This would end bitcoins chance at ever becoming a world wide currency system.
I think that Bitcoin's optional privacy is a good selling point from a government's perspective. However, I am not convinced Satoshi deliberately did this. I mean, he reinvented money as concept, denationalized it; made money that is impossible for the state to intervene. He pretty much raised the middle finger to the entire financial and banking system. It's quite hard to buy that he was afraid. Anything but that. If he had thought Bitcoin's privacy wasn't good enough, or had known how to implement better privacy techniques, I believe he would have done it.
What do you mean by that? I am not sure I understood. Unless you meant that governments care about not allowing merchants' and customers' being private, so they can always keep an eye on their trades and their identities.
That's what I meant. Government cares about invading into everyone's privacy more than anyone. It sort of survives by that.