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People always point this out. The astute ones point out the other half of this - the power to tax is based on the military's ability to compel payment.

One other way to look at this is physical security being a service - a fundamental one - being procured by your tax dollars. This is actually mentioned explicitly in the first sentence of the U.S. Constitution: "We the people...to insure domestic Tranquility, provide for the common defense...do ordain and establish this Constitution." By being a citizen of the United States and complying with its tax laws, you enlist the full force of the U.S. military in securing your rights.

You could easily imagine someone offering to provide military services for Bitcoin. Depending on how they wield these military services, this could range from welcome to highly inadvisable; if it turns out they are in opposition to the interests of more powerful militaries (i.e. the U.S, or other major nations), they could quickly find out just how powerful the U.S. military is.




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