The country with the strongest military has historically implemented their national monetary system as the global reserve currency. This started with the Silver Drachma of ancient Athens during the 5th century BC. Next up was Rome when they issued the Gold Aureus (from 1st century BC to 4th century AD) and then replaced it with the Silver Denarius coin in the year 312 AD.
As the Western Roman Empire fell and the Eastern Roman Empire (Byzantine Empire) survived/thrived, the Silver Denarius was replaced by “Byzantine coins” or a “Gold Solidus” which was an evolved variation of the Western Roman Empire’s coinage. During the early 1000s AD, the Gold Solidus was gradually debased and eventually Emperor Alexios I Komnenos replaced it with the “hyperpyron,” a refined gold coin that had ~20% less gold.
[perfectpullquote align=”right” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]Bitcoin’s Department of Defense has no bullets, no bombs, no ships, no fighter jets, and no soldiers. [/perfectpullquote]
Toward the end of the 7th century, we saw the rise of the Islamic Dinar. It wasn’t until the 13th century that the Florence Fiorino became globally dominant, which was followed in the 15th century by the Venice Ducato. Then in the 17th century, the Dutch Guilder took over as the world currency, before the 19th century ushered in the British Pound Sterling as the most important currency in the world. And the British Pound Sterling remained the global reserve currency until World War II.
It was at this time that the US dollar become the global reserve currency and it has defended that position since World War II. As I mentioned at the start of this letter, the global reserve currency was under the control of whoever was the global superpower at any given time. This trend is about to change though.
Change Is Coming
Previously, the country with superior military firepower and tactics prevailed. It mattered who had the upper hand on land, sea, or air. But given where we are going, the bombs, bullets, tanks, ships, and fighter jets aren’t going to be nearly as important as they once were. We are moving from physical warfare to cyber warfare.
We no longer need to send troops to combat if we can attack a country’s critical infrastructure (ex: electrical grid, banking system, media publications, etc). War becomes even less necessary when we can weaponize the US dollar and cut off entire countries from the international financial system (ex: Venezuela, Iran, North Korea, etc).
There is one problem with this military, economic, and cyber strategy though — what happens if we can’t attack a country through military firepower, economic sanctions, or cyber warfare?
This may initially sound like a ridiculous question, but it isn’t. Whether we like it or not, there is a group of people (the Internet) that has created a new currency (Bitcoin) that is slowly vying for global reserve currency status. And this group of people did something counterintuitive that is currently misunderstood.
The creators of Bitcoin focused on defense, rather than offense. Instead of conceiving a plan to gain superiority by attacking other countries or currencies, Bitcoin is designed in a way to survive any known attack. You could say this strategy falls in line with the belief that “the best offense is a great defense.”
Lets look at the three main threats to a currency’s global reserve status:
- Military superiority — If you control the global reserve currency and your superpower status is revoked, you have historically lost global reserve status. No matter how hard nation states try, there are no individuals, companies, or physical locations to attack. No one person or group controls Bitcoin. If a nation state was to capture or kill an individual, nothing would change. If a nation state was to blow up all the mining facilities in their country, nothing would change. Simply, the decentralized nature of Bitcoin renders military superiority irrelevant.
- Economic sanctions — The US has done a great job defending its global reserve status by weaponizing the US dollar. Unfortunately for the world’s leading currency, there is no individual, company, or country to sanction in an effort to stop Bitcoin. No one is in control, therefore the economic sanctions are rendered irrelevant.
- Cyber warfare — Over the last 10 years, Bitcoin has become the most secure computing network in the world. There are hundreds of billions of dollars in incentives for someone to successfully attack the system, but no one has succeeded yet. Additionally, the network continues to get stronger every day (up 10x in hash rate over the last 2.5 years), which widens the moat of security. Because of Bitcoin’s decentralized nature, cyber warfare tactics are rendered irrelevant.
BTC On Deck
Bitcoin is the first world currency that is (1) not backed by a nation-state and (2) has the ability to withstand any and all attacks by every nation-state in the world. Quite literally, the “defense first” approach to Bitcoin’s design is likely to have led us to a world where currency dominance shifts from military/economic/cyber superiority to anti-fragile superiority.
Bitcoin’s Department of Defense has no bullets, no bombs, no ships, no fighter jets, and no soldiers. It has thousands of volunteers and millions of computers around the world that are cooperating to ensure there is no single point of failure.
The world is changing quickly. Nation-states are behind the curve. And Bitcoin is the sleeping giant that is well-positioned to be the first currency to achieve global reserve status without ever having to engage in conflict.
This article is a reprint from the original Off The Chain e-mail and podcast list by Anthony “Pomp” Pompliano and can be found here. https://offthechain.substack.com/p/bitcoins-department-of-defense-the