in the future, will there really be a need for fiat currency? Government can collect taxes in crypto, determine how to allocate it, and spend it in crypto. Ppl can receive salaries and do all commerce using crypto. Loans can be done in crypto. Fundraising can be in crypto. Sure, problems have to be worked out in terms of scalability, does it have to be completely decentralized, etc, the value has to become more stable. But theoretically, is there any reason to have fiat in the future?
Let's set things straight. It had already been tried and didn't work (with gold as money). Any deflationary currency (gold, bitcoin, whatever) would be massively taxing real economy. People who have a lot of tokens representing money would be profiting from just holding them, that is by doing nothing, from people who actually create goods and services, bringing value to the table. Fiat is not perfect but what it is perfect at is taking from idlers a competitive advantage which they otherwise would have just because they happen to be rich.
It has been established that governments can now do taxation without representation by printing more money (which is a tax on everyone holding the currency), instead of trying to get a bill passed that allows it to increase the tax rate. With crypto this would be no more. All increased taxation would have to pass a vote.
Yes, it can be considered a tax on those who bring nothing to the table. The answer is simple, don't hold the currency.
From an economic standpoint, the idea that a country can stimulate its economy by adjusting interest rates is tenuous. There is just as strong an argument that lowering interest rates has caused speculation and bubbles, with calamitous results. In a crypto market economy, capital will flow from where it is needed less to where it is needed more.
As said above, fiat is far from being perfect which is heavily aggravated by its misuse and abuse. But a deflationary currency as a means of exchange would mean a quick and painful death to the whole economy.
