Still useless from the PoV of this argument until you get to the point where you can buy stuff you need directly in crypto without conversion to fiat. We're a long way from that now, and the closest practical workaround (bitcoin to gift cards to stuff) goes away if the government gets hostile.
The government doesn't have to make it impossible for cypherpunks and superhackers to use bitcoin, it just has to scare normal people. That's easily done with a few laws and some gratuitous enforcement, e.g., throw a few thousand people in jail for tax evasion, watch how long it takes for these casual hodlers to liquidate. That's 90% of the battle won, and 90% will probably be enough.
There may be a kernal of truth to this, but the fact is, to do this with overwhelming force there needs to a strong social impetus to do this.
With drugs you had families ruined by drug addiction desperate for a solution.
With bitcoin you have... what? Unwavering respect for the right of governments to restrict something most people can identify has at least some utility?
The social consensus for a harsh crackdown is not there, and like the internet on issues with copyright, governments will continue to muddle along as this all evolves way quicker than they can deal with it (kind of like Uber).
You have a government losing its sovereignty over its own money supply, for all practical purposes. After being invaded, or losing territory due to an invasion, that's about as serious a threat as any on offer.
Yeah, sorry, I replied to the parent while thinking forward. I agree that in order for cryptos to succeed, merchants have to use them first. It is definitely not simple and we are far from it because it involves rendering the current system obsolete and a mental shift in how we think about money and governance. Eventually I expect governments to be affected, too.
The government doesn't have to make it impossible for cypherpunks and superhackers to use bitcoin, it just has to scare normal people. That's easily done with a few laws and some gratuitous enforcement, e.g., throw a few thousand people in jail for tax evasion, watch how long it takes for these casual hodlers to liquidate. That's 90% of the battle won, and 90% will probably be enough.