This fork would not replace Bitcoin, but it would coexist with it. Many people will move, subdue to government control and in time will be robbed by government "for he greater good". Some will see this coming, return to original Bitcoin, maybe even avoid any loss at all. Others would stay and loose.
Maybe the government fork would offer good ratio between freedom/privacy and security and would work just fine (for some people).
If you are careful you can spend pre-fork coins on *both* chains.
Most likely once the majority decides one fork is better than the other they will cash in the coins of the other fork, and likely kill it in the process. I don't believe 2 forks can coexist for long on equal footing.
I for one would take a guarantee of 1000$ up immediately to cash out and keep my coins on the original fork. If everyone does that the gov is down a lot of fiat money, has gotten a stack of pretty worthless crypto coins, and the original bitcoin still survives. I don't see any gov being stupid enough to try that.
Well except maybe if they mandate their crypto coins to be legal tender and start paying employees with it, but then these crypto coins would be nothing more than fiat in disguise.
