Well there's two ideas.

It's easy to conceive of a state functioning in the same way just on a smaller scale under a Bitcoin standard.

But there's also the idea that Bitcoin could radically change the way states operate, so much so that they wouldn't be anything like they are today.

Either one could be likely.

I use the phrases "Bureaucratic machiney, legislative monopoly, and state sovereignty" because these are the "form properties" that Hallaq uses in his book. Would have been cool if he characterized fiat in those form properties.