Maybe it won't! It's a potential disaster, not a guaranteed one. You can read Tim May's Crypto-Anarchist Manifesto for a slightly more detailed argument, and there are decades of cypherpunk stuff to read on the subject, mostly from the perspective that destroying the welfare state would be really super great.
I don't agree, but the immediate and pressing problem for most people (especially in El Salvador) is not the potential collapse of the welfare state but the depredations of kleptocracy.
Destroying the welfare state doesn't imply the end of governments.
In my opinion, it would be good if we could focus on taxing the things that actually should be taxed: land property and pollution, and stop taxing transactions.
And it would still be egalitarian, since people who own tons of land are not poor.
> Destroying the welfare state doesn't imply the end of governments.
You might be right (nobody knows what the future holds) but that was certainly the vision May had (his .sig ended with "collapse of governments"), and it may be the vision that Bitcoin was written to promote.
Certainly a shift to a land-value tax and a pollution tax will be at least a very large dislocation. I hope it's less traumatic than the Thirty Years' War.
I don't agree, but the immediate and pressing problem for most people (especially in El Salvador) is not the potential collapse of the welfare state but the depredations of kleptocracy.