It's been clear for a long time that Bitcoin is not suited for small transactions.
The people currently employed by the financial industry would not cease to exist if the financial industry did not need as many employees, they would find jobs elsewhere. The downstream effects of what people spend their wages on isn't part of the the actual impact of the industry they work for.
Fiat currencies are backed in part by the power of the governments that issue them, so is defense spending a form of "proof of work" for them? If the US government disbanded its military would the USD hold any value for very long? Same goes for any other fiat... e.g. if the PRC disbanded the Chinese military would the Yuan retain much value?
If fiat currencies require a constant demonstration of credible military (and police) capability, that's a rather enormous cost and brings with it quite a bit of resource use and pollution.
(I would guesstimate that Bitcoin would still be less efficient than USD but that the margin would be smaller.)
If people were using Bitcoin as currency directly its value would remain equal to whatever people were willing to trade for it. Obviously if all people were willing to trade it for was USD it would become worthless, but that's not the point in this thread.
Bitcoin has other problems as a currency but that's not the topic of discussion here. Some other cryptocurrencies try to solve these, such as it being too deflationary or lacking functionality.