Could the Bitcoin Standard render warfare financially unfeasible?

“Make War Expensive Again” is a Bitcoin slogan introduced in a recent tweet by Adam Ortolf from Upstream Data. He argued that war has become “100% free (+ insanely profitable)” due to governments’ capacity to generate billions of dollars at will for military expenditures.

However, could a shift to Bitcoin—a type of hard currency—actually make war financially burdensome? This idea is certainly not novel, but it presents an intriguing discussion. In 2014, Roger Ver remarked

“Every time you use Bitcoin, you are helping to undermine the war machines around the world, and the power of those who would use violence to control others.”

Bitcoin vs. War

Bitcoin and its advocates have long contended that the digital currency could herald a new age of sound money. Unlike conventional fiat currencies, which are vulnerable to inflation and manipulation by central banks, Bitcoin has a capped supply of 21 million coins, ensuring its scarcity. In theory, this limited availability could render Bitcoin less prone to currency devaluation and encourage governments to engage in more fiscally-responsible practices.

What is the connection to war? Historically, wars have been financed through inflationary tactics, such as money printing. This approach allows governments to fund military endeavors without immediate financial repercussions. Instead, the costs are transferred to citizens through elevated prices and a devalued currency. The adoption of Bitcoin or other hard currencies could limit this seemingly boundless spending power.

As Saifedean Ammous noted in his well-known book, The Bitcoin Standard,

“For as long as the government could print more money and have that money accepted by its citizens and foreigners, it could keep financing the war.”

It is a plausible assumption that restricting governments’ financial resources could dissuade nations from pursuing extensive military interventions. However, when faced with the inability to inflate war-related debts, countries might turn to alternative approaches, including diplomacy and other non-combat strategies, to settle disputes.

In his book Soft War, U.S. Space Force Major Jason Lowery asserts that the U.S. should accumulate Bitcoin, as Bitcoin mining will be the battlefield of the future. He described Bitcoin

“A national strategic imperative that the U.S. should support and adopt as quickly as possible, else it risks losing its lead as a global superpower in the 21st century.”

A nonviolent revolution

In response to Ortolf, Taiwandan, an Advisor to El Salvador’s National Digital Assets Commission, expressed concerns regarding the potential implications of transitioning to a Bitcoin standard. While he concurred that hard money could render war more costly and less probable, he questioned how this transition could occur without leading to a dystopian future. This perspective is particularly noteworthy given El Salvador’s highly publicized decision to adopt Bitcoin.

Taiwandan proposed that as nations shift toward the Bitcoin standard, those with the authority to print money may do so excessively to amass a war chest of weaponry, ultimately resulting in one dominant power or dictator controlling the global landscape.

Ortolf’s counterargument centered on the belief that the shift to hard money will not be a voluntary choice made by governments but rather a transformation that takes place when the market no longer values the fiat currency issued by governments. He posited that the world can collectively disengage from the current financial system by demanding hard money for goods and services.

“The market decides by no longer valuing the paper the Gov’s try to pay with. It’s not a decision governments make other than because they have to.

The world opts out of the scam by demanding hard money for goods & services. A nonviolent revolution.”

Can Bitcoin stop “forever wars”?

It is essential to recognize that war is not merely a financial equation. Material conflicts are often intensified by ideological, religious, and nationalistic motivations that economic factors alone cannot swiftly resolve. Moreover, powerful nations are unlikely to abandon their lucrative defense industries simply because funding becomes more difficult. Governments may explore alternative funding avenues, such as increased taxes, borrowing, or even mandating contributions from the private sector.

Thus, while the idea of Bitcoin making war costly and diminishing its occurrence is appealing, the route to realizing this objective is far from simple. Therefore, a nuanced comprehension of global conflict dynamics and the potential challenges and risks associated with transitioning to a cryptocurrency-based economy is vital.

Ultimately, Bitcoin’s potential role in making war expensive again may be an attractive notion. However, it could also result in unintended consequences such as elevated taxes, increased borrowing, or coercive measures targeting the private sector.

The post Would the Bitcoin Standard make war unaffordable? appeared first on CryptoSlate.