Questioning Maximalism

The Case Against Bitcoin Maximalism

I am not a Bitcoin maximalist. I want to be clear that this is not an endorsement of all crypto-currencies. Some have ponzi-like characteristics, some look like get-rich-quick schemes for their founders and/or VC investors, and a small few are easily recognizable outright scams.

Let’s define some terms, so we are talking about the same thing.

What is Bitcoin Maximalism?

The zealous belief that Bitcoin is the only crypto-currency that is worth investment of time, talent, and treasure.

What is a Toxic Bitcoin Maximalist?

A Bitcoin maximalist is one that attacks other projects verbally, and commonly uses the term “shitcoin” about anything that isn’t Bitcoin, and often espouses that everything else is a scam.

A Bitcoin maximalist (toxic or not) will generally believe that only the best money will win, and believes that Bitcoin is that money, and therefore Bitcoin is the only project worth caring about.

What the Bitcoin maximalist fails to appreciate is that two things happened at once when Bitcoin started, or more precisely, when Bitcoin gained a measurable liquid value. First, as we know, it created a very transferrable and scarce valuable commodity. But, second, it created the ability to shift between these digital commodities with very little friction. It is this second feature of crypto-currency that negates the “only one will win” argument.

Even in the world of sovereign currencies, there are strengths and weaknesses of independent currencies. The Swiss franc, for example, has some superior properties to the US Dollar despite not being as widely accepted. The Swiss franc had negative interest rates up until a few months ago, in order to discourage savings in the franc to prevent it from appreciating too much.

In the near frictionless environment where one crypto-currency can be exchanged for an equal value of another crypto-currency, the value proposition of all crypto-currencies goes up. With money, there is an idea that the most accepted money is the best, and according to Gresham’s law — “bad money drives out good”. But, what if “good” money depends on the use case, and transferring to other money is trivially easy? In the case of crypto-currencies, other crypto-currencies have features and capabilities not provided by Bitcoin. The ability to take advantage of these features after a near-frictionless value swap gives other projects a reason to exist and to thrive.

Here are just some of the reasons that other crypto-currencies should exist:

It is possible to shoehorn many of these alternative solutions into (or onto) Bitcoin. The danger is that Bitcoin becomes unwieldy, clunky, and even more expensive. We aren’t certain, yet, which utility from each blockchain experiment will be useful. We had some permissioned-chain ideas like Corda that didn’t gain traction. We’ve had an experiments where the token qty decreased when not spent to mimic a Keynesian model to incentivize spending, and that didn’t work. We’ve had projects with no ultimate cap on issuance, and we’re still waiting for the results of that experiment. But many ideas have worked. The idea of tokenization of property or equity has been popular. Decentralized lending and borrowing have shown to be useful, albeit risky in the early days of smart contract code bugs.

I have a difficult time understanding how someone can simultaneously tout the genuine benefits of Bitcoin decentralization, while also advocating for a single crypto-currency, which by definition is centralized to a single consensus protocol, which restricts choice and optionality. It seems logically inconsistent.

If the Bitcoin maximalist truly believed their own rhetoric, there would be no reason to be toxic. If there will only be one money winner due to Gresham’s Law, and that the winner will be Bitcoin, then it should happen naturally and shouldn’t require frequent intervention with toxic and often belittling terminology.

This is not a case against Bitcoin. Nor, is it a case against those that choose to hold exclusively Bitcoin for their own reasons — preferably after doing some research into some amazing alternatives. This is the case against an ideology. An ideology rooted in ignorance of the benefits that the entire crypto ecosystem brings to Bitcoin.

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Tron Black

Freedom advocate, crypto developer, businessman, entrepreneur, and lead dev for Ravencoin — a top crypto-currency and asset issuance platform.