The point is that governments will stamp out crypto, like they got rid of BSCs, if they perceive that crypto is actually going to do what it was intended to do.
Government can never completely eliminate currencies based on decentralized consensus blockchains. They can only make it more difficult to trade this currency for their own currency, and vice versa. If government pushes Bitcoin into a black market currency, it will still exist. In fact, if the war on drugs is anything to judge by, a war on Bitcoin will only make it worth more.
No. It makes me cringe every time someone says this.
It's the truth. Please read here: http://economics.about.com/od/demand/ss/black_market.htm
The supply of bitcoins are not reduced if they are made illegal. There will still be 21 million of them.
No. The supply of Bitcoins being sold for USD will be greatly reduced. That would be the effect of any legislation criminalizing Bitcoin in the United States. Converting Bitcoin into USD will suddenly make that seller a criminal. This will make it much more difficult to buy Bitcoin, thus resulting in an increased BTC/USD price. Most exchanges for BTC/USD will be shut down.
Mining would become easier.
You're missing the main point anyway - the utility of illegal drugs are not affected by their legal status. The utility of BTC is greatly reduced if it is made illegal. And what's the "intrinsic" value of BTC in the first place? Its utility.
No. Bitcoin's utility as a store of value would not be affected. Only its use as a currency would be affected. The use as a store of value is what most directly translates into its exchange price today.
What are you going to do with your now illegal BTC?
Again, BTC wouldn't be illegal. Converting to USD would be illegal. You could sell for other currencies in countries not hostile to Bitcoin. If somehow all the countries of the world were to criminalize exchanges between Bitcoin and their currencies (very big stretch here), there would always be a market between Bitcoin and Gold, or anything else with actual value.
The truth is if the US decides to be hostile towards BTC, most other countries would follow for fear of economic sanctions etc. This may not be true in the future, but it is the reality today.
Now say you want to purchase a car, a house etc with your wealth stored in BTC. What incentive does the merchant have to accept your illegal BTC instead of legal USD? Maybe you can persuade him by paying more... What benefit does BTC offer him over USD for him to risk confiscation, prison etc?
