You are not dealing with how and why we have governments and nation states.

Governments have existed long before there was fiat money or even money at all!

The starting point is these fundamental realities of human existence:

1. Human young are helpless, vulnerable and a lot of work to raise;
2. The world is a dangerous place;
3. Thus humans MUST organize themselves in groups for self protection.
4. These self protection groups require leadership to be effective.

In the modern era the nation state is the smallest group that can effectively fill the self protection role.

This is why some, limited, government is both essential and unavoidable.

Self protection requires taxation. So that too is unavoidable. The United States early history proves this. See Barbary Pirates Federal taxes and formation of US Navy.

Internal self protection also requires Courts and some form of police. This cannot work on market mechanisms, otherwise the rich and powerful would truly be beyond justice.

What you are left with is what the US Founding Fathers envisaged and set out in the US Constitution.

Eliminating fiat currencies and moving to crypto will help pare back government functions to these essentials.