> It’s not beyond the reach of governments to ban unwanted trade
Yeah, right, it worked so well for alcohol... It DOES (/s) work so well for drugs in the US right now...
And hey imagine whether it's easier or harder to ban something that doesn't take any physical space in your suitcase and can be transacted with only internet connection.
On the contrary, bitcoin mining operations can be sniffed out by their impossibly outlandish power requirements, like pot growers used to be.
Increasingly, mining operations have to make special arrangements with entire power grids to suck up their energy and basically just burn it in arbitrary calculation. The scale at which this operates, and the increase over time, are both what makes up a lot of the problem, and what makes it impossible to hide.
If you'd prefer a world where people value bitcoin BECAUSE due to its unpopularity and externalities, governments resort to drone striking such operations when discovered, all I can say is: well, that solves the energy wastage issue, as blown-up ASIC farms aren't good at burning energy anymore. Maybe it solves the constant devaluation against energy cost issue, too! But I think you're missing the point and looking at only the end product of the industry.
Mining doesn't have to happen in the same country where you use the coin though.
In order for this scenario to become a reality, many governments would have to collaborate to make mining infeasible. But they would be incentivized to not collaborate so they can instead tax their miners and get the profits for themselves.
I'd actually argue that it was more of a threat to the authority of the state than Bitcoin is today. The widespread disregard of Prohibition lead directly to its repeal. Defying the state in one aspect of your life leads to defiance in other aspects.
Basically we are talking about the world's reserve currency becoming a denationalized currency. To be "mainstream" the denationalized currency will need to be defended by the militaries of the Euro-zone, US, India, China, and Russia (likely one after the other in this order).
Only the US is incentivized to have USD be the world's reserve currency. Meanwhile, 7 BB people around the world prefer a denationalized reserve currency, countries will prefer to interact with each other with a less trackable currency (e.g. Iran and the current sanctions), and based on the usage of tax loopholes by every multi-national company (e.g. FB, Apple, Google) every business will prefer transacting in less trackable currency (especially with crypto-coin tumblers). This demand for a denationalized reserve currency will be supplied by some crypto-coin (maybe BTC, maybe something else). FWIW, I don't think having a "less trackable currency" is a "good thing", I'm just saying there are large organizations that benefit from it financially and therefore it will exist.
Frankly once the S&P companies purchase enough BTC (e.g. TSLA, Square, etc), a BTC 51% attack will need to be defended against by the US military to ensure national stability. If BTC (or any crypto-coin) can hit "too big to fail" in the US, the rest of the world's militaries will all build a defense strategy around BTC mining. As as consequence, cheaper energy will also be an investment into national security.
There are still more problems with BTC specifically, like "slow transactions" but as may here have said, we can either use a geographically sharded blockchain (e.g. BTC-California, BTC-USD, BTC-CAD, BTC-RUP), where each shard allows fast transactions, and slow reconciliation, or we will just leverage credit for fast transactions like we do today, with slow reconciliation between banks like we have today. I don't see "centralization" as a problem, because having bank accounts and credit are very useful as an individual (as individuals will likely only transact with credit cards like we do today).
Will BTC become "too big to fail" in the US? Unclear. Another crypto might get there first. However, there is no scenario where the world's reserve currency continues to be tied to a single nation.
> Only the US is incentivized to have USD be the world's reserve currency.
The US is merely the largest reserve currency and has been trying to reduce that role for well over a decade now - being a reserve currency merely means foreign crises lead to dollar flight which has knock-on effects on US trade. There's no real upside - demand for dollars is based on the stabiliy and size of the US economy, nothing more. EUR, JPY and GBP also operate as reserve currencies due to the strengths of their economies.
What need there is for an international reserve currency is filled by the IMF's SDR, an asset whose value is based on basket of USD, EUR, RMB, GBP and JPY:
Yeah, right, it worked so well for alcohol... It DOES (/s) work so well for drugs in the US right now... And hey imagine whether it's easier or harder to ban something that doesn't take any physical space in your suitcase and can be transacted with only internet connection.