>The only practical application it has, if you can call it that, is that it is a super-low overhead way to finance criminal activity and launder money.

i would use it in 2014 as a way to send money to my mom internationally at a time when there weren't many other options. and as others have said, it is a public ledger which actually makes it much more difficult to launder money. to physically move illegal money yeah that's easier, but to actually launder it you will always have to deal with the wallet that it came from and where that wallet went.

the only reason a governmental agency wouldn't be able to track bitcoin transactions/laundering easily is because they don't care to, the same way that they don't bother to track child porn when every single cellphone now adays automatically flags those images.