Bitcoin has interacting forces that work in opposite directions. The increase in value makes it provide income as capital gains, but reduces its ability to be

Bitcoin has interacting forces that work in opposite directions. The increase in value makes it provide income as capital gains, but reduces its ability to be a currency. Reduced ability as a currency inhibits its value, reducing it's ability to provide income as capital gains. It's hard to assess what this would mean over time when you already know the history of the price biasing your viewpoint. Especially when you have to modulate that value by the effects of media coverage and public opinion contributing to a boom/bust cycle. I could see how it could be consistent with the price history with stepped increases in value as its long term potential as a currency is reassessed as being more likely, each step triggers an oscillation as the opposing forces react to the change in value and change in stability respectively. I think spread latency (not everyone reacts to the forces at the same rate) would have a dampening effect causing things to flatten out over time. Worst case scenario would be if the competing forces cause an ever increasing oscillation. I think that should mean that the end state for Bitcoin should be relatively stable, but at a value that we just don't yet know $0, $100, $1,000,000 could all happen. If it turns out to be $1,000,000, I'm completely ok with people paying tax on the increase in value if they bought at $10. On the other hand if the price remains stable around there, then people who used it as a currency would not generate much taxation income, but cause a considerable amount of paperwork to keep track of everything. Perhaps in that instance A percentage capital gain threshold would be in order. Perhaps something like, if the gain over a period is more than inflation_rate*1.1 capital gains tax kicks in.