What will governments look like when the world is on a Bitcoin standard? \ stacker news ~AskSN

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What will governments look like when the world is on a Bitcoin standard?

2190 sats \ 28 comments \ @k00b 9h AskSN

As I mentioned in last week's SNL, I've orange pilled my brother-in-law and now I'm kind of playing shaman, helping him down the rabbit hole as best I can.¹

Today he asked:

If bitcoin became the new world currency, do you think a different form of government would have to emerge given how difficult it would be to force people to pay taxes?

I'll share my answer as a comment, but I'm curious if stackers have thought about it and, if they have, what they imagine governments look like.

The rabbit hole has so many branches upon entry, which I've never had the pleasure of guiding someone down, that I'm finding it more tricky than I expected. Beginner materials are easy to find/provide, but where to go next is different for everyone. I'm hoping by the end I get a better sense of all the branches - progressively deeper tracks of bitcoin learning. ↩

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202 sats \ 11 replies \ @optimism 7h

If bitcoin became the new world currency

I have a counter question for you: what incentive do (major) governments have to adapt Bitcoin as their currency?

Asking because I'm still stuck on that and it's kind of essential, before I can even begin to hypothesize what the scenario would be if all of them would already have adapted.

252 sats \ 6 replies \ @justin_shocknet 7h

The highway is the world economy, global trade, and a security zone on the Bitcoin standard.

The house is a rogue state that isolates itself from all those things, like North Korea but without Chinese bailouts and humanitarian relief.

It's not whether there's an incentive to change, but whether they can tolerate or even survive the consequences of resistance.

0 sats \ 5 replies \ @optimism 7h

Okay so you need one to be the first, and then the rest will hop on?

153 sats \ 4 replies \ @justin_shocknet 6h

Still the wrong framing, it's not really voluntary anymore than breathing is.

Fiat does not live forever, never has because it can't by its own nature, it's a game of attrition.

It's more like once one domino falls it takes down the rest.

Keep in mind, the US national security apparatus created Bitcoin because they're well aware the dollar has an expiration date. The US has already adopted it, dollar stablecoins that bypass the SWIFT apparatus to drink other currencies milkshake are the equivalent to it hitting the second domino.

0 sats \ 3 replies \ @028559d218 3h

Keep in mind, the US national security apparatus created Bitcoin because they're well aware the dollar has an expiration date

Don't take this the wrong way... But why the **** do you think the national security state created Bitcoin???

The government hates the idea of Bitcoin being a global MoE. They want dollars to be the global standard forever it's what they say every day.

If Bitcoin became the standard (which would take a really long time) interest rates on bonds would skyrocket, debt servicing goes through the roof, and the debt (36 trillion) becomes that much more difficult to repay.

The US has already adopted it, dollar stablecoins that bypass the SWIFT apparatus to drink other currencies milkshake

Doesn't the Trump administration want to devalue the dollar??

0 sats \ 2 replies \ @justin_shocknet 2h

why the **** do you think the national security state created Bitcoin???

I already explained, the dollar is baggage, not an asset. If we know fiat has an expiration date, [they] knew it long before us.... they're probably reading this now having a laugh. No one alive today implemented the fiat order, operators however are standing by.

Also, the purpose of a thing is what it does, and what Bitcoin does is give the US an off-ramp from the Triffin Dilemma and the inevitable calamity that would result from the debt-based monetary ponzi spiral.

Lastly, since the dumbest people in Bitcoin worship at statues of some anonymous lone-wolf protagonist in a fairytale, in an era of absolute signals intelligence that assures such a thing is impossible, and following decades where the NSA papers and Washington think tanks discussed cryptocurrency scenarios, i'm inclined to take the opposing view.

The government hates the idea of Bitcoin being a global MoE.

Don't take this the wrong way... but that's ducking regarded for a few reasons...

There is no government monolith, there is a battlefield where various factions fight for leverage over institutions. Globalist banks are an insurgency to nationalists, thus COIN is COunter INsurgency.

want dollars to be the global standard

Among fiats, which it is and will be, stablecoins are part of it. All fiats collapse to the dollar as stables drink their milkshake, until its only Bitcoin and the dollar. Global trade in dollars is the worst thing that's ever happened to the US, because it gets exploited through foreign fiats.
Satoshi coins are NSA coins, they have at least 20% of the supply off-book.
Bitcoin's ledger is more surveilable for state-scale transfers than legacy finance with corrupt and opaque internal bank ledgers and shell companies all over the globe.

interest rates on bonds would skyrocket, debt servicing goes through the roof

Bitcoin exists to soak up the liquidity when that is debt monetized through stables, see Tether, one of the largest buyers of treasuries keeping yield out of the market by storing it in Bitcoin. Bitcoin is already being used to disperse the inflationary effects on real world prices, such that it doesn't directly go into the stock and housing markets thereby destroying price signals and collapsing the currency.

Doesn't the Trump administration want to devalue the dollar??

Bessent literally says "Strong dollar policy"
Even if so transiently for trade-deficit purposes, that's still only compared to other fiats... the dollar is and will remain the least bad fiat, and quite likely, the final fiat.

0 sats \ 1 reply \ @028559d218 1h

You are crazy

Whatever you are smoking I want some no offence

10 sats \ 0 replies \ @justin_shocknet 1h

reply on another page

100 sats \ 1 reply \ @k00b OP 7h

I'd guess ... They have no such incentive until a dominant world power does. And no pre-bitcoin dominant world power would adapt to bitcoin so it would have to be a world power that emerges after, perhaps only as a result of, adapting to bitcoin. At that point it's the will of the leader and if we are mostly self-custodying bitcoin, and bitcoin does all it needs to while maintaining self-custody, I think that's pretty stable.

50 sats \ 0 replies \ @028559d218 3h

I think it's individuals, investors, and to an extent companies and businesses that will force this change. Not governments necessarily.

0 sats \ 0 replies \ @fourrules 5h

The incentive is that the cost of their debt increases if they don't have sovereign assets. As they sell off their capital infrastructure and their tax base diminishes because they are squeezing the economy to pay debt interest payments people will move out of real estate and equities into assets that they can't tax, resulting in a large subset of the population playing kingmaker in elections, like the greens in Europe, or the ultra orthodox in Israel, who then push for a favourable environment for bitcoin. Other countries will have kingmakers from the dispossessed, whose assets and job security and social status are plummeting, but who resent Bitcoiners as "hoarders", and from those countries Bitcoiners (and the wealthy in general) will flee, taking their capital to favourable environments (Switzerland, Norway, Portugal, any country that offers them tax sanctuary and freedom of movement).

0 sats \ 0 replies \ @CruncherDefi 7h

what incentive do (major) governments have to adapt Bitcoin as their currency

Related question would be "What incentive do (major) governments have to obey the democratic decisions?".

Assuming that most individuals chose bitcoin, the answer to both is "Because that's what individuals want, and if you go against their choice, you are out."

100 sats \ 0 replies \ @didiplaywell 5h

There will be no government in the future. Justice will be served by private insurance companies, which will also conform together, per jurisdiction, defense forces. The map will be redefined as per its local and national constitutions reversioned in the shape of a "standard" which will allow said forces to operate coherently at the jurisdictional scale where said standard applies and then enforce law. Thus the figure of jurisdiction will remain, as conglomerates of property protected by groups of private contractors wich together will conform the unified defense of said conglomerates, as a mamushka of citadels. What will be left from today's scheme is a democratic system for a conglomerate to arrive to a consensus of what the standard will be at the scale consensus is achieved, thus defining the jurisdictions.

260 sats \ 0 replies \ @justin_shocknet 7h

Will definitely force the government to be less wasteful if they can't just print to fund bullshit, which has a secondary effect of the economy itself getting more efficient as it doesn't compete with a large government and monopoly money buying up talent, wares, and regulation enforcement.

Income and sales taxes probably get pretty hard to enforce too, inducing yet more efficiency at the government level, and liberating the larger economy further.

That leaves it funding itself through property taxes, service fees, customs duties... things where it actually has to do stuff in the physical realm, that aligns the incentives pretty well.

Government shrinks, gets incentive aligned
More efficient domestic economy

Now, international trade is I think the most under-discussed thing.

So much of what the US government does is due to it's bondage of the dollar being the world reserve currency. Trade is shaped by fiat exchange rates propping up governments... and security zones that reflect those monetary zones. That's all geopolitics is at this stage, maintaining (or exploiting) the fiat order governments run on.

We could for the first time in history have actually free world trade because Bitcoin creates a single monetary zone.

During gold's era, transportation wasn't comparable to today both for the money itself and products traded with it. It's never been free by comparison to what's possible on a Bitcoin standard. That alone is enough to change governments all over the world for the better.

21 sats \ 0 replies \ @zodthebarbarian 4h

Hard to believe bc bitcoin is so amzing no sarcasm but...I feel like things will still be the same somehow. You know that old line, nothing ever changes.

100 sats \ 1 reply \ @Scoresby 7h

Does "when the world is on a Bitcoin standard" mean widespread individual key-holding or does it mean something like "Bitcoin is the asset backing banks and other currencies" (kind of like the gold standard?

In the first case, it seems like it would be revolutionary, but I don't think it would be difficult to get people to pay taxes. The state can still use violence against you if you don't follow the rules. The main advantage I see would be how difficult it would make it for governments to impose an inflation tax -- and hopefully that would lead to more fiscal responsibility.

If it ends up being more like the gold standard, I suppose we would have a continuation of the current world, with more vicious downturns when the happen because governments might call each other's bluff on whether they really hold the bitcoin they claim to hold.

102 sats \ 0 replies \ @k00b OP 7h

I was thinking more about the former, as that's the kind of optimism I had early on and still hold out for.

50 sats \ 0 replies \ @supratic 8h

self organized smaller communities

200 sats \ 4 replies \ @0xbitcoiner 8h

The government ain't got no place in the Bitcoin standard. The minute they catch a whiff of losing their money power, they'll just straight up ban the whole thing.

0 sats \ 3 replies \ @k00b OP 8h

We're talking about after that phase. What's next? No governments anywhere? 8 billion homesteads and citadels?

0 sats \ 2 replies \ @0xbitcoiner 8h

I can't even imagine a world without a government. They're way too powerful and people to dumb to just let themselves disappear. We can talk about some utopian world, but that's a whole other level, we'd be talking pure fantasy.

33 sats \ 1 reply \ @k00b OP 8h

I'm not saying the world is a utopia, but if bitcoin survives its fight with governments, what's next? It's not an easy question to answer. That's why it's fun.

50 sats \ 0 replies \ @0xbitcoiner 8h

If Bitcoin actually beats the government, which I think is pretty much impossible, thoug, my guess is they'll just stick to being regulators, which is what they should've been doing anyway.

119 sats \ 0 replies \ @k00b OP 8h

I'm omitting his replies. My responses still make sense I think.

What would make it more difficult? The fact that banks can report on your spending if the government asks? That problem exists with cash too and maybe we'd see more under-the-table stuff with bitcoin, but I'd guess most people/businesses would still pay taxes. If taxes are still levied with the threat of imprisonment, most people will comply.

If there's a lot more under-the-table bitcoin stuff than there is with cash despite the threat of prison, governments will be forced to make their taxes more fair and appealing to pay or harder to evade. IMO we likely end up with a simpler tax system that's harder to evade like a sales-tax-only tax system or a property-tax-only tax system rather than our current tax-everything-everywhere system.

It gets a lot more complicated though when you consider that inflation is a hidden tax that will no longer exist. It's what allows us to have nearly 40 trillion dollars of federal debt and keep heaping on more. It's what allows us to finance forever wars and bail out banks that made bad bets. The world will have to change a lot. I think it'll be a change for the better - no hidden taxes, governments that have to operate without stealing from us all by printing money, governments that have to justify how they're spending their money.

In general, I think governments would stay the same for the most part - they'd just be way more accountable. IMO governments exist as the result of the network effects of violence; that is, the capacity for violence tends to concentrate and people want to pay to belong to the group with the largest capacity for violence, the group that it's safest to belong to.

I think a lot more government services will be more pay-as-you-go and pay-for-what-you-get in such a future. I suspect federal governments will mostly exist as a minarchy - nation defense and as a constitutional backstop, then a plurality of state and municipal government types, competing for citizens and sats.

Personally, I'm so infatuated with bitcoin in this way, bitcoin and related technologies as machines of change, that I have little interest in political hypotheticals anymore. You don't have debate change. You can just build something that incentivizes it.

Yep, technology is about making machines for change. Sometimes the change is relatively frivolous, but sometimes they change just about everything.

Electricity, computers, the internet, cryptography, bitcoin.

100 sats \ 1 reply \ @Undisciplined 26m

The forms of revenue they extract will likely change, but that's always happening as technology changes what's easiest to milk. There will still be physical stuff in physical places, so jackboots can always go around extorting people.

I would expect we'll see less taxation on financial transactions and more fees for doing stuff or just for existing. Fun fact: according to conventional econ models, the least distortionary tax is just a simple "head tax" where everyone pays the same amount.

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