the government should be freaking out about the potential implications of this tech. but they aren't. at all. not even a wiff of it. firmly in the ignore stage.
Well, there *is* a "whiff" of it, so to speak. During the Jan 2013 NYDFS BitLicense exploratory panels, Lawsky made some comment to the effect of: "...maybe we need to require that all virtual currencies use a transparent ledger" (paraphrasing). Remember, Zerocash has been on the radar for a while.
In any event, I think Bitcoin kind-of luck-boxed into being something that govs can accept. There's some quote from Satoshi where he basically outlines something akin to ring-signatures as a desirable design, but didn't have an implementation for it. If he had, and Bitcoin had been launched with native robust privacy, I fear it's path would've been *much* more difficult. As is, I think it's path is workable and probably leads to much higher market cap. Some people around here seem to underestimate the degree to which truly aggressive widespread multi-government legal action would curtail adoption and value.
So I think Bitcoin kinda stumbled into this (from a practical perspective) best of both worlds scenario, where it *can* afford reasonable privacy via various techniques, yet is palatable to govs because it *is* an open ledger.
That said, I think the native-privacy niche is the big one to be filled by an alt, and Monero has a nice shot at eating the market-caps of many of the other top-10 coins.