I think you got the argument right. I personally don't find it very convincing, because of two things: 1. If Bitcoin ever became significantly widespread, peop

I think you got the argument right. I personally don't find it very convincing, because of two things: 1. If Bitcoin ever became significantly widespread, people will start making debt contracts denominated in Bitcoin. It is merely the underlying base that is different, but debt will still exist. 2. For a monetarily sovereign state, government debt is very different from private debt. Private actors can be forced by having debt, monetarily sovereign governments cannot. In my view, it is the responsibility of the government to take on enough debt to make it possible for citizens to be debt-free. It is true that, under current institutional arrangements, the interest paid on government debt is effectively a transfer payment to the owners of that debt (the treasury bonds), which tends to be a transfer from poor to rich, which I view as undesirable. This is easily fixed by changing the institutional arrangements slightly. Essentially, the government simply has to use the central bank for funding to drive down its interest rate.