That government and military also safeguards a lot of the economy any financial system, traditional or crypto currency, needs to drive it. In any case, sovereign-less free banking happened [1]. It was replaced for reasons of efficiency.
The day bitcoin has its top 1% people(By many a definition they are already there) you will need a military to force it on the people, else they can start their own currency turning the value of existing cryptocurrencies to 0.
Bitcoin et al will easily support 10x the value and transactions and make the "but it is 5 times less efficient" argument moot.
Cars were also less efficient than horses at first. Maybe cars were a huge waste of energy and should have stuck with animal power.
If bitcoin has 300 trillion worth of transactoins, that means being able to mount a 51% attack on the network has a value in the trillions..
Therefore, if you're using less than trillions of dollars of energy to secure it, someone will mount an attack.
The more valuable the bitcoin network is, the more incentive there is to attack it and the more energy must be wasted.
Finance is about 7.3% of U.S. GDP [1]. The U.S. produces about 1,000 gigawatts of energy per year [2]. A first-order estimation thus yields 73 Gigawatts for finance. So about 150 times Bitcoin’s 500 megawatts.
About $700 million of BTC change hands every day [3]. That’s $250 billion a year. U.S. non-cash transaction volume is like $180 trillion a year [4]. So about 720 times the size of the Bitcoin economy.
Bitcoin thus appears about 5 times less efficient than the non-cash status quo. Given finance is less energy intensive than most of the U.S. economy, this is likely a lower-bound estimate.
[1] https://www.selectusa.gov/financial-services-industry-united...
[2] https://en.m.wikipedia.org/wiki/Electricity_sector_of_the_Un...
[3] https://www.quandl.com/data/BCHAIN/ETRVU-Bitcoin-Estimated-T...
[4] https://www.federalreserve.gov/newsevents/press/other/2016-p...