And there are benefits to being able to stop governments from controlling people. I would say the benefits of this far outweigh giving the state an even greater power advantage over non-state actors that may be acting maliciously.
Honestly it's very disappointing I have to explain this but I NEVER ARGUED THE LEGALITY STATUS of these activities.
I argue the fact Bitcoin and other coins enables crime.
I'll make it really simple for you: would you hire a hitman with a briefcase full of cash, or you'd do a bank wire with subject "for the murder, thanks"?
Think why we don't use bank wires for this.
Now think why anonymous cash transfers are hard internationally.
Now think what Bitcoin is. It's anonymous cash over the Internet.
It's a huge enabler for illegal activities because it's anonymous and decentralized and happens over Internet.
You can spin it any way you wish, but the fact speak if you're a criminal, Bitcoin is automatically the most attractive way for making transactions to you, aside from person to person cash briefcases.
Law is centralized by nature. Because law has to be enforced in a centralized nature. Decentralization and anonymity means you can't apply the law. "Illegal" means therefore NOTHING to Bitcoin.
The irony of this whole statement is that bitcoin isnt anonymous! (which is a core reason it lost its intended value as a medium of exchange)
The general sentiment also applies to cash, and the reality is the authorities want to track your every transaction, which is why every opportunity to diminish cash has and will be taken.
The reasons you give against Bitcoin can be used also to against encryption.
We agree that hiring a hitman is illegal, and we agree that it will be easier for the police to solve the crimes if encryption is banned and the police can read all the emails/whastapp/whatever of all the people in the city.
Encryption is tolerated because it also allows protecting regular people from criminals, in ways which allowed to build e-commerce on top, and ultimately enabling great economic boom on the Internet. If it was only about securing messaging, it would likely have been banned already.
It can't be decentralized to begin with, because whoever has more money can run more mining and whoever mines more has more power in the network. It's still more about rich hording power. On the flipside it may just be a little bit more distributed and accessible than the current prevalent system.
But mining doesn't grant you any power (unless you manage to accumulate 51% of it, which is in this day and age pretty much impossible for a single individual or organization). Mining is just a service that you provide (to secure the network), and you get rewarded for it.
Compare that to how monetary inflation works in the fiat world: they just press a button, et voi-la, they got their funding.
You don't get to complain when honest people lose cumulatively billions of their hard earned savings to scammers and hackers.
You don't get to complain when peope hire hitmen, buy drugs and child porn with it.
You don't get to complain when data mining centers hook illegally to the power grid and steal millions of dollars of energy.
Or when countries avoid sanctions, or manipulate other countries through it.
That's precisely what decentralization and deregulation looks like. It's the law of the jungle. Enjoy.