Bitcoin Will Revolutionize Politics, Not Replace It

Even if hyperbitcoinization were to become a reality with Bitcoin at the center of the monetary system that emerges from the ruins of the current fiat system, the state would remain the dominus of international relations.

Despite the grandiose claims of Bitcoin maximalists, who envision a future where Bitcoin will completely replace the state and usher in an era of stateless anarcho-capitalism, a closer examination reveals a more nuanced and surprising scenario.

Even in a hyperbitcoinized world, where Bitcoin becomes the central pillar of the monetary system that emerges from the ruins of the fiat system, the state will persist as the dominant force in international relations, rising like a phoenix from the ashes of its predecessors.

As Max Weber observed over a century ago in his seminal essay "Economy and Society," the state will continue to wield legal coercion and violence as its distinctive and specific means of action. This stems from its essence as an aspiring monopolist of force internally and a sovereign entity externally (rex superiorem non recognoscentes).

Thanks to Bitcoin, the state will undergo diverse and novel transformations, which are currently difficult to envision. It will certainly face significant challenges and reductions compared to its present state, encompassing changes in geographical reach, resources, competencies, and ambitions. However, even with the desires of anarcho-capitalists and staunchest libertarians, the state will not completely vanish as a societal organizational structure.

While the voluntary, transactional, and cooperative aspects of human interactions will likely dominate in a hyperbitcoinized world, they will not be the exclusive components.

There will always be individuals who choose to resort to force to assert their beliefs, simply because it is a feasible and convenient option. Furthermore, a certain level of violence is inherent to our nature as beings with animal instincts, and as long as humans inhabit this planet, violence will exist. Consequently, as long as violence persists, there will be efforts to organize, legitimize, and regulate it. This leads to the inevitable 'historical necessity' of the state as a regulator and concentrator of power among individuals.

Whether originating from a social pact among equals, imposed from above through annexation or invasion, or emerging from an anarchic "man is a wolf to man" scenario where the strongest dominates and seizes control, the state has evolved through various forms over time - from tribal societies to nation-states to empires - and has been upheld by diverse political systems such as monocracy, oligarchy, democracy, and more.

The 'new state' in a global Bitcoin system will be stripped of extensive monetary power, significantly limiting its ability to accumulate debts and manipulate currency. Consequently, it will need to downsize in both scale and scope, reverting to its core functions: legislating, adjudicating, ensuring security, and providing defense. In an ideal scenario, it would resemble a minimalist state, such as the one favored by minarchists, voluntarily embraced by its citizens and founded on mutual consent. This envisioned state could be a small entity, akin to a city-state among many others, or a compact nation-state centered around religious, linguistic, ethnic, and moral identities that surely won’t fade away with the advent of a Bitcoin world.

This future trajectory suggests a global landscape reminiscent of past political examples such as medieval Italy with its city-states, or ancient China with its pre-imperial states, or sixth-century BC Greece with its poleis, or even the American West of the nineteenth century. Hopefully, with a much lower degree of political violence compared to the former examples thanks to a significantly higher average material well-being - a result of enormous technological progress that provides an abundance of goods, discouraging predatory human impulses driven by resource scarcity - and an unparalleled level of commercial and informational interconnectedness compared to historical precedents.

Technological progress has facilitated and will continue to facilitate communication as a solution to the prisoner's dilemma and widespread trade as a beneficial alternative to war.

That being said, we should not expect perpetual peace as Kant envisioned. Interstate war will probably be rarer and a last resort in such an environment, but it will not be entirely excluded from the realm of possibilities. Some communities would still attempt to use coercive means to achieve their goals at the expense of their neighbors ending up in war. However, this infrequent occurrence will likely result in shedding less blood and resources than today, given the reduced capacity/economic power of the new state, as well as the prevailing interests in peaceful trade and the fresh historical memory of the fresh historical memory of the horrors of warfare and warfare states in our era.

In this hypothetical context, with multitudes of small sovereign states, intense trade, and relative international anarchy, there will be a proliferation of diplomatic activities, a flourishing of bilateral and multilateral alliances, and this is where the Bitcoin network will come again into play.

What better place for states to ratify and archive agreements and treaties than on Bitcoin's layer 1?

Diplomatic negotiations indeed share many similarities with commercial ones. In one case, they revolve around bargaining between states and treaties; in the other, they revolve around contracts. Just as contracts are not concluded in the absence of trust among merchants, treaties are not ratified without trust among states. Therefore, a certain degree