Exactly. Cryptocurrency is useful as as a backup system against failing/weak institutions. Just that. Like insurance, it was not there to make anyone's lives better but simply to become a safeguard to avoid complete collapse.
If it was just a backup against failing/weak institutions it would be relavively benign, but the problem is that it incentivises machiavellian types to undermine society and nation states for their own personal profit - see e.g. The Sovereign Individual[0].
Combined with effective accelerationism[1] you can see why we could be heading towards somewhere a whole lot worse than The Bad Place.
However, I think there's an argument that the existence of that backup, or at least its marketing, might of itself encourage people to make the institutions fail so they can profit from it.
That's a weak argument. If the institutions can collapse because a few powerful people can work against it, then the institution has already failed in the first place.
Trump and the general rise of Populism is not the cause of the fall of Western democracies, it is a consequence.
You're going to have to show your work on that one. Western democracies are suffering not because they are failing, but because they have been chipped away at for decades by fanatical right wing billionaires intent on eliminating taxes and securing their place in a perpetual oligarchy.
Combined with effective accelerationism[1] you can see why we could be heading towards somewhere a whole lot worse than The Bad Place.
[0] https://en.wikipedia.org/wiki/The_Sovereign_Individual
[1] https://en.wikipedia.org/wiki/Effective_accelerationism