It’s no threat at all for the foreseeable future.
Make no mistake though, over the next decades, the core idea is an existential threat.
If a currency like Monero with further developed scaling and privacy features is able to gain a foothold in developing nations, and enough off-ramps are set up via decentralized exchanges like Bisq and through direct acceptance for goods and services, then it is difficult to see the spread stopping between nations with reasonably free Internet, especially as factions within each government will likely have some direct interest.
The US dollar will be least threatened, the longest.
Privacy features in a currency are a double-edged sword. It means that the money is very difficult or impossible to recover in the event of theft, fraud, or even user errors. It isn't a risk most people want to be exposed to.
Physical cash is typically used in face-to-face transactions, which somewhat reduces the risks. The scenarios in which a digital version of physical cash might make sense are few and far between. To suggest that such a currency could one day threaten the US dollar dominance is absurd, in my opinion.
I completely agree with you. And you're assuming that a crypto network even exists that could support that kind of transaction volume, so the reality is even more absurd.
Monero for instance is optionally transparent using view keys, which allow read access to incoming but not outgoing transactions.
As cryptocurrency already requires the safeguarding of a private key or a custodial partner doing so, and generally do not accept rollbacks on the base level, there isn’t that much added drawback to making strong privacy default.
