i agree. A more realistic value is definitely the sum total of transactions conducted using said coin. Counting market cap as value is like counting the market cap of WeWork using the funding valuation they got for a small % of equity.
I'm not aware of any reason why the Bitcoin network couldn't switch to VPN-level overlay networks. Using Tor would be somewhat problematic, given the limited bandwidth. But I'm pretty sure that it'd be doable. Other options include Orchid and Loki.
Mining could be an interesting issue. Government pressure could render large-scale mining operations unworkable. But as I understand it, the Bitcoin network could function just as well with far^N less mining capacity. Difficulty would just decrease with less mining competition. And that would mitigate the key negative impact of electricity usage.
Not too many years ago, there were trusted services that sold Bitcoin (and Liberty Reserve and Pecunix) for cash sent anonymously through the mail. I haven't needed that for years, but I'm pretty sure that such services still exist. And given the escrow sector that's developed to serve dark marketplaces, trust is likely far more verifiable.
Cryptocurrency and meatspace money are now entirely separate for me. I earn all the cryptocurrency that I need anonymously online. And I don't risk manifesting it as meatspace cash. While that's not currently workable for most people, I don't see why it couldn't become so.
How do you buy things in real life?
The point is that my online anonymous coward personas and my meatspace identity are as isolated as I can manage.
i.e., you cannot fulfil your meatspace needs using cryptocurrency as of yet. It doesn't matter that you are able to isolate your identity online from your meatspace identity.
And this is what gov't can easily enforce - through money laundering laws. If ever cryptocurrency becomes prevalent enough to offer meatspace usage directly, you can bet your bottom dollar that gov't will regulate, and prevent anonymous spending (at least, for any large-ish amounts).
For example, cryptocurrencies could displace cash for gig economy tips. Maybe they already have, for all I know. Also for online porn and gambling.
Now, most people I know who hold Bitcoin are motivated primarily by other reasons. But still, I can cut down my cash spending/donations by a few $1000/yr just by doing those things above — which have fairly loose ties to my physical person — with Bitcoin.
I've also done some privacy-related development. For example, a client wanted a private IKEv2 server with a nested VPN chain backend. To provide iOS devices with anonymity that was stronger than VPN services provide, but also easy to use.
Also, oil has large carry costs. Many things with large carry costs are called toxic garbage and have negative value. Oil is just a useful so it mostly has positive value, but the moment you can’t use it, it joins in valuations other toxic garbage.