The key issue with using Bitcoin as a digital form of cash is that Bitcoin lacks a key property of cash: fungibility. Combine this with the transparent nature of Bitcoin's blockchain and you have a currency which is an authoritarian's dream and not a currency that could/should replace cash.
Bitcoin is not totally lacking fungibility, as there are ways to make the coins more fungible, but it needs more developer support. Wasabi wallet has coinjoin support, although it's not easy to use, not automated, doesn't work on mobile phone and expensive for most people. Also of course exchanges try to AML-KYC them out, as govermnets are trying to fight it.
Implementing Schnorr signatures was a great way to get closer to fungibility improvements, as it paves the path for signature batching, which can make CoinJoin cheaper than a single transaction, and will change the incentives towards making Bitcoin fungible by default for every user.
If it was an authoritarian's dream, powerful countries around the world would be embracing it. But it's not, because they can't control it, only surveil it to the same extent that any other person can. They have a slight advantage because they can compel exchanges to collect personally identifying information about their customers and divulge it upon request, but other than that they have no privileged position like they do with the Fiat banking system.
