What will happen to governments in a hyperbitcoinized world? Recently, I’ve been thinking about this question and wanted to see what would happen to government on the Bitcoin standard. How will governments finance themselves? Your taxes work How will the government respond to the dilemma of a digital world?
How do governments plan to fund themselves?
Hardcore Bitcoiners may not care what happens with the government if Bitcoin becomes standard. It is possible that most Bitcoiners would like to see governments collapse and burn. Although I understand that viewpoint, I’m also a pragmatist. They want the government because, as they’ve been taught, it provides order and protection for its citizens. Although I am inclined to think the opposite, this does not represent a majority opinion.
Since thousands of years, governments of all sizes and shapes have been around. They will probably still exist when hyperbitcoinization occurs. How will governments finance themselves now that the ability to make money at whim is gone?
Western governments tax income primarily as their major revenue source. source They can generate revenue by monitoring most transactions via payment rails that are controlled and monitored by banks and the Federal Reserve. They have been able to do this for many years, but it will not be possible with the Bitcoin standard.
Bitcoin is a very difficult currency to track, and it takes a lot of time. This is especially true when using privacy tools like lightning and coinjoins. Bitcoin is a powerful tool that takes power from governments.
In the absence of the right to tax anyone at will, governments are forced to create new revenue streams to support themselves. We’ll get to that in a moment.
The Bitcoin Economy Of The Future
Imagine an era where people buy and sell goods directly between each other using Bitcoin. By default, this would result in a free-of-tax economy. There is currently no code within the Bitcoin protocol to calculate the sales tax on goods purchased. No Bitcoiner will even think about creating such a line unless they don’t want their reputation tarnished as a government simp.
To be honest, I have no idea if this is possible. Taxes are not something that people enjoy and they would be happy to stop paying them. The governments of the world are faced with a new dilemma. How can they survive if they are unable to tax their income, and likewise they are unable to tax consumption effectively?
No simple solution exists. Our whole idea of government and its relationship with the people it serves will need to be radically shifted from a top down concept to one that is more decentralized. The libertarian view of government is that it should be funded by the citizens, not forced.
This model will require governments to shrink much more than they do today, as they must be aware of their revenues and expenditures, like any other business. Citizens will reward government with their continued support if they are fiscally responsible in managing the Bitcoin Treasury. The power of this form of communication is greater than that of voting. Withholding funding makes politicians more responsive.
This would not change the fact that elections could be conducted. Politicians would need to demonstrate that they’re good capital managers, otherwise the government would not get funded voluntarily and naturally fall from office. next election. We should all strive to create this world, which will be safer for everyone.
What will be the response of governments to this emerging challenge?
Although this may sound great to us, the politicians are not fond of the concept of Bitcoin. They also do not like the notion that they have to listen to their citizens. Right now, politicians have a pretty comfortable life. They get to tell people what to do, get good benefits, and get reelected even if they break their promises—no wonder they never want to leave office.
The incumbents are reelected at a rate of about 90 percent in America. Did you know in the House of Representatives, the reelection of incumbents has never dipped below 85 percent? Only 15 percent of voters will vote you out. next election. This is a great way to get people involved in the election. It’s because of this that nothing ever changes. The same people are in power year after year, because they have learned how to manipulate the system and lubricate the palms of the politicians.
Check out this website to find out all of the BS that the government is spending on its depreciating fiat currency. Citizens Against Government Waste website. It will help you to understand what is happening with your money.
Do you really think that they would give all of this influence, power and prestige up willingly? No, I do not think so. It’s unlikely. They are going to use various methods either to gain control of Bitcoin, or simply make it too cumbersome for people.
Bitcoiners may have fallen prey to one of the traps they set with Bitcoin ETF. It is my sincere belief that this move was wrong and could significantly slow down Bitcoin’s adoption in the US. It’s a shame to admit, but people are looking for quick solutions in everything, including Bitcoin.
Ask yourself this: why would someone with little Bitcoin knowledge learn about the basics of self-custody and what is its importance? “own” Bitcoins in retirement accounts? Nine out of ten people will choose this. They will happily allow Blackrock to hold their Bitcoin as long as their retirement portfolio increases.
Bitcoin offers us the chance to change the world. Hope people seize the chance to gain real freedom.
Robert Hall has written a guest blog. The opinions expressed by the authors are their own. own The views expressed herein do not necessarily represent those of BTC Inc. or Bitcoin Magazine.
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Source: bitcoinmagazine.com