If this actually takes off and doesn't suffer from nanny state meddling (oh no, you can't pay for guns with this! guns are evil!), it most certainly will reduce the long term growth of BTC.  Kill?  Nope.  But it will put one hell of a dent in it.  Such competition would make BTC more applicable to black market transactions and people who want to store wealth only they can touch.  Still a useful thing to have.  However, the value of that nestegg sitting behind your private key is based purely on speculation, just like fiat.  Some would rather just bury gold, guns and ammo.