It's possible that we could sell governments on the idea if we undertook to do so. Though bitcoins are a cash analogue, they are ultimately more trackable due to the existence of the blockchain. If a government were to get ahold of a mapping of addresses to identities, calculating tax owed by an individual from bitcoin activity would be as simple as mining the blockchain for data. If a country moved to using bitcoins exclusively as legal tender, they could feasibly replace most of their tax departments with a computer program.
BitCoin doesn't need to be sold to government entities as a tool in their toolkit, any more than HTML needed to be. It just needs to succeed on its own merits, at which point they can use it for technical applications in the same way that there exist government websites--alongside everyone else. The point is rather that governments had no need to fight HTML. Also, to suggest that tracking identities through bitcoin will be a bonus of the system is to misunderstand the underlying technology. Used carefully, BitCoin is almost exactly like cash. And just like cash, those who report and identify their cash incomes are taxed, while those who do not are not. BitCoin does not change this.However, it does enable more practical applications of this scenario, such as accounting programs which do your taxes automatically through the magic of perfect digital receipting. If I were a particularly forethinking government analyst (yes I mean you reading this thread
) I would be devising a standardised method of digital receipting to be accepted officially for tax purposes alongside the digital cash, saving both companies and individuals an immense amount of the wasted time that goes into the keeping of paper records; not to mention drastically simplifying the job of government revenue agents and auditors. I've been wanting to do my taxes automatically for years, and the lack of a practical digital receipting standard is the primary reason I can't! It would be a big winner at the polls, which means a big promotion for you-know-who. Hint, hint.Keeping BitCoin above politics means not trying to slant it in the other direction either. Bitcoin is what bitcoin is, and it is ingenious. All we have to do is not ruin it through either technical distortion or socio-idealogical hobbling. Bitcoin isn't a philosophy like statism or anarchism, it's a technology like HTML or BitTorrent. Don't mess with the core protocol, don't scare off future enthusiasts, and we're good to go whatever your reason for wanting it to succeed.