Here’s a thought experiment. Yes Bitcoin is global but like all other distributed systems, the CAP theorem applies. When there is a network partition, you can only choose between consistency and availability. Now what if tomorrow the Chinese government decided to totally block Bitcoin traffic, just like they block Facebook, Twitter, NYT, Tor and VPNs? Losing either consistency or availability would be a heavy blow. It’s either going to stop working at all, or fork into a Chinese and non-Chinese version. I don’t see how either of them inspires confidence.

I think it would be pretty difficult to block a P2P network at that layer of the stack to effectively partition the network. The list of peers is dynamic, so it would always be one step ahead of The Great Firewall.

Packet Inspection?

It wouldn't matter at all. It would inconvenience Chinese holders of Bitcoin. You can't really block Bitcoin traffic. There's ways around firewalls. For example, I could embed a bitcoin address into a JPG image, certain XY positions would contain the bits which could be decoded into an address or key. That could then be routed to the Bitcoin network once outside of China. As long as you can send bits, you can send bitcoin.

You can arrest people and seize their assets.

There is nothing inevitable about it, but even if it were, the SEC has a long arm.

https://en.m.wikipedia.org/wiki/Long-arm_jurisdiction

https://en.m.wikipedia.org/wiki/Disgorgement

http://scholarship.law.berkeley.edu/cgi/viewcontent.cgi?arti...

http://www.scotusblog.com/2017/04/argument-preview-long-arm-...

> Bitcoin is global at this point. No one jurisdiction is going to shut it down.

Especially as countries like Japan are embracing cryptocurrencies. That must make other countries wonder whether trying to attack cryptocurrencies will end up leaving them at a competitive disadvantage.