I was thinking today about Bitcoin as a government currency. Particularly, when it comes to using it as a government currency.
I think, if I was starting a new country, or looking to replace my countries currency… I would use something based on either Bitcoin or Litecoin. I’ll call it GovCoin for the sake of this blog post.
Here’s my 3 biggest reasons:
No Need For A FED -Â
The currency would be self regulated in the same way Bitcoin is. The downside to this is the same downside you have to any currency that can’t be manipulated: you can’t stop panics or bubbles. But I’ll take panics and bubbles any day over having my money easily manipulated by the government.
No Need For The IRS, or Tax Season –
The one change I would make to GovCoin is how the transactions work. I would set it up so that on every transactions, either a fix feed or a percentage was taken out of the transaction. This would basically amount to a sales tax, but done on every transaction, similar to how Visa does discount rates. Every citizen would have their own “pay in” ID that must be included with the transaction that is assigned they are issued a wallet. This would make it possible track how much you’ve paid in easily, either for refund purposes (tax-exempt organizations), or simply for your own reporting. The downside to this is the damage to free trade caused by imposing a transaction tax… but I believe the costs savings of not really needing an IRS could more than make up for it.
The other catch 22… Dealing with other currencies in your country. The only real solution to this problem is to not allow business to be transacted in other currencies… I’m okay with that… There will be international companies that are able to get around taxes by doing things in other currencies… I’m okay with that. As long as they are forced to pay their employees in our country in bitcoin, and all the stores online and off, require govcoin… Â If it’s an international transaction, then there would probably need to be some sort of “flat govcoin tax” for bringing it into the country (like reverse postage).
Mining To Balance the Economy
I would use mining to help keep the classes balanced more than they are now. I would look at possibly making mining exponentially harder, the more you tried to do it as a pool or individual… Thus allowing the automated distribution of wealth (lottery) to be equal among the citizens… Maybe even making it somewhat based on how many transactions (or better, how much) you engaged in (inversely)…. This would somewhat create an automated redistribution of wealth… As the richest people in the country would no longer find it worth while to mine (most likely, as their odds would be hurt by the amount of the transactions they engage in), and the poorest people could mine to possibly collect a ‘minimum wage’. Don’t get me wrong… it’s tricky… and you don’t want everyone simply relying on generating currency (that wouldn’t work)… But it’s a more “practical” way to hand out money to people than say… straight up hand outs or subsisdies…. At least this way, if they simply take the money and go and spend it like mad, they have less a chance of getting more free money… But if it works, you’ve pretty much eliminated the need for government programs that are simply there to hand out money. (You might still need some public education programs like… public education… might… being the keyword).
I’m not sure it would work… but… If I had a couple billion dollars and some land to try it out on… It would be a fun experiment… Wonder if a commune could pull it off legally inside state borders.