This recent price increase will possibly be viewed as a dead cat bounce.
The next phase would be for people to buy bitcoins through USAA directly.
Banks are notorious for being "monkey see, monkey do". How quickly did Mobile Checking Deposits take off when banks starting putting these into their mobile apps? Coincidentally, it was USAA who helped develop the technology which allowed mobile deposits in the first place. Once a few banks begin to incorporate bitcoin, the rest will follow.
It is literally impossible to have a functioning decentralized blockchain without a proper reward/currency built on it to incentivize miners to mine on it.
Again, what gives value to things is that people want them, no matter what the reason.
In the case of bitcoins, people want them not to pay taxes, but because cryptocurrencies offer benefits that only them can provide, so people see value in that.
The US government income (federal, state and local taxes) was $1 trillion in 1988 [1]. I picked this year because it is hard to find up-to-date data for the next number: the amount of dollar transactions was estimated at $1.7 trillion per day in 1988 [2]; this is $620 trillion per year. So taxes represented only 0.16% of all dollar transactions. At most you can argue that 0.16% of the value of the dollar comes from its use to pay taxes, but the bulk of its value comes from the economy using 99.84% of it.
Still not convinced? Here is a thought experiment. What if for every dollar owed in taxes, the government asked to be paid instead 1 grain of rice? Would it suddenly make the dollar worthless? No! People would continue using it because many other people already use it to transact trillion of dollars every year. They know it is a liquid asset that can be exchanged for anything, and this is what gives it value.
[1] https://books.google.com/books?id=POjfDvabbpwC&pg=PA1&lpg=PA...
[2] https://books.google.com/books?id=F8DSBwAAQBAJ&pg=PA144&lpg=...
My comparison is very relevant. It means if taxes did not have to be paid in dollars, then with all else being equal there would be 0.16% fewer dollar transactions. Not a big change.
You talk about marginal tax rate, but I think you meant tax rate. (Marginal tax rate has nothing to do with our discussion). If tax rates where doubled, then taxes would account for not 0.16% but 0.32% of dollar transactions in my 1988 example. Again, not a big change. And yes in practice marginal demand of the dollar would skew this percentage somewhat, but it would still be insignificant.
You did not answer if you were convinced by my thought experiment, are you?
About your thought experiment: what you describe has actually happened many times in history, and many of these currencies had a floating exchange rate and could not be used to pay taxes, see https://en.wikipedia.org/wiki/Private_currency Turns out they had value, like Bitcoin.
I feel like it has been ages since the two of us have talked bitcoin. Hopefully you've made some cash in the recent run up. Funnily enough we're both in NZ at the moment though I'm just here in Auckland for the week before heading back to Sydney so no overlap. I'd love to revisit some of our topics from last year though to see which ones each of us were right about. I have a feeling though it's a pretty even split.
Enjoy your travels. My wife and I did our own at northandsouthnomads.com and give me a shout on my email in my profile. I did always enjoy our debates.
Bitcoin was always just an experiment to work out the kinks and get people to accept the notion of crypto-currencies. It has no long-term viability as an exchange medium, since it will be quickly superseded by institutional competitors which can provide the stability that businesses need to operate.
Bitcoin doesn't have to "replace fiat currency" to be extremely successful. The transaction float of Visa and SWIFT (both of which are vastly inferior to Bitcoin) is enough to support a higher valuation than this 'bubble'.