Re: Did China just legalize Bitcoin, clarify regulation, for its free market use?
4) They won't put anyone in jail if BTC becomes big. If you can't fight them join them 
You were doing good but that part of your argument isn't logical.
Puting people who use btc in jail is not only illogical but also improbable. Prisons are full already
Governments will have to one day recognize BTC if only enough people vote for it. We have democracy, right?
You assume that they need to put everyone in jail in order to incentivize all Bitcoin users to require the identity of everyone they buy from and sell to. I had already explained upthread that they only need to make a few example cases of a few Bitcoin users in order to cause most Bitcoin users to become scared and do what the government wants. Then they can put the stubborn ones in jail.
Now if you had a very strong anonymity in a coin, such that most users were confident their identity could not be discovered, then there is a greater chance the users will ignore the government, because most of them wouldn't be ending up in jail as an example to the rest.