It is time to clarify a few points. While a great deal of digital ink has been spilled over the years debating the concept of Bitcoin Maximalism, it appears that we keep returning to the same arguments, most recently in Nic Carter’s recent Medium post and Pete Rizzo’s recent Forbes post.
Here are some additional points I wish to make: Critics of Bitcoin Maximalism appear to believe that maximalists are toxic, ignorant of the realities and realpolitik of the “crypto” world, and not technically savvy. Bitcoin maximalists, on the other hand, believe that their worldview is the ethical, rational, and pragmatic position to take in a fiat currency-corrupted world. So, what exactly does it entail to be a Maximalist?
What Does Bitcoin Maximalism Entail?
Bitcoin Maximalism, in my opinion, is simply the belief that bitcoin will one day be the global currency and/or that we will live on a bitcoin standard. This is also known as “Monetary Maximalism,” but where does the notion of monetary maximalism originate? In general, it is predicated on the notion that money is the most marketable commodity and that bitcoin possesses superior monetary properties. As Ludwig von Mises explained in “Theory of Money and Credit,” there is a tendency toward the most marketable good:
“The greater the marketability of the goods initially acquired through indirect exchange, the greater the likelihood of achieving the ultimate objective without additional maneuvering. Thus, there would be an inevitable tendency for the less marketable of the series of goods used as media of exchange to be rejected one by one, until only a single commodity remained that was universally used as a medium of exchange; in other words, money.
What Opinions Do Most Bitcoin Maximalists Hold?
In practice, the majority of maximalists I know are simply uninterested in non-monetary applications and are more concerned with differentiating Bitcoin from the rest of the “crypto” garbage that exists. And now, with so many crypto lenders halting withdrawals (e.g., Celsius, Vauld, Voyager), filing for Chapter 11 bankruptcy (e.g., Voyager), or accepting bailout deals (e.g., BlockFi, Voyager), there’s a strong case to be made that the Maximalists were correct.
At a time when yield-seeking newcomers were flocking to these platforms like lambs to the slaughter, Bitcoin Maximalists were warning about the rule “not your keys, not your coins” and against high-risk yield platforms.
What Do the Majority of Maximalists Really Want?
In reality, the majority of maximalists desire a clear distinction between Bitcoin and everything else. As far as I can tell, their primary focus is on Bitcoin promotion and support. They could issue a warning against false promises, gambling on “cryptos,” or inaccurate attacks on Bitcoin.
In general, they want altcoins to stop attacking Bitcoin as a marketing strategy. Bitcoin lacks a central foundation with a marketing budget, whereas many alternative cryptocurrencies do. As a means of promoting their altcoin, a large number of altcoiners criticize Bitcoin in the media. It is often necessary for altcoins to attack Bitcoin, as there would be no reason to consider their coin unless you believed Bitcoin’s FUD. This has historically taken the form of “Bitcoin is too slow; therefore, use my faster altcoin.”
In some instances, individuals associated with altcoins sponsor attacks on Bitcoin. Chris Larsen, the executive chairman of Ripple, sponsored a $5 million attack on Bitcoin’s proof-of-work security (with a donation to Greenpeace USA).
There would be much less conflict if altcoins did not attack Bitcoin and did not attempt to “ride the coattails” of Bitcoin by conflating things in the “crypto” industry.
Not Platform Maximalism, But Monetary Maximalism
But Platform Maximalism can and should be contrasted with Bitcoin Maximalism in the context of Monetary Maximalism. The concept is that everything should be built “on top of” Bitcoin, and alternatives should be completely discouraged.
However, I can understand the criticism of “Platform Maximalism” because not everything can or should be constructed “on top of” Bitcoin. There will be some things that are either not technically feasible to build on top of Bitcoin or would require making unacceptable trade-offs, thereby compromising Bitcoin’s decentralization, strict supply cap, verifiability, accessibility, or scalability.
In practice, however, Platform Maximalism is a minority viewpoint held by a minority of Bitcoin maximalists. Nevertheless, Bitcoin critics frequently conflate and attack Platform Maximalism as if all Bitcoin maximalists hold it.
What does “Being Built On Bitcoin” actually mean?
Even this question becomes challenging to define precisely. Most would agree that the Lightning Network, which uses UTXOs to open and close channels, is being built on Bitcoin. Perhaps it is less clear when it comes to sidechains, federated sidechains, altcoin cross-chain swaps, etc.
Does a cross-chain atomic swap between Bitcoin and an altcoin qualify as “built on Bitcoin”? Debatable. It would not qualify as a Bitcoin-only transaction.
Therefore, should stablecoins and IOU tokens be classified as alternative cryptocurrencies or something entirely different? For instance, the use of L-BTC on Liquid to represent pegged-in bitcoin IOUs appears to be a straightforward and uncontroversial way to represent what is occurring. At the very least, there is no altcoin that can be pumped and dumped by insiders onto retail investors without their knowledge. The amount of bitcoin pegged to the Liquid federation is verifiable externally, and L-BTC can be viewed as a money substitute, falling under the “money certificate” subcategory.
What About Stablecoins?
Stablecoins are simply crypto-fiat, correct? First, the name is somewhat deceptive. In reality, they are not so stable; rather, they are steadily declining over time, much like fiat currency. Second, the majority of individuals acknowledge that for the time being, fiat remains dominant and that stablecoins may play a role in the gradual transition to a bitcoin standard. Some new users (often not from the Western world) could begin with stablecoins and then gradually transition to bitcoin as their comfort level increases.
Regardless of how effective stablecoins are for short-term payments, they are unsuitable for long-term savings. Stablecoins track fiat currency, whose purchasing power is continuously decreasing. A key argument for Bitcoin maximalism is that billions of people around the world require a means of savings. This savings demand is also known as reservation demand, and it is a crucial element in the transformation of an asset into currency.
On the other hand, it is also possible for the government to take regulatory or legislative action that causes stablecoins to lose their relative convenience. This could occur, for instance, if stablecoins were regulated as money market funds, if additional banking regulations required KYC at every step of stablecoin use, or if private stablecoins were heavily regulated in order to promote government-issued central bank digital currencies (CBDCs). At that point, it would be even more evident that Bitcoin is uniquely resistant to censorship and inflation.
Is Bitcoin Optimism Uninteresting?
Is Bitcoin Maximalism tedious or merely consistent? Perhaps savings should not be so “exciting” in any case. Definancialization is what the world needs, and part of that is the long-term process of sucking out the “monetary premium” currently held in physical assets, stocks, and bonds. Over time, we anticipate that more individuals will opt for Bitcoin, or “switch to” Bitcoin, if you will. In lieu of stacking bonds, index ETFs, or real estate, individuals will stack sats.
While savings may be “boring,” if we’re talking about exciting things, why not consider the global impact of sound money? There are a variety of sociological effects that will result from the introduction of non-state funds. This is because fiat currency alters cultural norms. The majority of altcoin projects appear to be chasing the next “shiny” thing, and they like to move quickly and break things, whereas Bitcoin as a movement is about the infrastructure of civilization.
However, there are numerous other chains with proven value.
Therefore, the claim that altcoins have demonstrated throughput or paid fees represents altcoiners’ protest that there are meaningful uses of altcoin chains and decentralized financial services. They argue that this will be a world of multiple chains, and some even claim that Bitcoin will be flipped because this activity is not occurring on Bitcoin.
However, how much of this can be attributed to the shitcoin casino factor? The leverage casinos can certainly attract a crowd, but is it the right crowd? Will these be the individuals who HOLD through the large drawdowns and consistently stack? Will these be the individuals who create companies, code and review software, and construct hardware to advance the Bitcoin monetary revolution?
Altcoin advocates and apologists will cite the volume of transactions, fees paid, or total value locked (TVL), as well as the use of cross-chain “bridges,” as reasons why there will allegedly be multiple cryptocurrencies in the future. Some will argue that alternative cryptocurrencies are constructing a “economic engine.” Nevertheless, from the perspective of Bitcoin monetary maximalists, there is little reason to continue holding utility coins.
See this critique of utility coins by Blockstream CEO Adam Back:
People may use a variety of methods to transfer value, but the Bitcoin revolution is primarily about expanding the number of HODLers/stackers/savers. Similar to how you can use Zelle, PayPal, or Cash App to send USD, the USD is supported by the large number of people who want to hold it and who price transactions and exchanges in USD.
Even if there is a high volume of transactions on altcoin chains or a high volume of stablecoins flowing via altcoin chains, what matters is that people value bitcoin’s scarcity and overall qualities. Even if bitcoin is “held on” Binance Smart Chain in a “smart contract,” how does this differ from bitcoin held by a custodian such as Coinbase, BitGo, or others? There are different custodians of the Bitcoin ledger, but all Bitcoin coins exist on the Bitcoin ledger. What matters most is the number of people who are HODLing bitcoin and want to stack it.
Using this idea from Bitrefill’s Sergej Kotliar, it is important to distinguish between neutral “Bitcoin the tool” users and those who are ideologically aligned with the Bitcoin movement (broadly speaking: cypherpunks and libertarians). Bitcoin users are comparable to the millions of BitTorrent users who would never attend a BitTorrent conference or consider themselves part of the “BitTorrent movement.”
They use Bitcoin tools by simply searching online for “best bitcoin wallet” or by using the wallets already provided by their service providers, such as the blockchain.info wallet, which has existed for decades. They even use Exodus-style shitcoin wallets. Now, as maximalists and members of “bitcoin the movement,” we can express our opinions regarding shitcoin wallets and companies that are unpopular among Maximalists in the space (Blockchain.info or Coinbase as examples). However, we must accept the fact that shitcoin casinos currently have far more users. They may be able to attract more new users to shitcoin wallets than we can to bitcoin-only non-custodial wallets at this time. At least temporarily.
How Bitcoin The Movement Maintains Victory?
The primary characteristics of Bitcoin that altcoins cannot match are its monetary properties and decentralization. In addition, they cannot match the Bitcoin movement’s size and quality. There are Bitcoin meetup groups all over the world, developers working to improve the protocol and applications, peer-to-peer bitcoin trading in a number of cities, and miners dispersed all over the globe.
Many individuals work to promote Bitcoin’s adoption out of a sense of moral obligation. As a community of advocates, educators, and builders, we do have the ability to influence what is constructed and what products and services are taught to newcomers, particularly if they are our family and friends. Altcoin communities are nowhere near as stable as Bitcoin communities because altcoins are so volatile; one day they’re pumping 10 times, and the next day they’ve all collapsed or gone bankrupt. As explained by Sam Callahan and Cory Klippsten of Swan Bitcoin, the vast majority of pumping altcoins are essentially one-hit wonders, whereas Bitcoin persists and grows over time.
Despite the fact that a large number of Bitcoin users are not actively involved in the movement, they do benefit from the actions of “Bitcoin the movement.” I believe that ideological Bitcoiners will drive the adoption of non-custodial scaling technology and privacy technology in order to ensure that Bitcoin remains a freedom technology. And the benefits will eventually trickle down to “neutral” users who don’t care either way.
Summing Up
In conclusion, Bitcoin Maximalism is the belief that bitcoin will become the standard currency. Maximalists wish to make a clear distinction between Bitcoin and “crypto.” They are focused on community development, construction, education, and expansion. There is pressure not to engage in shitcoin scamming or shitcoin swindling, and this is typically done to protect retail consumers. Other projects may exist, and they may even attempt to interoperate or connect in some way with Bitcoin, but this is ultimately about the Bitcoin financial revolution.
