...Finally, consider what would happen if, someday in the future, inflation goes high (which forces nominal interest rates to rise--they will need to be above inflation in equilibrium). Would interest on BitUSD still be competitive if traditional interest rates rise to 10%, 15%, 20%?

Therefore, BitUSD interest might be dynamically adjusted, based on an intuitive, honest and public algorithm - rather than being set at a constant 5%. This might ultimately influence confidence in a self-regulating system, as there would be less risk of knee-jerk corrections down the line.