First, thank you for your service. I'm an Army vet as well who got out not too long ago now.

You have the concept of a block chain being a distributed ledger correct. Each block stores transactions. Using a tool like https://etherscan.io or similar is a picture worth a few thousand words.

As far as privacy, most block chains are pseudo anonymous, some are a bit better on this front than others (Dash, Monero, and ZCash come to mind). I say this because, well all of the information is public and unless a user takes a few precautions, it is possible to associate a public key with an individual and get a fair idea of who they have had transactions with. It takes some research but government is great at "encouraging" companies and organizations to collect this type of data.

As far as double spending or replay attacks, methods may very slightly per crypto. This usually involves timing (block time) as well as the transaction to be confirmed by several nodes before it is finalized.

On to the US government and speculation. Currently our currency is based on I owe you're (debt) and is printed / managed by a private for profit bank (The Federal Reserve). It wouldn't take an intelligent person more than five minutes to design a better system that didn't engineer loss to a percentage of users but it is the FIAT system we have.

Congress has little incentive to change this. They have a few members on the Federal reserve board. They basically can ask the Fed for funds, create bonds and the Fed creates money out of things air deflating the value of our currency. As a matter of fact, the government tries to depreciate the value of the USD annually so the deficit seems more manageable. I will leave this here, fractional reserve banking is a Ponzi scheme and sums up the rest.

The primary thing all governments do is try to stay in power. The best way to control people is occupying their time and leveraging their finances against them (sounds like an article 15 to me).

I do not believe there is an effective manner to regulate cryptocurrency out of existence. The ginnie is out of the bottle and too many have tasted freedom, not to mention the lobbyist funding crusty old Fiat pumping tarts are starting to play with crypto now and they would be upset if their new toys were taken away.

Great post, hope this information helps, I would apply your own BS filter as parts are certainly my opinion. I am not an expert yet but as and old IT professional/programmer, I am catching up quick.