Elaboration on implications of BTC if adopted by state.
Could fractional reserve system spontaneously emerge in Bitcoin enviroment?

Transition to Bitcoin of State
To adopt any foreign currency, particular central bank must first create reserve in that currency (in case the currency will be on paper and backed by BTC). This would rocket the price of Bitcoin up, depending on size of country and its economy. It even means that our country needs to invest a lot of money into Bitcoin, so it will drag money out of its economy. I can not imagine how this happens. I guess it must be very long term operation. And during this operation, both currencies will be probably functional.

Now how the people exchange old currency to Bitcoin? People on that country must be able to exchange their currency to new Bitcoin currency with given ration by central bank. This point is still very critical. And the ratio must be reasonably set.

I am not able to figure out major problem which is:
How will be set the ration between old currency and bitcoin for such a long time?


Economic
More difficulties with borrowing of money (bitcoin). Even fact, that people would not experience inflation and most probably will experience deflation, would be incentive to safe and spend less. Both above fact can slow down economy.  It can even anulate misinvestments which is big issue today. One of the issues is usually any kind of bubble (.com, reality, ...).

After time pass - Fractional reserve system
Fractional reserve system could spontaneously emerge after while.
If something goes wrong, bail-out is not an option.
Who can answer whether it is good or bad?

Interest rates
Any other positive value needs to be financed by central bank itself (or tax income of country). So interest rates given by central bank will be zero or close.
Central bank has no tool to slow-down economy if it is needed.
No monetary policy - so again no regulation.

Politic
I would be very interested how can government function on Bitcoin.
If there is a deficit, government needs to borrow Bitcoins from third parties.
After some time, if deficit and interest is unbearable the central bank have only option - to default,  because gov do not control the supply.
This fact may lead to more responsible budget on first place, maybe not.

Public sector transparency
Bitcoin protocol is public, so all transactions are pseudo-anonymous. It may lead to more transparency in public sector.

Social
Micro transactions?
...

What could be other implications of BTC if adopted by State ?
I look forward for your opinion.

Currently not minting. To check go to casascius website - https://www.casascius.com/.
Of course, taht doesnt mean CSC will not be minted in the near future.

I just won auction of 1BTC brass CSC for 1400USD. Coin was funded in Dec 2011.
I guess you do not share my opinion. But take into account I mean long run - 10 and more years.

Casascius coin (CSC) mint was recently under the zoom of US regulation authorities. As result the mint stopped to operate.
I thnik this can have significant impact on value of any Casascius coin regardless Casascius start to operate again or not.
Casascius fund the coin to specific registered BTC address and this fact is stored in blockchain with timestamp.

My theory is that CSC market value could strongly correlate with date of funding the coin multiplied by BTC amount funded. Similar to Bicoin days destroyed (http://blockchain.info/charts/bitcoin-days-destroyed-cumulative).

Of course Brass coin will have lower value than silver playted or gold playted coin. But in long run for coins in the same material cathegory, ''how old the blockchain timestamp is'' could be the strongest collerator of CSC price.
I assume here that coin is in mint condition.

What do you think?