 Today the debt of the United States is the reserve currency of the world and that's, I don't think, sustainable. This is Alex Gladstein, the chief strategic officer at the Human Rights Foundation. He's convinced that the US dollar status as the global reserve currency is undermining democracies and incentivizing military conflicts. The government's been able to borrow for war and somehow keep interest rates relatively low, right? It's a magic trick. According to Gladstein, if national states held the reserves in Bitcoin instead of fiat currency, there would be less incentivized to go to war. These forever wars get probably cut out or reduced in a Bitcoin standard. But how exactly would a Bitcoin standard deter wars? And why could the conflict in Ukraine mark the beginning of the end for the dollar's global dominance? I'm Giovanni, your host. Welcome to another Cointelegraph interview. So in a recent essay, you were discussing democratic peace theory. According to this theory, democratic societies are less likely to go to war compared to authoritarian regimes. Still, you point out that in this democratic peace theory, there is a big flaw, which is still pushing democracies towards wars. And that big flaw is fiat central banking. So what do you mean by that? So what I mean by that is in democratic peace theory, the argument goes that in societies where there's a voting process and where there's representation from the public and the government, that there's more sort of skin in the game from the people in warmaking and they would only conduct like existential or defensive or popular wars. Obviously, dictators are not bound by any of these considerations. They can just do whatever they want. They've severed the links between the people and the government. What I was pointing out is that there's a flaw in democratic peace theory in that fiat currency and central banking has allowed governments to borrow, to pay for war without taxes or without conscription or without war bonds or without the traditional like ways that governments would like raise support from the public to fight. So today's wars that like a country like America, for example, fights abroad are just like completely disconnected from the average person and there's no sort of accountability there. So we have these wars that go on for decades literally and cost hundreds of billions of dollars and it's all borrowed money. Like the US government just does deficit financing, like we literally we don't use taxes to pay for them. We literally print money, we sell bonds to the open market for a promise to pay in the future and we use the income from the bond sales to pay for these wars. And then what ends up happening is often those bonds are then sold back to the government through quantitative easing. So it's this way where the government's been able to like borrow for war and somehow keep interest rates relatively low, right? It's this like magic trick. So this is a flaw, I think that breaks the democratic nature of society with regard to war making. And I think it's very dangerous and it's something I explored in a recent essay. Yeah. So you think that solution to this issue would be introducing a Bitcoin standard. Bitcoin standard would be a system where central banks around the world would hold the reserves in Bitcoin instead of in fiat currency. So how would a Bitcoin standard solve this problem? Yeah, look, it doesn't prevent all war at all. But I think what happens is if you have the Bitcoin standard, which is essentially like, let's say, a central banking is based on Bitcoin and not on fiat currency any longer. Then, you know, there's still going to be government borrowing. There's still going to be bond sales. There's still going to be deficit spending and all kinds of things, but they'll be more restrained. And when a government borrows, the interest rate will not be zero. Like it's like zero. It's like zero one or two percent right now for the US government to borrow. OK, well, and it's been that way on and off since 2008, since the peak of the Iraq war. OK, well, that won't be the case in a Bitcoin standard. If a government's going to borrow to go fight a war, I mean, the interest rates are going to be much higher than that. And it's just going to be more prohibitive and it's going to be harder for them to to do this like endless borrowing for war thing. So I think that like these forever wars get probably cut out or reduced in a Bitcoin standard is my thesis. And so the implementation of this Bitcoin standard would mean that the dollar would lose its role as the world's dominant reserve currency. Is it correct? Yeah, like if you're Russia or China or the United States, that like your reserves would be primarily Bitcoin or potentially exclusively. But at least primarily Bitcoin. I mean, you would have maybe some other things like gold or other commodities in there. Maybe maybe you would have debt from other trustworthy countries in there, potentially. But, you know, today the debt of the United States is the reserve currency of the world. And that's I don't think sustainable. And I think we start to shift towards over the coming decade and decade, two decades, I don't necessarily think we go back to gold. I think I think we start heading into towards the Bitcoin standard. Yes. So you oppose the dominance of the US dollar on the global financial system. Still, one of the most effective sanctions imposed by the US and its allies on Russia was cutting Russia's out from its dollar denominated reserves. So in case Russia held its reserves in Bitcoin instead of the dollars, right now the West couldn't use these sanctions against Russia. So what would be your response to this argument? In other words, how do we make sure that the Bitcoin standard wouldn't play in favor of autocracies? Yes. So first of all, that's not true. Like we we are permitting Russia to make its bond payments and we are permitting Russia to earn income through the sale of fossil fuels. This this has not been impeded whatsoever. There have been, as you say, really strong sanctions put on the country, but they're not comprehensive. And they have more to do with the banking system unless the actual currency itself. Like in a Bitcoin standard, it's not like there won't be banks. There will still be banks that will be correspondent banks. There'll be American banks. There'll be Russian banks. There'll be all kinds of banks. Bitcoin standard just means that the like the reserve of the central banks is most likely Bitcoin and. You know, fiat currencies probably are pegged to Bitcoin in some way. But again, like the US government will retain the ability to like, you know, get its allies to cut off those other countries from from the banking system and from merchants and from like markets and things like that. So even under a Bitcoin standard, the US government retains like significant power in this regard. So yeah, I mean, it does prevent the US government in the EU from just like freezing half of Russia's, you know, reserves, which we did. But it's not clear how effective that is right now. Again, we're literally allowing the Russians to meet the bond payments. So we're unfreezing the reserves for them when when they need to. So I'm not sure how serious this is. Our government's taking this. And in the future, I think that we retain significant sanctioned privileges in a Bitcoin standard. It's just they'll be slightly different. Like like governments will save in outside money, meaning government money, that's not a liability of somebody else. And, you know, that'll give them more autonomy for sure. But they still live in an international world that that is connected. And they will still face significant obstacles if they try to do something that disrupts the international order. I just think it'll be more of a world where it's a little more equal and not so like, you know, dollar hegemonic. Let's put it that way. In general, how do you think this conflict and its economic implications are impacting the evolution of crypto? Well, I think it's it's pretty historic, sadly. I mean, it's a tragic situation, but the outcome is is an expedition or a is expediting the adoption of cryptocurrency. And laying the groundwork for a lot more Bitcoin adoption in the coming decade for two reasons. Number one, the fact that a nation state is raising tens of millions of dollars in Bitcoin and other cryptocurrency to support its defense efforts is pretty unique and historic. Of course, I'm talking about Ukraine. I think that that will be repeated worldwide. I think that'll really draw people's attention to this topic. It'll show that it's an effective way for a government to raise money. So that's one thing. The second thing is the freezing of the Russian Central Bank reserves is pretty massive. Some people are saying it's sort of the end of Bretton Woods, too, which is the system that has kind of been in place since the early 1970s, where the Treasury, the US Treasury has been the reserve asset for the world. They're saying that it's essentially, I guess, the beginning of the end of that, that other nation states are going to say, well, maybe we shouldn't save all in dollar debt. Now, dollar debt remains the most attractive. You know, fiat instrument to hold because dollars are king, but this is forcing a rethink there where governments are like, well, maybe I don't want all my eggs in one basket. Maybe I don't want the US government to be able to freeze all my stuff. So you're looking at like a realist analysis of this would tell you that if you're China or if you're Russia, yeah, of course, like, you're going to want to diversify your savings a little bit. And so would you say that these events are accelerating the realization of the Bitcoin standard? Yeah, I think it's very early days. And I just think it's a milestone on the way. Yeah, it's a big, big deal and it will take years to manifest. But it's a very now everybody's talking about and it is fully realizing like the fragility of having a global monetary system based on one currency. It just starting people are starting to realize the risk there. So I think there'll be diversification. That's the only thing that makes sense. So we'll see where it goes from here. The fact is most people don't we're still too early for Bitcoin. Like, you know, Putin obviously didn't have Bitcoin as part of his plan. So, you know, he didn't think about it. And I have a thesis that says dictators aren't really going to like Bitcoin because they can't control it. So there's a reason the CCP banned Bitcoin mining and there's a reason Putin didn't use Bitcoin as part of his plan in the last month. He that they're afraid of it. They don't like it very much. They don't like things they can't control. So, you know, I think that you know, Bitcoin's freedom technology, it's freedom money. So they don't like freedom money. So, you know, we'll see what happens. But I think there are challenges to authoritarian regimes trying to adopt Bitcoin, big challenges. I think open societies can adopt it much more easily. Democracies can. So so we'll have to see how it goes over the coming coming years. Yeah, it would be definitely interesting to see how this geopolitical conflict will impact the global economy and the world of crypto in the upcoming years. Thanks a lot, Alex, for coming to our show. That was a cool conversation. My pleasure. Thanks for having me, man.