I believe that’s why Bitcoin should never substitute the existing financial system, too many things can go wrong and there are benefits to the centralized control, e.g., as you said, acting in emergency situations, or fighting the crisis.
Bitcoin shouldn’t be a full substitution, because it could never fulfill some of the fiat functions, but rather it should be a perfect complement to it. Then people will have more freedom, but, in the general matter and in extreme situations the government would be able to act on its own.
Agreed that it makes more sense for Bitcoin to complement fiat rather than substitute it, because fiat system has a last-resort mechanism (money-printing) for catastrophic situations and a Bitcoin standard doesn't. Having the option for a last-resort system is better than not having the option because it can act like insurance when needed (even though it can also lead to some mis-allocation and benefits some at the expense of others).
So if we think that there are merits to a fiat system and it makes sense for fiat system to sit alongside Bitcoin, then the next question is does it make sense for governments to hold Bitcoin as reserves? Are there sufficient advantages to holding Bitcoin that make it better than gold from the government's perspective? Personally I don't think so. A few reasons:
- Government gold reserves are just sitting there. There's no need to transport or transfer much. So Bitcoin's advantage of being easy to transfer/transport is irrelevant.
- Government holding a single private key which gives access to their entire reserves is a bit laughable.
Keen to hear any opposing perspectives though.