As I said in my comment, keeping Bitcoins is like keeping cash - you can keep either and hide them. Yes, you can secure Bitcoins better than cash if you want to

As I said in my comment, keeping Bitcoins is like keeping cash - you can keep either and hide them. Yes, you can secure Bitcoins better than cash if you want to, but that is irrelevant to my point. My point was that you can generally earn interest from a bank at better than inflation rates, and if Bitcoin becomes more mainstream, people will do exactly the same thing Bitcoin they do with cash - give control of it over to a bank, and get an account denominated in that currency (i.e. Bitcoin). Once you give the cash or Bitcoin, as applicable, to the bank, you no longer have it in your wallet / Bitcoin address, but instead, the bank promises that it will give you back that amount of Bitcoins, plus interest. The bank promises to give you back a certain number of Bitcoins, but you don't have any physical way of enforcing that - it is the bank's Bitcoin address that holds them, not yours. Other people borrow Bitcoins from the bank and have to pay back interest at a higher rate than the bank borrows it. Because of interest, banks collectively are owed more than actually exists in circulation at any one time, so Bitcoin becomes fractional reserve system. Under this scenario, the government can still tell banks to reduce your balance (which is a number on your servers, and not physically enforced by the Bitcoin protocol). It doesn't affect BitCoins you hold in your own addresses (just like the Cypriot tax doesn't take a cut of money held as cash by individuals in Cyprus), but that might be only a small fraction of the Bitcoin economy in a future under a fractional reserve system.