Exactly the right questions I keep on asking as well. So far, the only satisfactory answer I receive and give myself is this, let's call it the nostr:npub1s05p3ha7en49dv8429tkk07nnfa9pcwczkf5x5qrdraqshxdje9sq6eyhe scenario:

That the world is bound to 'hyperbitcoinize' one day, if we the people keep pushing and use it as money in our communities. And that this deflationary model reflecting a truly free market will eventually become so successful that it's like comparing West and East Berlin in the 1980s, and the East/Fiat will dissolve naturally. Within the new free & conscious communities, the transaction history of your BTC won't be used to control the flow of money. Utopia, aye?! Because something will need to break or render useless the use of violence by the state. What will it be? A wave of awakening? That's what I work for.

What if everybody is just fully transparent with their KYCed stale asset BTC in a fiat world? Likely that they will be slowly taxed away from most people eventually. If you spin the status quo forward in a linear way, I think we'd end up where you described.

But there'll always be unforeseeable change along the way. We make that change.