If you back fiat with Bitcoin and Bitcoin is permissionless, why would you ever hold the fiat. Why wouldn't you just hold the thing backing it. Backing fiat with Bitcoin says the quiet part out loud.
Discussion
A transition to Bitcoin only won't happen right away. Do you still use fiat? 99.99% of the world does. It's not far fetched to see a transitional period will take place where governments will try to save their currency by backing it with Bitcoin.
How is that even possible when the government doesnβt even know how much USD is out there? π
Etirium π€ USD
They'd back a percentage of new Treasury bonds issued per year.
Thatβs not backing, thatβs borrowing money to buy #bitcoin. No matter how much interest the government pays, it will never be more than holding bitcoin in self custody. #NGMI π
If you believe that's the case then that's absolute game theory right there. Some country will do it at some point.
The problem is they canβt. In order to back fiat with something, they have to own that something free and clear. So they have to confiscate everyoneβs #bitcoin first to even think about using it to back fiat. Good luck with that π
