Bitcoin needs fiat to survive and grow. All government has to do is block funds at the source. The banks. The same way they did for online poker. It's not difficult at all. If they really wanted to get nasty, they could make it illegal for businesses to accept it. Mass adoption = dead.
That said, I think they will allow a $500 billion Bitcoin economy because that's a lot of tax revenue to be had. They'll regulate exchanges and any sources of money in and out of the network to get their cut and I think that's a good thing as long as regulations are fair and aren't hindering startups.
Yeah, prohibition without justification has always worked.
Certainly not but prohibition was done against the majorities wishes. Bitcoin does not have the majority of the population on its side as of yet. Merely a sliver at best. Hell, at the moment, most are terrified of Bitcoin.
