Most people don't make a lucid difference between the separation of money and state and the destruction of the state. The separation doesn't mean the disappearance of the state, but it's functional limitation.
Discussion
True. The state could use bitcoin as money too instead of fiat and it would not mean that the state falls. The state couldn’t tax people through inflation anymore, but can still coerce them to pay income tax etc.
What if BTC is captured?
It will in big parts for a long time. On- and off ramps, regulations for business payments, chain surveillance…there is a non KYC P2P market now and it will grow. I don’t believe that it will be fully captured. At least I’m trying to help further the grassroots adoption.
I'm afraid that will remain an uphill challenge as increasing accumulation will diminish the volume of bottom up liquidity.