Your "dystopian" world was the status quo for thousands of years as people used gold. You don't have to imagine how the economy would look, you could just pick up a history book.

Gold was not a universal currency, and it wasn't a currency in common use.

You could pick up a history book, and you would learn that gold was almost never used as currency because it was simply too rare, and too valuable for the amounts traded in normal commerce.

Rather, silver was the currency of choice in Europe and most of Asia, with lower-value denominations eventually showing up as coins made of less valuable metals.

Math and Energy. That's the beautiful thing. If you trust the ECDSA is secure, and you trust that SHA256 is secure - You don't need to trust the individual network participants.

If ECDSA or SHA256 were shown to be weaker than believed, they can be substituted in the bitcoin codebase (given approval of all participants, which are incentivized to ensure the computational security of the protocol).

The energy is the barrier to prevent malicious parties from rewinding history. Fundamental, understood quantities in the universe is far better than the political whims of the party in charge.

What does hyperbitcoinization look like? This infographic video provides some introduction to what this could be: https://www.youtube.com/watch?v=2pDlaOGA2ac (Bitcoin: Everything there is, divided by 21 million)

You will still have political parties. They will be the ones with the militaries.

The endgame of HODL is a digital Fort Knox. Under the gold standard people didn’t actually exchange pieces of eight. They used paper money.

Yes, and what will they pay the soldiers? Worthless Fiat? Part of the debasement of the roman currency was to pay their armies. When you take that ability away from a state, how do you maintain them without unlimited funding? I don't know if bitcoin will end all wars, but it is far closer to a peaceful coexistence than debt-based economies.

You might manage to cause an upheaval in which who runs the state changes hands, but nothing else will change for the better.

You’ll just get a new state which holds Bitcoin and issues debt based on Bitcoin in the form of promissory notes.

It’s pretty simple - just require taxes be paid in Bitcoin and use violence against those who don’t pay. Just like with other revolutionary wars, you pay generals with land and soldiers with the new currency (I.e. Bitcoin). Some of those generals will end up as a dictator or president depending on whether you are able to establish a democracy.

The state will be the ultimate HODLer just as it was with gold.

Yes I see bitcoin causing a lot of trouble, if it is successful. And by trouble I mean violence and political upheaval

Nothing dystopian about it. Precious metals were standard currency for most of human history. It's the modern fiat currency system that's abnormal and highly inflated in value.