> I think increasing regulation and the use of blacklists and 'coin tainting' erode whatever use bitcoin has though, as there will be no fungibility.

This has already happened. Bitcoin is a permissioned blockchain, now. It may be used by permission of the chainalysis industry and the regulators.

That's not to say bitcoin won't become a widely-used currency.

Maybe governments will allow bitcoin but ban all cryptocurrencies they can't track.