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More specifically the dream of bitcoin replacing cash died in 2017 when changes were made to the protocol. Bitcoin became cost prohibitive to use for small transactions (less than several hundred dollars) and the addition of a feature called 'replace by fee' meant that small transactions weren't immediately reasonably trustworthy and you would have to wait for one or more confirmations on the blockchain.

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Bitcoin is hardly cost prohibitive. When was the last time you sent a transaction? The last one I sent cleared at 2sats/byte and was <$1. Are you going to buy your coffee with it? No, probably not, but that hardly makes it a useless as currency replacement. Replace-by-fee doesn't make small transactions any less trustworthy either, since you should never trust any unconfirmed transaction (by definition, if its not on the blockchain its not yet a transaction). Furthermore, the lightning network blows away the competition in terms of cost per transaction, and while not perfectly trust-less (unlike the base layer) it has far less custodial risk than a bank or credit card account. If for example your counter-party goes rogue, at worst you just close the channel resulting in a rollback to the last settled balance state, minus an on-chain fee.

Don't you think the custodial nature of lighting network opens it up to the same type of censorship we're seeing with bank transactions in Canada? What's stopping governments from blacklisting wallets and pressuring LN nodes from transacting with them?

Good luck shutting down or controlling thousands of nodes on the Tor network.

Don't see how any government could reasonably pressure enough nodes in that way, particularly ones that are in other jurisdictions.

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