every computer program could be considered algebra, that doesnt magically make it elude legislation.
Every computer program is not Bitcoin - that's why Bitcoin is special. That's why Bitcoin is Bitcoin.
There are illegal numbers so you are correct, governments are stupid enough to attempt to regulate math. But just like with regulating file sharing it will fail and for the same reasons. Unlike sharing files we are talking about sharing money now. Nothing will stop people from sharing money. Even in an all out war people are still sharing money.
Bitcoin allows people to share money over the Internet while Colored Coin and Mastercoin built on top of Bitcoin allows for Bitcoin to take over the entire global economy and replace virtually every function.
I think Bitcoin may end up being money 2.0 and there is no way any government can stop that. People have killed and died over money and governments pay their troops with money. So how exactly are you going to stop money with laws? You can stop money by offering more money or better money than Bitcoin.
I don't think the US government or any government wants to do that though. They will just build on top of Mastercoin and Colored Coin for their own purposes when the time comes.
Putting the Blockchain at risk? Please elaborate.
essentially every bitcoin client will become part of a distributed unregulated security exchange, which might be considered illegal by regulators just about anywhere. Now whether or not such interpretation would stand up in court, I have no idea, but Id rather not see them get the chance to try it.
If the king were to outlaw bread do you think it would stop peasants from eating bread during a famine?
The laws will be rendered unenforceable due to the particular condition of the economy.
When there is no viable alternative for people, it wont matter what the law says. Ultimately the law enforcement are supposed to protect and serve the community. The laws if they don't protect the community probably aren't going to be followed by many people. People still gamble for example even if you make that illegal, and copyright infringement is illegal but probably everyone you know does that.
Consider that the government of the US does decide to crack down on Bitcoin? The people who break the law and ignore the regulations would become millionaires. Those millionaires would be the people smart enough to leave America and live where there aren't any regulations on Bitcoin being enforced.
So if the US is stupid enough to crack down then people will start leaving the US and working overseas instead. Then they'd start businesses over there and pay taxes to some other country. That other country will use the tax money to spy on US interests. It would be smart if the US actually kept it's tax base in the US by either not enforcing certain regulation or changing the law.