If you can't buy weapons and drugs with something, it's a terrible currency.
Every single currency known to men can buy weapons and drugs.
In fact, bitcoin is easier to trace than most currencies (if you don't pay with credit cards or digital transactions.
'terrorism' is just some buzz-word the governments use to get people to do what the government wants them to do, because oh no, 'terrorists' are bad.
Every government needs some invisible enemies they can 'fight' so they can unite their citizens against this invisible enemy and control them.
So true