The only three events that could send bitcoin to $0 are, in my opinion, if people stop using it and decide that it's worthless, the encryption scheme or peer to peer network are some how compromised, or all nations simultaneously outlaw it. However the last one would only serve to send it near zero.
Consider if all governments outlaw it simultaneously. The market participants currently consist of free market type enthusiasts & hobbyists, rich celebrity speculators, drug dealers and cyber criminals. I think it is a fair assumption that most of the active traders are currently from the hobbyist & enthusiast category. Additionally when you consider that places like Silicon Valley and other hubs around the world have a large proportion tech savvy workers who make a lot more than subsistence wages, it's not too hard to see how some sort of speculative market could continue to lumber along without much reason for existence. Look at sports betting and horse racing.
If the government were to come out and drop the hammer, however, I think most of these people (myself included) would vanish. The volume would dry up and the only people left in the market would be criminals and people with a hard requirement for virtually untraceable digital currency, prison be damned. My opinion is that these people would continue to remain using it as a means of commerce and store of value provided that the underlying cryptography & p2p network remain sound and un-compromised. There are currently millions of bitcoin in existence so a price of near zero would probably satisfy the black market. How does $3 sound as a reasonable number that readers can use against me in the probable event that I turn out to be wrong 5 years from now?
Of course this all relies on the underlying cryptography and associated peer to peer network remaining sound and trustworthy. If a party is able to compromise the underlying encryption or execute a double spend by attacking the network then trust in bitcoin as a finite commodity would be irrevocably destroyed. No one would ever use it, thus a $0 price.
The utility of bitcoin is just too hard to ignore from a commerce perspective. It's taking away authority and power from banks to act as gate keepers to their countries finical & economic system and putting it in the hands of the people who engage in commerce themselves. I don't believe banks will cease to exist as some of bitcoin's most ardent supports hope it will, but the transaction costs for international business could drop substantially. Barring bad news on the legislative or technology front the only thing stopping bitcoin from gaining greater adoption is that too many people are psychologically fixated on an individual bitcoin. Bitcoin is sub divisible up to 8 decimal places, the vast majority of people who have heard about bitcoin that I have talked to do not realize this. Since the total number of bitcoins is fixed at 21 million this yields a total number of theoretical units of currency of 210 trillion. That's a pretty formidable island on which to create a base of trade on.
