As the saga of Silk Road plays out, a lot of attention has been focused on the mistakes that Dread Pirate Roberts made that helped the Feds catch up with him. The Verge has a good longform piece on this topic:
It appears that the current Dread Pirate Roberts (for we all know that the original Dread Pirate Roberts is retired and living like a king in Patagonia) made a number of fatal mistakes, including posting a question about Tor on StackOverflow under his own name (!).
Yet to focus on either hacker mistakes or lawman cunning misses the point. The fall of Silk Road (and by extension Bitcoin) was truly inevitable.
There are three monopolies that sovereign nations reserve to themselves:
1) The power to mint currency
2) The power to tax
3) The use of violence
These are the fundamental powers of government, and no government can afford to tolerate rebellion in any of those areas. Printing money, running protection rackets, and fielding private armies are a very good way to get the Treasury, FBI, and ATF on your tail, if not the military itself.
Bitcoin can't become a viable global currency because the nations of the world won't let it. If the US, EU, and China think Bitcoin is a threat to their currencies, they'll simply outlaw it (using their monopoly on violence to enforce their monopoly on currency). The possible outcomes are either failure or criminalization--there is no success case.
Silk Road was even worse, because it leveraged Bitcoin's rebellion in the area of currency to rebel in both tax (Dread Pirate Roberts made his money by taxing Silk Road transactions) and violence (by selling arms and flouting drug laws).
I freely admit that it's scary to let governments control currency, taxation, and violence. But the alternative is worse.
The IRS may be a protection racket, but at least it's a
protection racket that's partially answerable to us citizens as voters,
and it jealously guards its monopoly, preventing random people (Donald
Trump perhaps?) from levying random taxes on us.
A world of unstable and fragmented currencies, split into feudal fiefdoms, with disputes settled by armed bands, is a terrible place to live. Just ask the residents of Europe, prior to the advent of the nation-state.