What governments don’t understand is that bitcoin can never replace the world of fiat currency.

The reason is because you can’t borrow bitcoin denominated in bitcoin.

If people like Jerome Powell and Janey Yellen truest understood that, they would ignore bitcoin as a threat to the USD.

Gedankenexperiment:

Economists don’t understand negative interest rates.

So let’s say #BTC has an interest rate of say -4.0%.

What that means is that if I borrow 100 #BTC from you today, then I will have to pay you back only 96 #BTC next year.

But from my perspective that wouldn’t make sense, I would just hold it for another year and pay you back 92.16 #BTC . Driving that to its logical conclusion I hold for 50 years and only owe you 1BTC

Understanding negative interest is mind boggling for most economists.

Now this is why capital gains tax is unjust. Your capital asset (house, farm, etc) never became worth more, the dollar just weakened. But needless to say the GOV even wants a portion of your weaker dollar.