So, what in your view should a bitcoin holder do? Calculate the price of his stashed coins each year and report a gain or loss depending on whether in the last 12 months bitcoin was pumped or dumped?
This would mean that if you own any jewelry you should do the same and report a gain or loss each year based on its value.
Again, it depends on the specific jurisdiction. Generally speaking there is no tax on holding financial assetsBitcoin or not. Consequently you aren't required to continuously report the current value of your assets.
However, there is a tax on capital gains in most jurisdictions, i.e. the difference between cost basis and sale price. So the Bitcoin holder in your example doesn't need to report anything until he actually sells his Bitcoins and realizes any profit.