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The Fiat currency is the largest instrument of governments. Well, that and the banking network and the large companies owned by Rupert Murdoch and Chang Ma.
You can not upset any of the big sharks if you want their economic resources and support for the next election campaign, as well as economic things like employment and investment.
The control of the government depends largely on the strength of the banking system and its operativeness in fiat currency. After all, fiscal policy is at the root of the economic tension and the driving force of the country to address issues such as ideological warfare, the provision of health services and job creation. Substantially everything from welfare benefits to economic activity to the gritty actions that every individual takes every day, as the purchase of bread or bagels depends on it.
Governments do not hate Bitcoin, Fiat is just a support system for oxygen.
Governments control entire nations, theirs and those associated with their control over the legal currency. They use central banks to issue or destroy money from nothing, using what is known as monetary policy to exert economic influence.
They also say how to transfer fiat coins, for example poor countries could have very poor banking infrastructure to keep money concentrated in the hands of fedegists or greedy politicians who are not successful. Poor banking systems mean that people can not enjoy globalization as much as possible.
Government control over money allows them to monitor currency movements, determine who profits from that movement, levies taxes on it, and tracks criminal activities. This is also possible with crypto currencies, bitcoin tracking is perhaps easier because it is super non-anonymous.
There are entire organizations dedicated to this fiat currency monitoring, whole systems are in place to monitor it. These organizations are also the same as those currently responsible for encryption and have to learn many new and technological things that they do not like.
All this control is lost when non-governmental bodies create their own currencies.
Lost control means losing control over so much. If I am paying my bills with bitcoins and buying the pot with the coin of the pot, then there is really an ego problem that hangs in the head of the government. The loss of control really means that the government will need to trust people, be less paternalistic and intervene much less. This also means that large companies will slowly lose their relevance, since more and more ways to make money with the blockchain emerge, as it offers a decentralized solution that people have to push for.
Governments also worry about allowing less access to innovation and development. This is threatening the same revenue that spills large companies that have no competition.
Governments increase or intentionally restrict the amount of money circulating in an economy in an attempt to stimulate investment and spending, create jobs or avoid inflation and recession out of control, as part of fiscal policy the whole deal becomes a whole huge group! This is even more problematic as governments rarely understand what they are capable of doing in full complexity, they only understand that it is possible to buy pizzas with bitcoins. Perhaps they know more, but they are hysterical and lost in thick clouds of confusion.
