The Bitcoin Standard: The Decentralized Alternative to Central Banking

by Saifedean Ammous

On a national level, nations using sound money are far more likely to stay peaceful, or to have limited conflict with one another, because sound money places real constraints on the ability of government to finance its military operations. In nineteenth-century Europe, kings who wanted to fight each other had to tax their populations in order to finance their militaries. In the long run, such a strategy could only be profitable for kings who would employ their military defensively, not offensively. Defensive military action always has a stronger advantage than offensive military nature, because the defender is fighting on its own soil, near its people and its supply lines. A monarch who focused the military on defensive action would find his citizens willing to pay taxes to defend themselves from foreign invaders. But a monarch who engaged in protracted foreign adventures to enrich himself would likely face resentment from his population and incur significant costs in fighting other armies on their home soil.