What is Bitcoin Maximalism & why is it important?
- What is a Bitcoin Maximalist?
- Crypto Tribalism
- Maximalism, Shitcoins & Toxicity
- The Empire Strike Back
Bitcoin Maximalism might sound like a character out of the Gladiator movie, but any word ending with ism relates to belief in a particular political idea or philosophy. In the case of Bitcoin Maximalism, it describes a fervent belief that Bitcoin is the one true decentralised digital currency that will persist at the expense of all others. If you care about adoption then you should care about Maximalism, because it is at one end of a spectrum of opinion on what the future of crypto should be.
It would be an understandable mistake to assume that the crypto community has a shared set of beliefs. That there is one crypto banner and one goal - to replace the government controlled variety of money that has prevailed for the last few thousand years.
The difficulty is, that as with any complex subject lacking a black and white definition, what cryptocurrency represents, is open to interpretation. Where there is interpretation, there is tribalism. Which means many banners, beliefs and visions for the future of private digital money, played out aggressively across social media.
Bitcoin Maximalists are one of those crypto tribes - one, if not the, most important. They believe that Bitcoin satisfies all the qualities of sound money. It is digitally scarce and truly decentralised. All other coins fail that test and are, therefore, either unnecessary or created out of opportunism.
Satisfying both digital scarcity and decentralisation is a lot harder than it sounds, especially as Bitcoin Maximalists (which we can abbreviate to Maxis) see them as mutually inclusive. You can’t have one without the other.
Bitcoin has a set of rules - the Bitcoin Protocol - that defines how that scarcity is achieved, and a network of participants that don’t need to trust each other to know each will abide by them.
Maxis argue that if you can simply change the rules, then the system isn’t truly decentralised. And the reason they believe that cannot happen to Bitcoin is because its creator - Satoshi Nakamoto - has always been anonymous, and last communicated back in 2010.
One can only assume Satoshi intends to have no further influence on the system he/she created, and more importantly, that they knew that the success of their creation was conditional on them letting go of the reins. With no central figure influencing the protocol, the network of nodes running Bitcoin’s network is the only attack surface, and that is so large that coercive control is practically impossible. In the eyes of maximalists, that is true decentralisation.
Bitcoin is regarded as the first cryptocurrency, though that word doesn’t appear once in its blueprint - the Bitcoin White Paper. It was coined afterwards, and is an umbrella term for currencies that employ cryptography.
Maximalists resent Bitcoin being lumped in with other cryptos, while each of the new currencies believe they either improve on Bitcoin’s design - offering faster and/or cheaper transactions - or offer something that Bitcoin can’t, such as smart contract capability.
Maxis also believe that any feature Bitcoin lacks can be added in time, pointing to the Lightning Network as the solution to faster/cheaper transactions, or the recent Taproot upgrade as a crucial step to enabling smart contract capability.
Maximalism, Shitcoins & Toxicity
We shouldn’t be surprised that opinions are divided on the future of money, given the stakes are so high. And let’s not forget that the guardians of existing monetary systems aren’t simply rolling over either.
This volatile mix of tribes, defending the virtues of their solution to one of the biggest problems civilisation encounters and the biggest source of conflict - transferring wealth - are constantly engaging in a war of words and memes.
The word shitcoin is how Maximalists refer to any other digital currency - fiat included - and is as pejorative as you can get. Your coin is shit, worthless. This aggressive stance has led to Maximalists, and their defence of Bitcoin, being labelled as toxic by those you view decentralisation in less strict terms.
The aggressive undertones of this battle for the soul of money are evident in military names that these tribes give themselves - the XRP Army, the Link Marine. What could arguably be described as the defining moment in Bitcoin’s short evolution, the debate around it could/should scale, was also couched in military terms, forever known as the Blocksize Wars.
Waged from 2015-2017, this culminated in the splitting of Bitcoin (known as forking) into a new variant allowing for larger blocks - Bitcoin Cash - in August 2017. That in turn split again into another variant called Bitcoin SV - short for Satoshi’s Vision - in November 2018.
There have been 105 Bitcoin forks, and literally thousands of different cryptocurrencies based on different blockchains, with their own approach to consensus. Each is a tribe, though there are broad alliances where coins share an underlying blockchain, most commonly Ethereum.
What Bitcoin Maximalists will consistently point to as being the critical points of differentiation is a central point of weakness - someone in charge - and/or a lack of genuine scarcity.
Though there is a clear sense of toxicity in the way Maximalists describe shitcoiners, and visa-versa, they both exist to fix the broken fiat money system, they just disagree about how that should happen. Meanwhile, the biggest army of all is gearing up to defend the status quo against pretenders from right across the crypto spectrum.
The Empire Strike Back
A broad alliance of governments and global institutions, like the IMF, sensing crypto adoption rising, are digging in to defend their right to control money through regulation. At the same time they are pursuing more progressive measures to adopt aspects of crypto and create digital versions of fiat money, so called CBDC - Central Bank Digital Currencies - in order to maintain their authority.
So if we come back to our idea of a spectrum of beliefs about the future of money, Bitcoin Maximalists are at one end, governments and existing financial institutions are at the other (developing CBDCs), and somewhere in the middle is a mix of different approaches to ‘crypto’ with varying degrees of decentralisation.
The recent Senate Banking Committee Hearings - Cryptocurrencies, what are they good for? - is a prime example of the state making a defensive position. Bitcoin Maximalists will only be satisfied with all-out victory, while the pragmatists argue that regulation and compromise are inevitable.
You don’t necessarily have to pick a side in this battle, though it will likely have huge implications for your future. What is important, is to at least know that there is a war being waged for the future of money, and that under the banner of the Bitcoin Maximalists, are those who see themselves as defending the only truly scarce, decentralised and permissionless version of digital money. Qualities that they feel will inevitably lead to victory.