If you want a system that taxes unrealized capital gains, it is possible to defer the actual collection until the time of sale, but backdate the tax as though y

If you want a system that taxes unrealized capital gains, it is possible to defer the actual collection until the time of sale, but backdate the tax as though you bought and sold the asset each year under interpolated appreciation causing a taxable event. After each taxable event, the government would an increasing slice of the appreciating asset, which would itself compound. This essentially removes the incentive to buy and hold for tax purposes. It also means there's never any tax owing for paper gains.