>In contrast, those same institutions do not yet know how to cope with the use of Bitcoin for illegal activities.
There was just recently a (Senate?) hearing about regulatory institutions and law enforcement dealing with Bitcoin and cryptocurrency in general. Also, Silk Road used Bitcoins and still managed to get busted (and the bitcoins seized). Whatever other transformational aspects Bitcoin may or may not have, it doesn't appear to be so alien that the government doesn't know at least in principle how to cope with it.
There was just recently a (Senate?) hearing about regulatory institutions and law enforcement dealing with Bitcoin and cryptocurrency in general. Also, Silk Road used Bitcoins and still managed to get busted (and the bitcoins seized). Whatever other transformational aspects Bitcoin may or may not have, it doesn't appear to be so alien that the government doesn't know at least in principle how to cope with it.