Appreciate the thoughtful article.

One thought I would offer...

You don't expect the welfare state to go away because you say people want it to exist. If I analyze that, I think it's important to specify what people actually want.

They want the benefits of the welfare state for themselves, without the costs. You say voters support Social Security. What would happen if you proposed a change to Social Security where each person is required to pay into the fund, their payments are kept segregated from everyone else and earn the savings account interest rate, and at retirement they are allowed to withdraw the money they paid in minus an administrative fee, and once their account is empty that's it. Would that get the overwhelming support Social Security has?

I doubt it. The reason Social Security is so popular is that most people perceive they'll get benefits, and the cost is hidden. They think they're getting more than they're giving. I think that applies to the welfare state in general; people perceive it to be "something for nothing."

This is relevant. Have you ever heard someone who supports Social Security say "I always make sure to pay taxes on all the miscellaneous cash payments I receive, plus throw in a few grand extra every year. I support Social Security so I want to do my part to make sure it stays solvent." Of course not. Almost no one contributes to o the welfare state voluntarily.

That's by definition. If someone wants to contribute voluntarily to a system that they don't benefit from disproportionately, they donate to charity. The difference between charity and a welfare system is that the welfare system is coercive. If it weren't coercive, it wouldn't exist. Its role would be filled by a charity.

The current welfare state benefits by being deceptively coercive: the cost is mostly hidden in inflationary monetary expansion, so most people feel like they're benefitting from the system.

Bitcoin can undermine welfare systems by making it extremely difficult to the point of being uneconomical to coerce people. No one is going to willingly agree to have their wealth redistributed away. They might support the current welfare state as a concept, but that doesn't mean they won't hold their savings in Bitcoin as NGU and resist any effort by governments to take that value.