“Absolutely a fiat currency, it makes the problem of confiscation of one’s entire net value as simple as a keyboard stroke, or even to plunge any person into complete penury upon the whim of any tyrant or just plain thief who has the necessary means to access individual accounts.”
I think the government has ignored the initial reason that digital currency took off. Digital currency was viewed as a way to cheat on taxes, buy things without leaving a footprint and generally get around the government. A US digital currency would give the government more visibility and taxability. Apparently countries are planning to convert to all digital. This is to capture tax on every transaction. A kid mows your lawn? You pay a tax on his service. What will happen is the people who have off the books jobs will convert to using foreign currency or something like Bitcoin*. As it is now, people in Europe who have off the books jobs, take their EU cash to Switzerland and convert it to Swiss Franks. (This is really pissing off Switzerland, although I haven’t seen any recent articles on the subject, it was in the news for several years.)
* China has already outlawed any cyber currency they don’t control. This is because Chinese currency is not convertible, to stop capital flight. The Chinese have attempted to make their currency convertible twice. Both times it led to capital flight to investments in the US and Canada. They will never make this mistake again. The only way to get money out of China, if you aren’t in the CCP, is to convert it in China to something you can sell out of China. Very hard for the average person. This is why there are entire unoccupied cities in China. Real-estate is the only thing a Chinese person can legally buy as an investment. All other “investments” are like legal gambling.
I think the fundamental appeal is an immutable blockchain from which nobody can erase your money. Second securing your private key means nobody can steal your money. Taxes were certainly not an issue when people bought in early like I did. Now that is has gone up 100x, the long term gains taxes are due when I cash in, but those are not onerous. I have always left a footprint, and don't have a need to get around the government.