Economist, Musician, lover of Web3 space, from Canada 

The Battle of Water(Luna)

**What do Nepolean and Do Kwon have in common? They were both on the wrong end of speculative attacks.**

As most are well aware, the Crypto world was rocked last week as we watched the [Terra](https://www.terra.money/) ecosystem suffer an incredible and unprecedented devaluation of assets. The events were unfortunate, and there is little I can do other than offer my sympathy to those affected. It might come as little solace, but one comfort I can offer is to say – you are not alone.

Speculative attacks of this type are all too common in history. The famous Napolean nearly lost a war due to a speculative attack before it started. I suggest much to be learned by drawing parallels from history to this week's events.

The[ Battle of Waterloo](https://en.wikipedia.org/wiki/Battle_of_Waterloo) of 1815 was “the nearest run thing you ever saw,” according to the Iron Duke, who observed the battle firsthand. The battle that saw the British defeat the notorious Napolean Bonaparte was undoubtedly one of world history's most significant events and turning points. With that said, and before I get ahead of myself, the main event I want to talk about is not this infamous battle but an obscure one that happened a year earlier. A  battle that didn't play out on a battlefield with cannons and horses but rather one that took place on a financial ledger, a war where the weapon was confidence and (false) information.

So what happened in 1814? Well, the history books will tell you about Napoleans's great success that year. Yet, surprisingly, British bonds, called Gilts, skyrocketed in February that year. This is a bit of a puzzle. Let me explain why.

War requires capital. Indeed, many suggest modern states came to their current form as financial entities with the ability to back wars. As a famous scholar pined, "War made the state, and the state made war" – [Charles Tilly](https://www.goodreads.com/quotes/639516-war-made-the-state-and-the-state-made-war). The link between battlefield success and bond prices is straightforward. If one side wins, they can honor their bonds. If they lose, they can't. The state backs war, and if you win, the war supports the state and the price of bonds.

Logic would suggest that Napoleon's success that year would imply a relative fall in the cost of the British Bond, given most would think the chance of default would increase if a battle with the French ensued. So why was there an increase in the value of British Bonds? Well, simple, it was a scam.

A few people contacted an elaborate lie to convince everyone [Napolean was dead](http://fathom.lse.ac.uk/Features/121984/).

*“In the early hours of Monday, 21 February, 1814, a man wearing a staff officer's red military tunic adorned with gold star and medal hammered (...) demanded a message (be sent) to Admiral Foley at the Deal garrison. The message was that Napoleon had been slain by Cossacks*”

This was a complete lie. Many wealthy elites were involved, and it led to long jail sentences. You might ask, is it illegal to claim someone died? Well, no, but it is if it causes huge swings in the financial markets, it certainly is. And this lie did just that.  The plan was simple, sell British Bonds at an inflated price before anyone realized Napolean was, in fact, alive and well.

Now, the interesting question to ask is, suppose everyone believed the scammers? Suppose, by chance, no one was able to uncover the truth that Bonepart was alive and well. The British Gilt would have continued to skyrocket. The French bond would have tanked. The British army could have used this money to build their military might quickly. The French capacity would have withered. The false claim that France's power was on the decline, given the death of their leader, would have become a reality.

After hearing the claims, the French Government and Napolean immediately proclaimed it wasn’t true.  But why were they in such a rush to instill confidence? Wouldn't it make sense for Napolean to prete