Admittedly, gold and silver have a utility value, but the price is much higher than the utility value because most people want it as a medium of exchange or a store of value, not to make stuff with.
Silver and gold aren't like fiat, they're inherently inferior to fiat currency, for exactly the reason you cite.
PPH is deeply incorrect when he says that fiat currencies are not backed by assets. Fiat currencies are backed by legally-enforceable promises to repay debts. Every dollar created is balanced by the simultaneous creation of an obligation by someone to do some sort of productive work to generate value that is used to retire that obligation (at which point the dollar is destroyed).
Precious metals have a small utility value coupled with a large speculative value. Fiat currency is also a mixture of utility and speculation, but the mixture depends on the probability that the borrower on the loan contract that created the dollar will repay the debt. Since nearly all debt is repaid, dollars are mostly real utility. Further, the probability of default is offset by the fact that borrowers that don't default repay more than 100% of the debt, because of interest (though interest must also offset the discount rate, i.e. currency devaluation, i.e. inflation). So the precise mixture of utility and speculation behind a dollar is hard to nail down with precision, but the speculative part is very small, usually indistinguishable from zero.
Fiat currency evolved rather than being designed, but it's hard to see how a more perfect system could have been designed. Not only does fiat currency have greater intrinsic value than precious metals or similar physical exchange media, it naturally expands and contracts the money supply as needed, which facilitates rapid economic growth in good times and prevents devastating deflation in bad times.
Cryptocurrencies are among the worst possible forms of currency. They have negative intrinsic value (they cost money to produce but have no intrinsic utility), have very limited ability to expand money supply when needed (they could adjust the mining success probability, but there are strong disincentives to do so) and cannot contract the money supply when needed. Further, they have very high transaction costs, which leads to them being treated as assets rather than currencies. The fact that they're very hard to regulate does, however, make them great for crime of all sorts.