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It being a battleground for state actors is pretty much just evidence that it works as intended, which is to say, as properly censorship resistant value transfer/money.

You could find similar evidence for the power of the US dollar over the past 100 years (and of course, gold, going back much further). It was used for a lot of heinous shit!

Although this usage of Bitcoin might not be what some people had in mind

Believe me, it was always in the minds of those who had a clue :) Bitcoin is SWIFT not Starbucks points, I always used to say. And the birth of bitcoin as money was in darknet drug markets and wikileaks donations.

That stuff remains somewhat in the background, but your point that it's in state level actions now is a good one.

new cryptography isn't the game changer.

I beg to differ. Well, obviously :)