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Bitcoin provides an individual with a superior form of money compared to fiat because Bitcoin treats all participants in the protocol equally. But in the case of the nation state Bitcoin is less desirable because Bitcoin removes their privileged position of issuance. It is the ability of the state to debase fiat and to dictate the price of money via fiat that delivers the state with immense power. Combined with the monopoly over MoE fiat is a potent power projection tool for the nation state. Hyperbitcoinisation would remove that power from any nation state that adopts Bitcoin.
Thus in the contest for military, territorial and power projection fiat delivers the state advantage compared to Bitcoin- precisely because fiat gives the nation state and its government significant privileges over the individual holder of the currency.
In times of peace and times of war fiat money is a potent lever for governments. In the west since at least the 1970s neoliberal governments have abused that lever- allowing the issuance of fiat debt for use to pump up speculative non productive asset prices- that is outright misuse of fiat monetary leverage but has happened because western governments have been taken over by the bankers. China in contrast has mostly used fiat leverage to build productive capacity and infrastructure. That is why China has won the trade war already.
Bitcoin is better, from my point of view than holding fiat money in western nations where the fiat leverage is being so abused. But China has much less indulged in that corrupt abuse- in China the CCP is highly motivate to deliver real economic advancement or they would likely be removed by force. And they have delivered. Western governments are just fronts for the wealthy bankers and capital who now direct them in a corrupt and diseased process of crony capitalism that is leading to the decline of western hegemony.