The main thing would be the government start to tax bitcoin transaction and people which to buy and sell it, it would be legalized for a price, soo people would raise their prices accordingly the fees being taked. And the funny thing would be say to my friends that said im doing something ilegal, earn bitcoins, they were very wrong and lost time being following the law.
But I think the government will unable to find that who is using bitcoin and who is not using so they will not be able to start tax on them but only a fees for transaction is possible for the government to keep on the people.
Not until there is a global government ruling over the world. On the other hand, let's assume for a moment that the Chinese Politburo decided to heavily tax Bitcoin miners (since most mining pools are Chinese). The miners would have to raise the transaction fees. But because transaction fees are the buyer's market, all they can do essentially boils down to not including transactions with fees lower that they consider sufficient. Obviously, people start to transact less, the price of Bitcoin begins to plummet...
And the Chinese miners get outcompeted by less demanding miners and eventually end up thrown out of business
