Riots, a pandemic and a grim economic outlook with mounting government debt. This is what the world looks like. It should be the hodler’s bittersweet “I told you so” moment. But it is not. The situation gives detractors fodder, which is how the idea of the Bitcoin Citadel came to the fore.
The Bitcoin Citadel: A Great Dystopian Story
The Bitcoin Citadel is a dystopian post on Reddit. Its author uses the potential for Bitcoin success – the hodler’s dream – to paint a future in which the global economy is in ruins due to the deflationary nature of BTC.
Those who survived the economic transition and hold some coins or even fractions of a coin, build a Bitcoin Citadel. They change their identities and sever their ties to nocoiners, even families.
“Bag holders” suffer the brunt of the deflationary pressure and some become terrorists. These terrorists hunt hodlers down, blaming them for economic decline and the collapse of governments that crumbled because they couldn’t tax Bitcoin wealth. That is why rich people need the Bitcoin Citadel.
Here is a summary of other key components of this dystopian post:
- The author writes in 2013 coming back in time from the year 2025
- Only 2 governments survived: North Korea and Saudi Arabia
- Both governments started investing in Bitcoin secretly and intervened in Africa to stabilize the continent
- That happened after Russian hackers exploit a weakness in African telecoms infrastructure that was somehow tied to the citizens’ IDs and Bitcoin wallets, to steal 60% of African wealth in 48 hours
- The IMF – surprisingly – also survives, holding 70,000 BTC to stabilize its reserve
- Bitcoin super millionaires get killed by terrorists
- Hodlers with more resources hunt down and torture smaller hodlers in an effort to steal their coins
- The narrator of the story says that he is part of a group that will fight back
- This group has 20 nuclear submarines and is getting ready to strike; the objective is to eliminate the internet
- The story ends with a plea to stop Bitcoin in 2013 instead of allowing it to succeed and eliminate the central bank cartels that control us now
A Bitcoin Citadel Too Far: The Story Backfires
The creativity of this post is undeniable. Nevertheless, it seems to have had the opposite effect. The idea of a Bitcoin Citadel draws hodlers in.
It gives them hope that one day they will join the 1% after hyperinflation sets in and Bitcoin replaces fiat. Therefore, the author decided to edit the post and include a puzzling disclaimer.
Strangely enough, this whole Bitcoin Citadel story and its weird disclaimer shows us how both sides of the argument are wrong:
- Contrary to what the disclaimer says, Bitcoin is not an investment
- It never was an investment and should not be treated as such
- Satoshi created BTC as a “P2P form of electronic cash”
- There are many who use Bitcoin to acquire all kinds of goods and services
- Others use it as a hedge, much like gold
There is a shrinking minority of people – maximalists – who think that Bitcoin should actually replace fiat. There is an even smaller minority who think Bitcoin will replace fiat.
On the other side of the argument, there are those like the author of this Bitcoin Citadel story, who think Bitcoin is an investment and make false assumptions about the fiat system.
Setting the Record Straight
For those of you who are familiar with our work, you know that we are not Bitcoin maximalists. We are, however, Bitcoin advocates. We are as objective as we can be, and we repeat our message every time we can:
- Bitcoin is a hedge against the excess of governments, central banks and the fiat system
- Fiat is flawed; hyperinflation is a real risk
- Fractional reserve banking and big business bailouts are extremely problematic – to put it mildly
- Wall Street types who push synthetic investment products and derivatives upon derivatives, are poisoning the economy
- The pandemic did not help either. Lockdowns pushed sovereign as well as private individual debt to unsustainable levels
- Inflation is tantamount to taxation on savings; it reduces the purchasing power of those who save money
Why was the Author Able to Imagine a Dystopian Future with a Bitcoin Citadel in it?
The author of the Bitcoin Citadel post is worried about the environmental impact of Bitcoin and its lack of purpose. That is because he ignores the environmental impact of printing money out of the blue. Newly minted funds serve to keep up demand for services that pollute way more than Bitcoin does.
In essence, Bitcoin has a purpose: to give everyone an opportunity to build a hedge against the excess of the present system. It provides an alternative, parallel money network that tends to be deflationary in terms of prices. As such, it pollutes with a purpose.
Keeping demand up artificially to make the economy “grow” is also harmful to the environment. There is very little we can do about that. Nevertheless, that artificial demand growth through money printing – a marvelous mechanism of Keynesian economics – is one of the reasons why Bitcoin is successful.
Printing money to buy government debt in essence allowed the author of this post to even imagine a Bitcoin Citadel. Cryptocurrency holders have already been attacked. Self defense would justify the creation of a gated city for hodlers.
Is a Bitcoin Citadel Necessary?
There are enough people who hold BTC and are at risk of being kidnaped and tortured. But that is a risk that many rich people face, regardless of how their wealth is denominated.
Have you seen billionaires living among us? Many have several residences, private security and live in gated communities with other rich people. The billionaire’s citadel is already a reality, so maybe the Bitcoin Citadel is necessary.
After all, wouldn’t you want to live in a safe place with like-minded people?
The Bitcoin Citadel Flaw
The problem is that if you build a Bitcoin Citadel for all BTC hodlers to live in – even those who hold just 0.03 BTC like the story depicts – you would create a single point of failure.
Bitcoiners are aware of this. They oppose centralization precisely because it is easy to attack a single point of failure.
Why would hodlers fall into the Bitcoin Citadel trap then? Even in a dystopian future, the Bitcoin Citadel would be a bad idea.
Anyone who knows anything about security would tell you that lines of defense always break down.
You don’t want to reveal yourself by living in a Bitcoin Citadel, knowing that your line of defense will inevitably fail and you will have to face the mob.
Decentralization: The True Bitcoin Spirit
Even if Bitcoin displaces fiat – a highly unlikely scenario – hodlers know they are better off if they scatter all over the world. They would rather spread their nodes far and wide to keep the network alive.
If you are one of these hodlers, you might even prefer to live in a rural area and decentralize other aspects of your life, such as: water supply, electricity generation and food sources.
It is difficult to imagine a Bitcoin Citadel knowing that decentralization in every possible aspect is a key feature of resilience.
It is even more difficult to imagine certain characters within the community, especially the crypto anarchists, living within a Bitcoin Citadel and following security protocols that others impose on them for the well-being of the Citadel.
We Might See a Bitcoin Citadel or Two
A Bitcoin Citadel is still possible. Like the maximalists out there, who think Bitcoin should or will replace fiat, there are those who would love to live in a gated community with like-minded people. Even traditional billionaires dream about this.
Just ask Peter Thiel about the idea of Seasteading. Those platforms in international waters are the predecessor of the Bitcoin Citadel. So far, they look like a bad idea nonetheless.
But the world is plagued with bad ideas as much as it is plagued with faulty assumptions. This whole Bitcoin Citadel Reddit post and its disclaimer prove as much.