How can the government discover I own BTC, let's say I'm from Venezuela where crypto is banned, what they can do to discover and arrest me?
As per the present bitcoin's characteristics, identity is anonymous therefore no one can knew you are using it, unless otherwise you give your information to someone who you do not know. Do not trust easily to people who are asking for personal information because they probably do it for some unknown interst or maybe a command from the government.
Yes, bitcoin was exist ik the digtal world and government doesnt hold it. They cant trace you using the internet because that was stupidity if they do that in fact that there are more important issue that one country must focused more. They will just trace you if you surrender and say to that you are still using it and I believe no one will do that. So dont be scared because asnlong as it exist in the digital world, you are stillq safe on using it.