i'm not making the argument with tvbcof that gvt won't enforce unreasonable laws onto Bitcoin. that probably is in Bitcoin's future.
what i'm arguing is their ability to actively taint tx's, either thru addresses or UTXO's. that's not technically possible for them and also for those they demand to do so. thus, their work will be cut out for them, assuming they need to actually track and enforce against those who disobey.
OK, got it.
For a modern day example, they are effectively banning the use of cash. So that everything is electronic and fully tracked in their financial system.
http://mises.org/blog/fighting-war-terror-banning-cashIn theory it should be impossible to enforce a cash ban, after all cash is similar to bitcoin it is not traceable and transactions are permanent, but in practice I am sure most businesses and individuals will voluntarily comply making the ban 99% effective.
I think what tvbcof is getting at is their ability to force major transaction points into their own system, will enable a government to effectively create a 'whitelist' bitcoin economy that is tracked an monitored. Yes, bitcoin will process coin transfers regardless of their whitelist / blacklist status, but what good is that if your employer, grocer, butcher, pizza man, electric, water & internet/phone utilities, etc. go along with the whitelist and only accept transactions from gov approved sources?
If this sounds far-fetched, well I'd challenge you to pay these firms with cash after the gov eventually forbids cash usage and demands electronic payments only. After that ban your cash would be useless, unless you can whitelist it into a bank account.
It's not technically possible to taint/track bitcoin, any more than it is not technically possible to ban cash transfers or gold transfers, yet these things can and still do happen.
on balance, i think it's too late to make Bitcoin illegal or even put sharp restrictions on it here in the US.
mainly b/c it's global and their are too many large, legitimate US investors involved already. think NYSE, NASDAQ, multiple hedge funds, banks, VC funds, and numerous financial luminaries and Wall St folk. just about the entire Silicon Valley wants it as fintech has been irrationally and unfairly excluded from financial innovation forever. this is their time. Wall St has begun to sense the inevitability and are climbing aboard. there are plenty of overt data points and pending signs.