It's also possible that the government may declare some bills invalid (what happened in India with larger bills). Also, government could inflate away your wealth by printing more currency.
You make mistake of assuming that countries won't put up a global firewall that makes bitcoin/ether network impossible to operate. If China can filter traffic at internet scale, crippling Bitcoin network even if say EU/US/China are on board is trivial.
Currencies are backed by the only thing that matters, its will/trust of the people. And no amount of crypto changes that. Unless of course you have some magical way of baking silicon on your own into processors and other chips used in computers and networking equipment in your backyard.
Bitcoin/Ether barely register in terms of the total economic activity (75 Billion $). With significant fraction unusable. They will either be tamed or destroyed.
In fact another way of looking at cryptocurrencies is as a revolt against the Visa/MasterCard duo-poly & regulations that has made digital transactions too difficult. The moment digital transactions become cheaper/more-efficient, the allure of crypto-currencies will disappear.
As for the allure of cryptocurrency, only time will tell. I predict they will continue to grow in prominence.
Except for drugs, contraband, money laundering, and evading capital controls. Which, from day one, has been the entire actual value of these things and remains so.
That's a reasonably big business to be sure, but it will always remain a niche element and always be under fire, for obvious reasons.