There are massive P2P economies already built in most third world nations that work on crypto. They prefer stablecoins but will happily accept BTC as well. It's a serious enough problem that they've started using code words to refer to crypto currencies ("goat" for USDT, "chicken" for ETH, etc.)

If a corrupt third world government is scared of a piece of tech, it is, imo, good tech

I'm pretty sure I could find someone who'd accept 1 BTC for bread and milk. After that, we're just haggling over price.

People are already using crypto in this way so you can stop fighting the hypothetical.