This is an interesting perspective, and I agree that Bitcoin has unique properties that could force a paradigm shift in government finance. However, I see a few key challenges with this approach:
1. Doesn’t Bitcoin Monetization Strengthen the State?
While a strategic Bitcoin reserve could help the U.S. government manage its debt more effectively, wouldn’t this just extend its ability to function as it does today? If the goal is to shrink the government, giving it a powerful asset like Bitcoin could delay the necessary reckoning that forces structural change.
2. Inflation and Control
Governments rely on inflation as an implicit tax to maintain power. If Bitcoin were to replace U.S. debt issuance as a funding mechanism, wouldn’t the government just find new ways to extract wealth, such as taxation or capital controls on Bitcoin itself?
3. Would Governments Really Stop Expanding?
Historically, governments don’t voluntarily shrink; they either collapse under their own weight or are forced to change due to external constraints. Bitcoin could be that external force, but its adoption by the state might just lead to a ‘Bitcoin Standard’ where the government still controls the rails.
I think the real path to a smaller government lies in individuals and businesses opting out of the legacy system entirely—using Bitcoin in a way that makes the state’s debt-driven expansion unsustainable. What’s your take on that?