Thats a good thought about the bitcoin and fiat tie up but there are again few more questions that arises. I mean why government will choose bitcoin for this purpose and why they cant just go and rule out the cash itself? So that by declaring that they will be using only digital forms of payments ? They can always do that and same thing is happening in country like India. Where to stop the money laundering they literally changed the currencies throughout the country and declared that use of digital payment will be rewarded. The results were pretty good and I guess its worth to think that government can control it the way they want.
Good idea!
I think the Fiat system is beneficial to the government. She can write these debt papers (wrappers) as much as she wants. Let them into circulation, and cashless way to pick them up. Thus it turns out the cycle of money. Money laundering definitely occurs in non-cash and digital form, there is no doubt about it.