They could prevent you from spending the coins, though, by threatening anyone who accepts a transfer of the 'seized' coins.

Enforcing illegal torrents failed. I think a cryptocurrency ban would be similar. Also, the US made it illegal to hold gold between 1933 and 1974 but almost nobody turned in gold to the feds. https://en.m.wikipedia.org/wiki/Executive_Order_6102

They enforce it when you buy something real with the coins. A torrent is the thing you want, it isn't a currency to buy the thing you want.

Both are essentially electronic systems of information on a computing system, a format and a protocol of communication through the internet. In terms of technical difficulty to enforce them it would be very similar.

Does the crypto community actually stop people from spending stolen coins? No, they send off alerts but the coins still get used.

I'm pretty sure that "They" was meant to refer to the Government. The Government could most certainly pass laws (or enforce existing laws) that put people in jail for accepting stolen or "dirty" coins. (Just like the Government could pass a law or re-interpret existing laws to make making owning bitcoins illegal.)

That doesn't stop them from shutting things down. The result is the same: You no longer have it. An offline wallet would help, if you can avoid jail.

So you're basically saying that it works with an offline wallet? Wasn't that the original point?

Offline wallets have limited utility. Once you want to do anything at all with the money it becomes vulnerable.

I feel confident that any major state actor could completely disrupt the bitcoin market. In traditional banking the government wants to maintain the value of its fiat currency. But the government doesn't care one iota about the value of Bitcoin except potentially for its own nefarious purposes.

This is assuming that Bitcoin wasn't invented by a government in the first place. Cryptos have a strong benefit to central authority in that they are simple to track flows of money, it's impossible to play a shell game if you can check the block chain. It becomes very easy to check the full transaction history of someone if you find out their addresses. Here is an NSA paper on cryptocurrency that came out in 1996 https://groups.csail.mit.edu/mac/classes/6.805/articles/mone...