Could my internet provider just block Bitcoin transactions and then it would be a censored cryptocurrency?
i believe they can.
communications over bitcoin network are not encrypted (there is no reason to encrypt it) so your ISP can clearly see the packets you are sending and by "sniffing" them they can know it is a bitcoin transaction so they can prevent you from sending it out.
but there is a simple solution for it: encrypt the communications!
so far there has been no need for it so there has been no solution for it either.
~ run a bitcoin full node through Tor and you're good.
would that prevent packet sniffing?