$BTC #BTC
Over-collateralized, Bitcoin-backed stablecoins will be an integral part of Hyper bitCoining.
BITCOIN, DEFICITS AND TAXATION
Bitcoin as a hedge against monetary debasement is only half the battle. As sovereign debt goes parabolic, rate hikes become unviable without breaking the economy. Instead, it seems probable that governments will use taxation to quell inflation and reduce deficits. When governments collect taxes, they remove money from the economy and reduce the purchasing power of individuals and businesses. This reduces demand for goods and services, which in turn helps to control inflation and deficits without the economic blunt-force trauma of rate hikes during a debt crisis.
To hedge against these risks, Bitcoin must not only protect against the hidden tax of monetary debasement but also against literal tax. The problem is that the world is not yet ready for a pure bitcoin standard without dollars. Dollars still provide a service, even for the most ardent Bitcoiner. Dollars are the most widely-accepted and most stable (despite inflation risk) currency unit. As such, governments could use the existing demand for dollar access as chokepoints for taxation or even bail-ins. As an example, we could see higher capital gains taxes levied on bitcoin sales, a sales tax on any bitcoin spent in the “real economy” or a bail-in where dollars held in bank accounts receive a haircut to socialize debt burdens.