When some people think that governments can't really ban bitcoin because the bitcoin nodes can always exist "underground" and keep mining over VPNs, and the government has no mindreading technology to know which citizens have memorized a 12-word passkey to their wallet, and so on... that's a naive view of the coercion tools the government has at its disposal.

To lower bitcoin's advantages as an inflation hedge, governments can:

- tax heavily the conversions of bitcoin into fiat cash and vice-versa back into bitcoin. E.g. an "oppressive 90% tax" at the exchanges like Coinbase

- declare exchange businesses as illegal. This is analogous outlawing nationwide gambling websites. Yes, the bitcoin network by design still operates without exchanges but the barriers to quick liquidity and fears of cashing out affects its value as inflation protection

- declare property transactions enabled by bitcoin to be null & void. E.g. If you convert 4 bitcoins @ $50k to buy a $200k house, that real estate transaction is illegal and the government uses its power to confiscate the property. Analogous to property seizures because of drug money. The government still wants to trace the origins of money and if it's an illegal activity, the property is forfeited.

- require citizens to declare the bitcoins they own. This is based on the honor system and citizens can try to hide it of course -- but the FBI and IRS can monitor large amounts of fiat cash deposits into bank accounts and if the citizen can't explain where $200k legitimately came from, ("Uh, I sold a car wash business!"), they get fined or go to jail. Of course, the black market will come up with solutions to "legitimize bitcoin cashouts" but again, the barrier to lawful liquidity decreases its inflation hedging value.

- require a government license to use bitcoin. E.g. After your license is approved, you must run extra software to notify to the government the bitcoin addresses and amounts you intend to transact. Yes, the bitcoin network is independent from the government but that doesn't matter because if your self-reported declarations don't match the bitcoin activity, your property can be seized. Analogous to informing the SEC ahead of time of a new issuance of corporate stock.

- ... any creative other ways? The common theme is that citizens still have to interact with the real world and the government has a monopoly on enforcing property rights and putting people in jail in that real world. There doesn't have to be a law that literally has the word "ban" in it. Instead, governments can changes bitcoin's utility and thus its market value.

So to balance all the negativity above, the way bitcoin can avoid government interference is to virally embed itself so thoroughly in society that it makes it politically impossible for the government to pass anti-bitcoin laws. Examples:

+ many influential members congress have significant net worth tied up in bitcoin so they are unwilling to pass laws that hurt themselves. Self-interest and self-preservation can be used against the government.

+ several large institutions (e.g. California Federal pensions, cancer charity endowments, etc) that millions depend on have significant bitcoin holdings.

+ the more influential billionaires that hold bitcoin, the more they pressure congressmembers into leaving bitcoin alone

It's hard to predict how game theory between government and citizens will play out. It seems like it's easier for China & Russia to control its citizens bitcoin rather than the USA.