I still think it's possible for the existing governments to kill bitcoin:

First, just shut off the fiat currency to the exchanges. Shut down all of them at the same time - it would be a breeze. The exchanges are a single point of failure and there are only a few of them. Coordinate a raid on them all at once on some trumped-up charge like money laundering, drug trafficking, etc.

Second, attack the manufacturers that accept fiat. By manufacturers I mean companies who make the stuff that makes bitcoin viable. For example, shut down all ASIC manufacturing, the big FPGA sites, the Casascius coins – anyone who helps bitcoin but takes payment in fiat is vulnerable to an attack the same way the exchanges are vulnerable.

Third, buy out or arrest silk road plus the top ten other bitcoin destinations. If they took out the "top ten list," then bitcoin would be relatively worthless because the average person wouldn't be able to find anything they wanted to buy with it.

Oh yeah, and shut down the popular forums, like this one, by seizing the domain.

I never realized how terrible paypal was untill I started reading this forum, didn't take much digging to see how terrible it is for sellers. But for most people who are like me and only used it to buy things its easy to trusy paypal way too much.