I like this tin foil hat theory and subscribe to it now I have heard it. Except the end part where they try and legitimize it.
I modified it somewhat to keep it a bit more coherent.
I'm fully convinced that Bitcoin will never be made illegal, because it is a fiscally-sound currency that no one knows about. It can still be legitimized and used to back any country's current currency. The first countries to adopt Bitcoin as the financial backing for their own currency will have the most fiscally-sound currency in the future.
Look at the countries who still buy and add to their gold reserves. They aren't having problems the others are. The US stops buying and what happens? QE1? QE2? Debt-limit debates?
you cant force out anonymity. i can run my client through tor and exchange federal reserve notes in person or through dead dropping. the use of tracphones and third party phone line encrypters. you can also use an open wifi or hack into one. i think tracfones also allow internet access. so maby some phones would have a hotspot sort of thing. but whatever, as long as you have cash you can be almost 95% anonymous on the internet.
Sure you can, look how they force anonymity out of cash. Require any "legitimate" enterprise (including all mining pools and banks) to report holdings and the names of the individuals doing business with them. The only increased step here would be to require online retailers to also require reporting, if they even cared what you were spending your Bitcoin on. You'll have to turn to the black market to get your currency converted, but what is so beautiful about Bitcoin is it actually keeps track of exactly where the money came from, if you send coins to a known pot dealer's Bitcoin address, you're busted. The only people that couldn't be traced will be solo miners, but the system is designed to discourage solo mining, so it won't matter.
The only counter I can see to this sort of a system is like an anonymous pooled mining operation, but such a thing would be ridiculously difficult to pull off, and nearly impossible to keep legitimate the more regulations that get piled on over the years. The value of Bitcoin rises a little when they "legitimize" it, so some people will whine, but the people holding and promoting BTC (even the most hardcore libertarians) won't demonize their precious Bitcoin as a whole, because they own a lot of it and they want to see it increase in value. So the government will add a little bit more regulation, making it safer, increasing the value, and causing a few complaints. Rinse, repeat. Do this twenty years. Remember, governments have time on their side, they'll be around long after we're all dead.
I'm willing to bet 10 BTC that within two years all US-based mining pools will require identification of miners operating on their pool in order to satisfy government regulations.
EDIT: (3/11/2013) Well, I was right about two years all US-based
exchanges would require identification, but it turns out the US doesn't really care all that much about the miners.
