The implication is that bitcoin won't function without (lots of) miners, and if miners would be getting more money in an alternative currency where they can use their hardware, they'd leave bitcoin.
If bitcoin ever got large enough to be perceived as a threat to USD (which is a long ways off) the bitcoin community would not have the resources to take on the US gov. Being geographically spread out is irrelevant. For a small fraction of one of its many defense institutions annual budgets the US gov could easily build an ASIC cluster larger than the entire bitcoin mining network. They could even just start maliciously buying/selling large quantities of btc to keep the btc market volatile. To put it into perspective: btc current total market cap is ~4billion, and the NSAs annual budget is ~12billion.
Bittorrent is used to download fucking movies while a lot of serious people invest millions in Bitcoin. Federal armies will have to deal with a lot of vested interested. In addition, some bankers and regulators may look seriously into Bitcoin and realize how good it is for storing their own bribes and bonuses and thus buy it. Then "fight" against it only to confiscate for themselves even more.
By the time anyone would seriously decide to throw billions to fight anonymous miners and billion of smartphones, Bitcoin monetary base will be a trillion USD and hashrate will be boosted by Chinese government protecting and taxing their miners.
Also, it's one thing to say that some company helped Osama bin Laden to launder his money - there will be evidence and no one would make a big story out of it. Another thing is to say that "we cannot do anything about this protocol, so we will shut down every single company just because they might use it". To shut down tens of companies you'd need to show evidence that they all somehow launder tons of money. That would be an epic event and it will be well-advertised, so prosecutors would have to be even more careful in what they say, or they will look like simple bullies on every newspaper. It's just entirely different scale of action to take on everyone connected with Bitcoin.
If they do things slowly and try to kill companies one by one, then each time they would create more clarity on how to be compliant with the law which will make every next case even more difficult.
I have no doubt there will be war (there's one already with all this regulatory crap, seizure of funds etc.), but it sure won't be one single decision and little attention, like in case of Egold.
I suspect Bitcoin will occupy the same space that gold does now, as just another place to store your money during economic downtimes.
It's all about time preference. For certain goods people have a very high time preference. For other goods, it's low. Would I forgo dinner simply because I think my Bitcoin will be worth more a week from now? Probably not since I have a high time preference for food. I need it to survive.
Just think about goods in technology. They are extremely deflationary. Using the deflationary logic people use to criticize Bitcoin, why would anyone buy an iPhone 5S or Nexus 5 today when they know it's going to be cheaper 6 months from now?
Therefore, no one will ever spend their dollars to buy actual stuff.
* A security or encryption issue discovered in the protocol that leads to compromise of most wallets. The bug could be fixed, but existing balances and trust may be wiped out.
* Government regulation that makes it illegal to exchange bitcoin for cash or goods at legal businesses. It may remain as a niche underground thing, but even drug dealers need a way to eventually buy something else with their bitcoin.
* Insecure exchanges that make it impossible to exchange bitcoin for cash. Exchanges seem to get hacked and disappear even without government "help". The result is the same: people need a way to use bitcoin for it to have any value.
* Another digital currency becomes more popular.
* Someone with enough computing power takes over the network. This could be a government agency aiming to shut it down, or perhaps a back-door in ASIC miners.
Personally, I think that hardware wallets have the potential to solve this problem. Picture a device that contains your private key, and is capable of signing transactions (after you press a physical button). This thing could be designed such that it is physically incapable of leaking your private key via its USB port (or whatever). And maybe it has a little LCD screen that shows the transaction it's about to sign before you confirm. With something like that, there's really not a whole lot a bad guy could do to steal your Bitcoins.
Of course, if a bad guys does coax you into sending them Bitcoins via some more social-engineery-type means, that could be a problem. E.g. if they briefly took over a popular website and made it show their Bitcoin address rather than the real one, there wouldn't be a whole lot of recourse.
2) the iron fist of the Empire.