[noelchurchill]

For the sake of thinking it through, how exactly would a government get rid of bitcoin?

I imagine they'd make it illegal to accept bitcoins as payment, which would remove all legitimate users from the market, but illegal drug buyers and sellers may still use it as payment, along with underground bitcoin/cash currency exchanges.

The anonymity of bitcoins may prove to create great enough demand, and help decentralize the illegal drug trade.

[hugh3]

I imagine they'd make it illegal to accept bitcoins as payment, which would remove all legitimate users from the market, but illegal drug buyers and sellers may still use it as payment, along with underground bitcoin/cash currency exchanges.

Sure, but now you've gotta participate in two illegal operations instead of only one. Instead of exchanging cash for drugs you're now exchanging cash for bitcoins and bitcoins for drugs. You've doubled your chances of getting caught. And unlike the drug dealer, the cash-to-bitcoin converter doesn't have much of a profit margin, so what the hell is his incentive for staying in this illegal business?

What would an underground bitcoin/cash currency exchange look like anyway? A smoky room? There's no way to anonymously and untraceably recieve cash on the internet, is there?

[brandall10]

Attacking the methods of conversion might be the most expedient route.

For instance, for those in the US, the most sane method of exchange for US currency is setting up an account with Dwolla tied to your bank account, then use that to transact thru MtGox. Dwolla is US based. Your financial institution is US based. If you have difficulty getting money in/out, or that becomes strictly a black market activity, well it will likely sink the value of bitcoin.

[Duff]

Easy.

They go after Mt. Gox.

They go after the very small number of payment networks that let you trade Bitcoin for coin.

This may push the trade of bitcoin underground, or more likely push both of the drug dealers using bitcoin to use actual dollars.