You can still have a centralized token asset as your currency. It defeats the purpose of open source and public blockchain utility, but gives a government massive control over its currency.
gives them an excuse to ban an uncontrollable currency/asset. But the paradoxical thing is that if the gov't creates their own crypto they control (and ban the "real" decentralized crypto), they give legitimacy to the idea of crypto, and thus, make bitcoins and other uncontrollable cryptos even more popular. You can't actually ban crypto, anymore than you can ban maths.
If I wanted to do so as a leader I would:
* Log which citizens visited any crypto related domains (exchanges, crypto wallet app servers etc.)
* Make a law banning the holding or exchange of crypto. Give everyone 1 week to comply.
* Make a government address to send coins to for disposal, and publish a form to fill in to say you have disposed of your holdings.
* Contact everyone in your log telling they need to fill in the form (even to declare they no longer have any holdings).
* After the deadline, arrest anyone who has not filled in the form or who declares zero holdings and subsequently visits exchanges etc.
* Sure, this method will miss some who carefully use tor. But that's a tiny minority. *
* Move coins to cold storage wallet.
* Memorize seed phrase.
* Destroy written copies.
* Walk casually through checks at airport or frontier as a tourist, carrying nothing but chlothes.
* Do whatever you want to do with your money.
You can choose to leave your country for good taking your wealth with you against your government laws, if things get really bad.
The government can issue an arrest warrant for you, and have you extradited from wherever you went.
Figuring out who to arrest is harder, but it's a pretty small pool of people heavily invested in bitcoin who have suddenly vanished abroad flouting lots of cash with no obvious source...
[0] https://en.m.wikipedia.org/wiki/Payment_and_settlement_syste...
Bitcoin might have been designed with some other purposes in mind. It could also be co-opted by a government. For instance, I suspect that subsidized energy for bitcoin mining represents a government monetary policy, but I don't know the extent of the influence or its real purpose.
Moreover, like a technology, people will use money if it's useful to them. For instance people in countries with "bad" money will often use it for daily expenses, but move the bulk of their assets into instruments based on the currencies of the US, Europe, etc.
Banning crypto is another policy altogether.