Revisiting Bitcoin maximalism

I was inspired to pen a short piece after a couple of weeks of considering Ferdous Bhai’s (controversial) takedown of the concept of Bitcoin maximalism, and the reactions it subsequently triggered. Whilst I diverge from Ferdous’ thinking on a number (perhaps the majority) of the points made, I strongly believe that the overarching theme was very much on point, and had some incredibly important takeaways.

 

I developed an interest in Bitcoin during my last year of high school (I’m sure everyone can relate with an anti-statist teenaged phase). A friend and myself came close to purchasing some of the small USB miners to mine on the DL at school, but the idea never came to fruition — our time preference ended at the prospect of cheap cans of lager on Friday evenings.

Nevertheless, I kept an eye on it through university, completing my dissertation on some of the legal challenges surrounding cryptocurrency. Shortly thereafter (around the time of UASF), I began writing for a few publications in the space, and got more involved on Twitter.

 

What interests me the most about Bitcoin (and, indeed, any cryptocurrency that fulfils the purpose) is the ability for a party to trustlessly send a digital transaction from point A to point B with finality. I think that’s phenomenal. ‘Smart contracts’ (beyond multisig), ‘on-chain governance’ and ‘Web 3.0’ are all very well and good when you’re trying to rake in investor funds, but I think the importance of tokenising an inherently centralised business just for the sake of it pales in comparison to the cyber-spatial realisation of permissionless money.

The particular ‘killer apps’ for Bitcoin at present are, in my opinion, shielding individuals from oppressive governments (allowing them to store their wealth in a parallel financial system) and engaging with markets that aren’t necessarily state-sanctioned.

 

Bitcoin fits my needs when I need to transfer value (I didn’t transact that much at the time of the $50 spike, so that didn’t really bother me as I’m more of a HODLer) and as an asset in my portfolio (partly for ideological reasons, though predominantly for pragmatic ones). There may come a day where it implodes, where fees are prohibitively high, where all of our addresses get doxxed, but I’m doubtful that that will happen — I think the innovation on the protocol is unparalleled. It’s easy to extoll the virtues of the speed/inexpensiveness of your altcoin when it only has fifty users and a value of 2000 sats. Let’s revisit the topic when it matches Bitcoin’s volume.

So yes, I’d consider myself a ‘maximalist’ for the most part.

Settling on a definition:

 

I’ll firstly outline my understanding of the concept of maximalism. I believe it’s quite a basic one, but that it’s all-too-often been strawmanned into some kind of unstoppable juggernaut of carnivory and shitcoin destruction.

Simply put, I think that Bitcoin maximalism is nothing more than a bet that Bitcoin will outlast any inferior clones — granted, if we’re to go with the dictionary definition, that’s in an ‘uncompromising’ and ‘extreme’ way, but let’s not forget its origins: Vitalik coined the term so as to dismiss arguments, by shoehorning anyone even insinuating that Bitcoin may be in any way superior to the myriad of other cryptocurrencies or tokens constantly being churned out.

Obviously, the response to Vitalik’s post was to commandeer the term as a badge of honour. It’s now a proverbial middle finger asserting the dominance of Bitcoin. Whilst it’s had a sort of network effect of its own and will likely persist until the inevitable advent of hyperbitcoinisation, I’m beginning to go off the term (I can hear the pitchforks sharpening as I type this, but hear me out).

You see, I fear the word is losing its edge — not because of its original intent to deride (I’ll take ‘toxicity’ over ‘lead devs dancing to a backdrop of cartoons at a conference’ any day), but because maximalism, in my opinion, should simply be a term synonymous with ‘common sense’. It’s a position you inevitably arrive at when you evaluate a number of metrics — the ‘immaculate conception’, hashpower accumulation, the economic underpinnings, the game theory that creates an alignment of incentives between users, developers and miners and the first mover advantage.

By classifying it as anything more, I fear that we’ll get to a stage of groupthink that:

a) hinders newcomers from thinking for themselves (I have nothing but respect for the people I learned from, but it’s vital to DYOR, as it were – don’t trust, verify).

b) results in a much more sinister aggregation of viewpoints under a label with negative connotations.

To be clear, I abhor both extreme left-wing and right-wing ideologies. However, I strongly disagree with the mindless practice of self-righteous repudiation of differing political views as ‘nazi’, ‘communist’ or ‘fascist’, terms which serve only to blunten discourse, eliminate nuance and polarise groups — it’s basically Newspeak. Similarly, I think it’s unhealthy to characterise what we perceive to be ‘Bitcoin maximalism’ as a blinkered, experimentation-stifling collective.

Really, I don’t think there’s anything wrong with looking at maximalism as an umbrella that encompasses a wide range of varying beliefs converging around the opinion that, ultimately, Bitcoin wins.

On Innovation:

I’d like to address some of Ferdous’ criticisms with the point that resonated with me the most — that is, the outright dismissal of innovation. Yes, examples are few and far between, but if a truly innovative solution comes around, Bitcoin will surely subsume it (we’re backing the wrong coin if it doesn’t). One example that irks me is the idea that Monero is incompatible with a maximalist viewpoint.

I think that’s nonsense (you’re free to disagree, of course. There’s no Maximalist™ playbook). Bitcoin is making huge strides towards ensuring greater privacy (Lightning, CoinJoin implementations and eventually Schnorr signatures), but for now, Monero is second only to cash when it comes to fungibility. It serves a niche use case that Bitcoin is unable to provide for now. Certainly, I think that it will lose relevance over time, but dismissing it outright as a ‘scam’ or ‘shitcoin’ is laughable, particularly when these claims come from self-professed cypherpunks/crypto-anarchists/proponents of financial inclusion.

Learn to Love the Confusion:

I recently posted a thread on Twitter explaining why I think the proliferation of altcoins can only be a good thing. I hold this view for a couple of reasons — again, I’m confident that Bitcoin cannot lose (relative to other coins, let’s not forget that this is all still just a massive social experiment). I’m convinced of its antifragility, which has been demonstrated with events like the Mt Gox hack, Segwit2X, influential legacy talking heads disparaging it, or resolved software bugs. With each failed attack, it grows stronger.

But I don’t think attacks of massive magnitude (i.e. state-backed acts of sabotage) have occurred yet. They will, surely, and they’ll either succeed and we’ll all need to go back to PayPal and gold, or they’ll lose and we’ll meme the would-be attacker into dissolving their nation. How such an attack would occur remains to be seen — some fear the hijacking of mining pools or hashpower, others think it could be through the covert dissemination of protocol-breaking bugs via the Core software. The latter isn’t out of the realms of possibility.

As for its ability to ‘kill’ Bitcoin? Doubtful. It will set us back majorly, but, at the end of the day, myself and thousands of others all hold a complete and detailed ledger of every single transaction that’s occurred since the genesis block on low-spec computers. We know exactly which address owns which UTXOs. The list isn’t going anywhere, and it can just be ported over to a patched version.

With regards to the lead up to this, I think there’s a lot of value in a sort of smog of altcoins, tokens, accredited investor-only presales, existing companies tokenising everything, etc. It gives legislators a lot to handle. As they try to construct frameworks and criteria for handling the deluge, there are two outcomes — blanket ban everything or wait (probably for years) for the watchdogs to distinguish between the two. Either way, the confusion buys time. The longer regulators stall, the more individuals/investors/businesses begin to accumulate Bitcoin, and the harder it subsequently becomes for any harsh crackdown (the beauty of skin in the game).

In that regard, yes, altcoins are ‘insurance’ from the state, but from a technological standpoint, I agree with those making the point that if Bitcoin can be destroyed by a government/coalition, no coin is safe.

The altcoin/token killer app, where the altcoin/token doesn’t offer superior features to Bitcoin at scale, is as cannon fodder. They’re buying time to strengthen and ossify the protocol. I predict that as a result of Bitcoin’s liquidity, networks that absolutely need a token (spoiler: none do, aside perhaps from asset-backed/non-fungible ones, but that’s another story) will simply swap them for Bitcoin in the backend. I don’t expect the ‘web of tomorrow’ to require users to waste time trading a liquid asset for a less liquid one on an exchange, just so that they can interact with a dApp.

Onto the points I disagree with:

Government launches an equivalent:

The meat of this argument seems to revolve around the government being able to create a sort of simulacrum that, on the surface, appears to mimic Bitcoin’s monetary policy. It ends at that. Granted, there may be some appeal to s̶y̶c̶o̶p̶h̶a̶n̶t̶s̶ upstanding citizens that want to toe the line (particularly if some of Ferdous’ proposed narratives emerge — as touched on above, the social justice one seems to be well underway).

There’s something to be said for echo chambers, a phenomenon that may be getting worse, but I also think that Twitter and Reddit give us a distorted perception of all Bitcoin users — I detest the term ‘Bitcoin community’ (what are we, the XRPArmy?), because I think that what people chiefly refer to with the phrase is ‘the 400 people I follow on social media’. There are other communities that don’t necessarily take to Twitter or even speak English.

Maximalism, as I take it, is descriptive. There’s quite a spread of users who differ in ethos, values, political leanings, and even their view of Bitcoin going forward — you’ve got the ‘institutionalse everything ???’ crowd, you’ve got the goldbugs-turned-HODLers, criminals, privacy-oriented individuals and outright collapsitarians, to name just a few.

I can’t speak for everyone, but my own interest in Bitcoin led me to challenge the notions of money I’d otherwise not given much thought to. The value proposition here is government-proof money, a philosophical concept brought to life by a robust tech stack. Government narratives can only go so far. Short of some totalitarian overhaul, their attempts to impose a narrative on what is fundamentally a politically-void free market commodity would likely fail. It would involve forcing a currency on citizens with guns, which is exactly why we’re opting to use Bitcoin in the first place.

New entrants enriching old ones:

To his credit, Ferdous took a better stab at the ‘pyramid scheme’ argument than most, but I think this, too, falls short. Everything is a pyramid scheme. To have value as money, something needs to be adopted. Bitcoin is entirely opt-in. Earlier adopters take on significantly more risk — whether it’s mining at a loss, trading alts to accumulate more, or working in exchange for payment in Bitcoin.

Later adopters are paying a higher price for reduced risk — after all, they’re benefitting from the added confidence that those before them are still invested. It’s hard to refute the claim that its distribution must have a certain pyramidal hierarchy to it. In contrast to other pyramid schemes, however, there’s no centralised body orchestrating it — one party dumping vast amounts of Bitcoin may have some effect, but it would not cause complete collapse and loss of confidence without well-thought out coordination between pseudonymous individuals.

It would be nice if we could all just be given equal amounts of Bitcoin from the get go, but that simply wouldn’t work — otherwise we’d all be envious of the Icelanders for their vast troves of Auroracoin.

Wrapping it up:

As I said, I agree with the sentiment of the piece. No rational person is going to back the claim that, on the free market, we should settle for an inferior currency if there is currently a better one in existence. I don’t think it will, but if a coin comes along with a wider/fairer distribution, better security, privacy and scalability than Bitcoin? You can be sure I’ll quickly change my tune.

In my experience, vocal maximalists aren’t necessarily up in arms about this line of thinking, but rather by the shameless cash-grabs serving up buzzword soup with a hearty dose of snake oil to enrich the founders. That’s healthy – see Michael Goldstein’s Everyone’s a Scammer.

I’m not a maximalist because I was sworn into the Church of Satoshi, where we all eat entire raw cows (I’m more of a medium-rare guy), read the same books (incidentally, I think the only reason we all read the same books is due to lack of variety) and plot intricate Twitter raids on shitcoins. I’m a maximalist because I believe Bitcoin triumphs on a long enough timescale.

I’m fond of Stephan Livera’s explanation, too — that maximalism merely denotes ‘monetary maximalism’ (a monetary theory as opposed to a portfolio statement), characterised by the belief in a strong tendency towards Bitcoin becoming the best global sound money, and that the viewpoint is not in any way anti-competition.

There may be a place for niche coins, but as digital gold (barring some radical new technological paradigm), I find it highly unlikely that Bitcoin can be overtaken – to loosely paraphrase Hal Finney, the entire viability of cryptocurrency is called into question if Bitcoin can be overtaken (I may be misquoting him – I can’t seem to find the original post).

Bitcoin maximalists are frequently conflated with shitcoin minimalists (don’t get me wrong, I enjoy bashing lacklustre offerings, but not to the point where I rule them out entirely if their technology shows promise). You can be one or the other, or both. Not all maximalists hold the view. Personally, I, too, am looking forward to experimenting with some of the MimbleWimble implementations if they can do something better than Bitcoin. My cold storage funds will still be there afterwards.

The bottom line is, I think there’s too much emphasis on the binary ‘all in on Bitcoin’ and ‘all in on 80 different altcoins’ viewpoints. Ferdous is right in the idea that individuals need to think for themselves (that should be a given, though in light of the amount of ETH the bots are currently raking in, I’ve been reconsidering the efficiency of that message). Dogmatic and blind faith lead nowhere. Listen to OGs, but draw your own conclusions – I doubt anyone will disagree with this.

Until the maximalists can physically block or reverse your transactions, you have nothing to worry about.

And please, for the love of God, understand that dismissing reasonable criticism of flawed networks as ‘Bitcoin maximalism’ is not a valid argument. You’re thinking of Bitcoin terrorism.