Nice first post. This is a well thought out anti-bitcoin argument. I am inclined to believe that this 'middle scenario' you mention where governments slowly fail and consequently bitcoin other crypto currencies gain market share and momentum is the most likely scenario. Bitcoin has a ton of momentum and as time wears on it will only get harder to do dislodge. I think the cat is out of the bag to a large degree. The concept of decentralized systems-once fully understood by the masses- will be too attractive to ignore. The projects being built on Ethereum-including this site for example-are just flat out jaw dropping and I am just hoping that governments embrace it and move forward rather than engage in a futile efforts to squash progress. We will see.
Maybe these technologies are too efficient for governments. A world of hyper-efficiency and rationality isn't really ideal for the survival of governments as we know them.
Here is a comment one of my buddies left me on skype. He needs to join Steemit!
Obviously Brandon is extraordinarily bright
but I think he makes the same mistake that I have seen other bitcoin skeptics make
Government is not a monolithic entity
there are many different governments around the world, each with different policy goals
It seems clear to me that bitcoin is going to get several more years of uninterrupted growth
Politicians aren't smart enough to see what Brandon outlines coming
Bitcoin is going to be quite large by the time the "Sea of Red" problem becomes apparent
It seems likely to me that entire countries, like Venezuela perhaps, will have adopted bitcoin wholesale by 2025, perhaps to the point of being their national currency
I think bitcoin has serious geopolitical significance at this point, and China may very well go all-in on bitcoin if the US tries to ban it. Also, it seems very likely that public blockchains will have a huge array of important non-monetary economic functions by 2025
The US government may not be able to throw the baby out with the bathwater
Finally, the global underground is enormous, and will grow larger if governments grow too rapacious while trying to fix the "Sea of Red" problem
Crypto is CLEARLY going to be the reserve currency of that market