I believe that criminals have found cryptocurrencies' killer application and maybe are their killer application. While crypto might be a bubble I think that criminals -- drug dealers, arms dealers, sanctions breakers, tax cheats and currency control busters -- provide a floor to the value of crypto overall.
Historically these criminals have used banking systems in secretive jurisdictions like Switzerland and the Cayman Islands to manage their money. These sytems have become hostile after a huge US government crackdown that srated after 9/11 and intensified after 2008.
A lot of activity moved from secretive banks to the art market, which has become a den of money laundering. But art is difficult to manage. You have to buy it at auction. You have to transport it. You have to store it somewhere. The Swiss, their banking business model under threat, have started moving into sketchy art storage but I doubt it's enough. Physical things are a pain in the ass. Why keep your money in a Damien Hurst in a Swiss "Free Port" if you don't have to?
Cryptocurrencies are the answer. Transactions are hard to trace and storage is easy. Point, click, launder. Use a hardware wallet. Don't worry about borders.
I think this is why Julian Assange asks his supporters to use cryptocurrencies to fund Wikileaks. Wikileaks is on the wrong side of an international banking boycott led by the US Government and cryptocurrencies are the way around it.
How much cash wants to get around Chinese currency controls right now? Or anti-Putin sanctions? Or get around the DEA and Treasury and the like? The market cap of contemporary art plus historic deposits of Swiss & Co. banks might be a guide. A lot.
I think all that money eventually goes into cryptocurrency.
If I'm right this means that the combined market cap of cryptocurencies must be at least the sum total value of the global black market and the accumulated wealth associated with it. I'm not sure exactly how much money this is but I think it's a lot.
There's probably a cryptocurrency bubble anyway. When your taxi driver starts pitching you on a new ICO you know you've got a bubble. But bubbles don't mean there isn't underlying utility. Often bubbles pop, asset prices depress, and then gradually climb to their true value. I think that this will happen with crypto and that crypto's true value is and will be underwritten by crime.