Either way most people still need somewhere to buy it if they don't have any, which is what Coinbase is primarily for.
That is an incorrect assumption.
People buy bitcoin because they want to make financial gains.
Dollar cost average in, say, every month, on Coinbase, withdraw the BTCs immediately to an address you control (for example using an hardware wallet).
Do that 20 times and you never have more than 5% of your cash at once on the centralized exchange.
Some call it "on ramp / off ramp".
Now I don't doubt some people use Coinbase as their wallet: both for the on/off ramp and to store their coins (that is: without bothering to ever withdraw to an address they control) but nothing forces people to do that.
I think some do gold and are using these old companies in Switzerland holding gold for people in vaults, with proof of reserves (contrarily to the gold "it's there we swear but we refuse an audit" inside Fort Knox).
Nothing stops you from selling physical gold for USD (or EUR or whatever), sending that money to Coinbase, buying Bitcoin.
I don't think people are disputing that USD/EUR are used to pay taxes and to buy everyday thing. What some people are disputing is the value of USD/EUR in the face of ever more indebted states and ever more money printed.
The goal is not to never use USD/EUR: the goal is to never be exposed to these for too long. At the very least you'd want yield on your USD/EUR countering inflation (and for that it's not sufficient to "keep your USD at the bank").