Cutting off exchanges from financial institutions will likely be the primary way the government attacks cryptocurrencies. Just look at what happened to online gambling 10 years ago. Online poker and sports gambling were booming. What the US did was prevent banking companies from doing business from gambling companies or intermediaries (e.g. Neteller). Basically overnight, online gambling became a shell of what it was previously. Sure there are still ways around it, but it's enough of a hassle that only the most die-hard players are going to find it worth it.
It doesn't take a huge stretch of the imagination to apply the same strategies to crypto. If financial institutions are prevented from doing business with Bitcoin, et al., it's basically game over, as long as its utility is dependent on buying with fiat currency.
And not a moment too soon. Gambling games are designed to be addictive, to bypass the judgment and decision-making centres in people's brains, and take their money. Providing places to go and gamble is one thing; people who walk in there ought to know they will probably lose every bean they walk in there with, so there's informed consent. Putting gambling games that accept real money on the web is effectively like putting coin-operated pokie machine in every living room (and these days every pocket) with a net connection. It's profoundly exploitative and totally deserved to be starved of financial oxygen IMHO.
probably not, unless they're comically incompetent
>What kind of damage could they do? Eg. Could they introduce consensus bugs without anyone noticing?
not much, considering there are independent implementations, there's no auto-update for clients, and consensus code changes are heavily scrutinized. I'm sure they can ram a PR through if they really wanted, but it's going to be very obvious what's happening.
Can you back this up? From what I can tell, governments can ban mining, shut down exchanges and co-erce developers. If the handful of devs that have commit access to Bitcoin were working for the CIA, would we know? What kind of damage could they do? Eg. Could they introduce consensus bugs without anyone noticing?
> Today, people can transfer their wealth as bitcoin across international borders.
Again, citation needed. How many Chinese people are doing this? The exchanges are banned, right? So how could your family buy Bitcoin in China? OTC? What's the spread on the OTC market in China versus US market? Is it actually worth it?