Exactly. You can't buy all the gold in the world at the imaginary "market cap". Or all of a currency. And if you did buy all of a currency, it would be worthless, because the whole point of a currency is as a medium for exchange. Indeed, that's how they take a currency out of service, as they did when they launched the Euro.
No. They decreed that the respective currencies stopped being legal tender (against the will of the people in many cases, btw) and so the people had no choice but to swap their money for Euros. The exchange rate was fixed and the currency was never bought on a free market. They couldn't have because many people would not have sold and then you'd have ended up with multiple competing currencies. The government has a monopoly on national currency, it's very different from gold and cryptocurrencies that are properly decentralized and freely traded.
The name cryptocurrency is a misnomer for many of the new generation blockchains. They are not just currencies and they're also not a commodity like gold. You can think of a currency like Ethereum more like a decentralized company offering infrastructure services. It also has aspects of a currency and of a commodity. It's a bit of everything.
People could and did hold onto them. I should know; I have a small collection of defunct notes. But they were in negligible amounts, because a currency isn't intrinsically valuable. What's the market cap of the Italian Lira? It was a meaningless question both before and after the Euro cutover.
