You cannot transact physical goods digitally. If I have a physical dollar bill, I cannot magically turn that into something digital that I can send to you. I have to go to someone who will accept my physical dollar bill and give me digital dollar bills in return. Likewise, with my bank account, I need to convert my bank dollar bills into digital dollar bills that work on this other network.
Well now we really have three things that represent the same value: physical dollar bills, bank dollar bills, and digital dollar bills. At this point, the only thing holding them together is the fact that they all have the same value. But they can only have the same value if some central authority is dictating that all of these have the same value.
Suppose the digital dollar bills were created by some independent entity which is not influenced by the same entity that enforces that a physical dollar bill and a bank dollar bill are equal in value. Well now we have digital dollar bills which have a different value; it is now its own currency. It has its own digital tokens which have their own value. And thus we have Bitcoin, a digital token which has its own value independent of any other currency.
