Oddbean

Unless there is circullar economy developed state have full controll over bitcoin. I am saying this as someone who loves bitcoin and hope we’ll get to the point when it is unstoppable. Right now it is not the case.

That merchant needs to pay his bills so he needs to convert to fiat. State can block that. Having said that i dont think it is likelly in western democracies but what might happen that every coin will need to be kyced. Which i consider to be full controll.

Proxy merchants specialize in solving these problems. They are operating even now. Some of them exploit jurisdictional arbitrage (Bitrefill), some operate in illegality, but it always works. One has something valuable (bitcoin) and wants to trade, there's a provider making sure this transaction happens for a fee (proxy merchants). How exactly they achieve depends on the exact conditions and environment. But it works... Also, there are many people willing to buy bitcoin, so proxy merchants provide also the other side.

It works because states dont care. Once (if) they do there wont be proxy merchants anymore. I think circular econ is actually not that difficult to achieve. Only fiat money you need is for taxes. I think if you charge customers in bitcoin+fiat it might be a good start. Having that functionality in wallet would be awesome.

Again - states have cared about the drug business for more than 40 years, yet everyone who wants to get some does. Even in states where enforcement is strict and effective, it still works. Go to Orchard Towers in Singapore, prostitution supplemented by cocaine. Yes, they have death penalty for cocaine in Singapore. The mistake here is to believe that this is not a solved problem. State can try to enforce something, but that creates counter pressure, because going around that limitation is a valuable service, so you'll have providers who specialize and compete on figuring out the way around. Also, I would leave a hellish dystopia well before they could even try this, but that's another topic. It's impossible to ban bitcoin, it can be only more or less costly to transact with it.