The government can deliver serious blows to BTC but I’m not sure it can be totally destroyed.
Banning bitcoins as I described would mean the vast majority of all banks in the world would not be able to act as on/off ramps to crypto so it could never hit mainstream as a medium of exchange. It would also be worthless as a store of value because you wouldn't be able to get that value anywhere useful. It might live on as some part of the existing shadow banking networks, but it would never deliver on the promise of currency available to the masses & disconnected from arbitrary nation-state monetary policy.
I'd like to be clear in my viewpoint though: I am not anti-crypto. I think there are many improvements it can bring to the existing global financial infrastructure. I just don't have any faith that it can deliver on promises of freedom from government regulations & control. If it exists, it will always exist because of government forbearance in killing it, not despite government antipathy.
I think the real joker is the black market. Modern drug organisations are Apple sized businesses that also have their own enforcement of violence and justice systems, and so on, making them effective non-geographic states.
I live in Denmark, we’re a rather small country, we frankly have less authority behind the Danish Krone than some drug organisations would have behind whatever crypto currency they fancy.
It is not censorship resistant, the entire system could be censored. Heck, FinCEN is already moving forward with regulations that require regulatory reporting on crypto transactions touching US institutions in a similar way to CTR reports. Bitcoin exists only because it is not a threat to governmental monetary control, and could be squashed the moment that changes.