Decentralization is not essential to cryptocurrency as a technology. It's essential to a view of how it could be used for the betterment of many.
The technology can just as easily be applied for other purposes, mandated by an authoritarian government to be the only legal way to conduct commerce. You'd use it not because you want to, but because you want to avoid their ire.
I think we're mixing terminology. There's a difference between distributed and decentralized.
You can have a distributed blockchain, while still being controlled by a central authority (i.e. not decentralized). That's pretty much Ripple, and it still has many of the advantages of blockchain technology: distributed/quick settlement, highly secure, highly available, etc...
It would be actually possible to use a government's money in various new ways. Think of what could happen in the economy if the government provided flexible and free payment services.
(Which is exactly why they'll never do it, but just pointing out that a government-controlled blockchain for normal people would have a LOT of applications)
Actually my government already has rules on that. Using my debetcard at a store, withdrawing money from an ATM or transferring money between bankaccounts is free.
The technology can just as easily be applied for other purposes, mandated by an authoritarian government to be the only legal way to conduct commerce. You'd use it not because you want to, but because you want to avoid their ire.