Bitcoin discharges the trilemma tax

Uneasy Money: In a couple of tweets to me and J. P. Koning, William Luther pointed out, I think correctly, that the validity of the backward-induction argument in my previous post explaining why bitcoins, or any fiat currency not made acceptable for discharging tax obligations, cannot retain a positive value requires that there be a terminal date after which bitcoins or fiat currency will no longer be accepted in exchange be known with certainty.

The idea is that China will give up the  currency FX management and bitcoin is no longer needed. But we will always have governments attempt capital controls, sufficient to maintain a bitcoin value.  There will always be retail discounts points also. The idea that central banks determine one kind of coin only, no longer true. But, there will be one pure cash technology, one sandpit  just like there is one  internet.

The case of central banking is typical

The  central banks have a hedging ability,it ability to prohibit its own competition, or its ability to enforce ATM fees.  Bitcoin removes that ability.   The central banks and bitcoin together are, in total, less hedgable then either by itself; hence    he aggregate always having the more accurate 'balance sheet'.

Value of a coin, or redeemability, is determined if the coin computes the precision of probability of arrival. A probability distribution can only be determined in aggregate through network effects, A simple translation of the S&Ln yield curve should result in the probability distribution of arrivals, by price.

There is something called base transaction costs, for example, the price of driving around stacks of paper cash. When that costs is driven to zero, theoretically, in the model, then financial math is greatly simplified.  But, in fact, the technology is driving that cost to zero, the average person will be able to invest in amber, paying no more than the cost of watching adds while he checks on his bots. So, in reality, the world will be composed of 'coins' whenever their introduction significantly increases the accuracy of the distribution.

It is an encapsulation that results because the technology supports the sandbox model. A particular type of cash becomes an accounting instrument, but true cash technology, the card, is still mostly determined by the deployment of Fedcoin, which will have dominance. All the old rules apply, we just get about ten times more accurate in probability of arrivals.