You may, if I understand your drift correctly, have a fundamental error. But then I may not understand it, and we may be in agreement.
Yes, I think we are actually in agreement - your final line suggests that we are.
If people are using both national currencies and crypto currencies, what is the effect on government and private actions? In particular, is there an effect on the likelihood of war?
I had, for the sake of speculation, assumed away all competing/existing national currencies. But, I am very interested in the tradeoff you are asking about. It seems possible that both national currencies and cryptocurrencies can both be used to finance war and their dual existence might actually make it more possible for tge creative financing that could mobilize military resources.
You may want to review an article written by Milton Freedman, and a similar one by Hayek, on the effect of consumers having a choice of currencies. This applies to the case of a consumer having a choice of crypto currencies as well as his national currency.
If the national currency starts to be over inflated, money such as savings will naturally flow to the safe harbor. This seems like it will act as a stop gate on over-abuse of currency by nations.
To put it another way, suppose that both Bitcoin and Currency ABC are available to all citizens of Nation ABC. The nation starts to print money, in order to finance a foreign war. As the money loses value progressively, people see that Bitcoin does not lose value, and in fact gains value. They move assets into Bitcoin. This moderates the extent to which Nation can gain by printing money, which should suppress but not totally eliminate it's ability to do such things.