{"id":8148,"date":"2022-07-12T12:00:00","date_gmt":"2022-07-12T12:00:00","guid":{"rendered":"http:\/\/ci02a5f0f530002651"},"modified":"2022-07-12T12:00:00","modified_gmt":"2022-07-12T12:00:00","slug":"why-bitcoin-maximalism-is-critical","status":"publish","type":"post","link":"https:\/\/bitcoinmagazine.com\/culture\/why-bitcoin-maximalism-is-critical","title":{"rendered":"How We Should Really Think About Bitcoin Maximalism"},"content":{"rendered":"
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This is an opinion editorial by Stephan Livera, host of the \u201cStephan Livera Podcast\u201d and managing director of Swan Bitcoin International.<\/em><\/p>\n

It\u2019s time to clear a few things up. While there has been a lot of digital ink spilled over the years debating the concept of Bitcoin Maximalism, we seem to be going back to some of the same arguments over and over \u2014 notably in Nic Carter\u2019s recent Medium post<\/a> and Pete Rizzo\u2019s Forbes post<\/a>.<\/p>\n

Here are a few thoughts I want to add: Critics of Bitcoin Maximalism seem to believe that maximalists are just toxic, hoi polloi, and not technically savvy on the realities and realpolitik of the \u201ccrypto\u201d world. Bitcoin Maximalists on the other hand tend to believe their worldview is the ethical, rational and pragmatic stance to take in a world corrupted by fiat currency. So, what does it really mean to be a Maximalist? <\/p>\n

What Is Bitcoin Maximalism?<\/h2>\n

I view Bitcoin Maximalism as simply being the view that bitcoin will someday be global money and\/or that we\u2019ll live on a bitcoin standard. This is otherwise known as \u201cMonetary Maximalism,\u201d but where is the monetary Maximalist idea coming from? Generally, it is based on the idea that money is the most marketable good, and that bitcoin has superior monetary qualities. There is a tendency toward the most marketable good, as Ludwig von Mises spelled out in \u201cTheory Of Money And Credit<\/a>\u201d:<\/p>\n

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\u201cThe greater the marketability of the goods first acquired in indirect exchange, the greater would be the prospect of being able to reach the ultimate objective without further manoeuvering. Thus there would be an inevitable tendency for the less marketable of the series of goods used as media of exchange to be one by one rejected<\/strong> until at last only a single commodity remained, which was universally employed as a medium of exchange; in a word, money.\u201d <\/p>\n<\/blockquote>\n

What Do Most Bitcoin Maximalists Believe? <\/h2>\n

In practice, most of the Maximalists I know are simply disinterested in non-monetary uses and are more interested in distinguishing Bitcoin from all of the \u201ccrypto\u201d garbage out there. And at times like these<\/a>, with so many crypto lenders stopping withdrawals (e.g., Celsius, Vauld, Voyager), filing for Chapter 11 bankruptcy (e.g., Voyager) or taking bailout deals (e.g., BlockFi, Voyager), there\u2019s a strong case to say the Maximalists were right. <\/p>\n

At the time when newcomers were running like yield-chasing lambs to the slaughter on these platforms, it was Bitcoin Maximalists who were warning about the rule, \u201cnot your keys, not your coins,\u201d and warning against high-risk yield platforms. <\/p>\n

What Do Most Maximalists Actually Want?<\/h2>\n

Really, what most Maximalists want is clear separation between Bitcoin and all the other stuff. As I see them, they are generally focused on promotion and support of Bitcoin. They may act to warn against false promises or against gambling on \u201ccryptos,\u201d or against inaccurate attacks on Bitcoin. <\/p>\n

They generally want the altcoiners to stop attacking Bitcoin as part of their marketing. Bitcoin has no centralized foundation with a marketing budget, but many altcoins do. Many altcoiners spend time trashing Bitcoin in public media as a means of marketing their altcoin. Altcoiners attacking Bitcoin is often a necessity because there\u2019d be no need to even think about<\/em> their altcoin unless you believed some FUD about Bitcoin. Historically, this has taken the form of<\/a>, \u201cBitcoin isn\u2019t fast enough, therefore use my faster altcoin.\u201d<\/p>\n

In some cases, people associated with altcoins will explicitly sponsor attacks on Bitcoin. The executive chairman of Ripple, Chris Larsen, for instance, openly sponsored a $5 million attack on Bitcoin\u2019s proof-of-work security<\/a> (with a donation to Greenpeace USA). <\/p>\n

If altcoiners did not attack Bitcoin, and did not attempt to \u201cride the coattails\u201d of Bitcoin by conflating things together in a \u201ccrypto\u201d industry, there\u2019d be far less conflict. <\/p>\n

Monetary Maximalism, Not Platform Maximalism<\/h2>\n

But Bitcoin Maximalism, as thought of in the context of Monetary Maximalism, can and should be contrasted with Platform Maximalism. The idea here is that everything should be built \u201con top of\u201d Bitcoin and any alternatives should be discouraged completely. <\/p>\n

But I can rightly understand the critique of \u201cPlatform Maximalism\u201d because not everything can be or should be built \u201con top of\u201d Bitcoin. There will be some things that are simply not technically feasible to put on top of Bitcoin, or they would require making unacceptable trade-offs to do so, harming Bitcoin\u2019s decentralization, strict supply cap, verifiability, accessibility or scalability. <\/p>\n

But critics of Bitcoiners will sometimes conflate and attack the Platform Maximalist view as though that is what all Bitcoin Maximalists believe, when Platform Maximalism is really a more rare view in practice. <\/p>\n

What does \u201cBeing Built On Top Of Bitcoin\u201d Mean, Anyway? <\/h2>\n

Even this question becomes difficult to cleanly define. Most would say the Lightning Network, using bitcoin UTXOs to open\/close channels, clearly is being built on top of Bitcoin. But when it comes to things like sidechains, federated sidechains, altcoin cross-chain swaps, etc., perhaps it\u2019s less clear. <\/p>\n

For example, does a cross-chain atomic swap from Bitcoin to an altcoin count as being \u201cbuilt on Bitcoin\u201d? Debatable. It certainly wouldn\u2019t qualify as Bitcoin-only. <\/p>\n

That said, should stablecoins or IOU tokens be classified as altcoins, or just something different entirely? For example, the use of L-BTC on Liquid to represent pegged-in bitcoin IOUs seems an upfront and unobjectionable way to represent what\u2019s going on. There is at least no altcoin that can be pumped and dumped by insiders onto unsuspecting retail investors. The amount of bitcoin pegged into the Liquid federation can be verified externally, and L-BTC can be viewed more like a money substitute, in the \u201cmoney certificate\u201d sub-category as outlined below:<\/p>\n

<\/figure>\n

And What Of Stablecoins?<\/h2>\n

As for stablecoins, aren\u2019t they just crypto-fiat? Firstly, the name is a bit misleading. They\u2019re not really so stable, more just steadily declining, just like fiat currency is over time. Secondly, most people accept that for now, fiat is still dominant and that stablecoins may form part of the process of slowly shifting the world to a bitcoin standard. I could see pathways where some new users (often not in the Western world) start using stablecoins and then slowly transition over to using bitcoin once they are more comfortable. <\/p>\n

No matter how good stablecoins are for short-term payments, they are still not suitable for long-term savings. Stablecoins track fiat currency, which is continually decreasing in purchasing power. A key part of the case for Bitcoin maximalism is that billions of people around the world need something they can save<\/em> with. This savings demand is also known as reservation demand, and it is a key component in the process of an asset becoming money<\/em>.<\/p>\n

<\/figure>\n

On the other hand, it\u2019s also possible to see government regulatory action or legislative action come that regulates stablecoins in such a way that they lose their relative ease of use. For example, this could happen if stablecoins were to be regulated as money market funds, or with additional banking regulations that required KYC on every step of stablecoin use, or if private stablecoins were regulated heavily in favor of promoting government-issued central bank digital currencies (CBDCs). At that point, it would become even more clear that Bitcoin is uniquely censorship- and inflation-resistant.<\/p>\n

Is Bitcoin Maximalism Boring?<\/h2>\n

Is Bitcoin Maximalism boring or is it just consistent? Maybe savings shouldn\u2019t be so \u201cexciting,\u201d anyway. What the world needs is definancialization, and part of that is the long-term process of sucking out the \u201cmonetary premium\u201d that is currently held up in physical properties, stocks or bonds. Over time, we anticipate more people to choose Bitcoin, or \u201cdefect to\u201d Bitcoin, if you like. Instead of stacking bonds, index ETFs or properties, people will stack sats. <\/p>\n

While savings might be \u201cboring,\u201d if we\u2019re talking about exciting things, why not consider the impact that sound money would have on the world? There are all manner of sociological impacts that will come from bringing about non-state money. This is because fiat money changes culture<\/a>. A lot of the altcoin projects seem more like chasing the next shiny thing, and they like to move fast and break things \u2014 but Bitcoin as a movement is about civilizational infrastructure. <\/p>\n

\u201cBut There Are Lots Of Other Chains With Demonstrated Value\u201d<\/h2>\n

So, the claim that altcoins have demonstrated throughput or fees paid represents the protest of altcoiners that there are meaningful uses of altcoin chains and financial services being provided in a decentralized way. They argue that this will be a multi-chain world and some even go so far as to say that Bitcoin will be flippened because this activity is not taking place on Bitcoin. <\/p>\n

But really, how much of this was just because of the shitcoin casino factor? The leverage casinos can definitely pull a crowd, but is that the crowd that matters? Will these be the people who HODL through the big drawdowns, and stack consistently? Will these be the people who build companies, code and review software or build hardware that helps advance the Bitcoin monetary revolution? <\/p>\n

Altcoin promoters and apologists will point to the volume of transactions, fees paid, or total value locked (TVL), and the use of cross-chain \u201cbridges\u201d as to why it will supposedly be a multi-coin future. Some will argue that altcoins are building up an \u201ceconomic engine.\u201d But from the Bitcoin monetary maximalist POV, there\u2019s little reason to continue holding utility coins anyway. <\/p>\n

See this critique of utility coins by Adam Back, CEO of Blockstream:<\/p>\n

<\/figure>\n

It may well be that people use different rails to transfer value, but the Bitcoin revolution is very much about growing the base of HODLers\/stackers\/savers. Just like how you can use Zelle or PayPal or Cash App to send USD, the thing that helps the USD is that there are lots of people who want to hold<\/em> it, and people who price their deals and exchanges in USD. <\/p>\n

So even if there is a lot of transactional flow on altcoin chains, or even if lots of stablecoins are flowing via altcoin chains, what matters is that bitcoin\u2019s scarcity and overall qualities are valued by people. Even if bitcoin is \u201cheld on\u201d Binance Smart Chain in a \u201csmart contract,\u201d how is this meaningfully different from say, bitcoin held by a custodian such as Coinbase, BitGo or the like? At the end of the day, all of Bitcoin\u2019s coins are existing on Bitcoin\u2019s ledger, there are just different custodians of it. The number of people HODLing bitcoin and wanting to stack it is what matters most. <\/p>\n

Bitcoin The Tool And Bitcoin The Movement <\/h2>\n

Running with this idea from Sergej Kotliar of Bitrefill<\/a>, it\u2019s important for us to understand the difference between neutral \u201cBitcoin the tool\u201d users, and those who are ideologically aligned with the Bitcoin movement (broadly speaking: cypherpunks and libertarians). Just as there are millions of BitTorrent users who would never go to a BitTorrent conference or consider themselves part of the \u201cBitTorrent movement,\u201d there are Bitcoin users who are similar. <\/p>\n

They use Bitcoin tools just by searching online for \u201cbest bitcoin wallet\u201d or they use the already existing wallet by their providers e.g., blockchain.info wallet, as that has been around for ages. They even use shitcoin wallets like Exodus. Now, as maximalists and members of \u201cbitcoin the movement,\u201d we can certainly have our views about shitcoin wallets and companies that aren\u2019t popular among Maximalists in the space (Blockchain.info or Coinbase as examples). But we do have to accept the reality that currently, shitcoin casinos have a lot more users. They may currently be able to drive more new users into shitcoin wallets than we can funnel into bitcoin-only non-custodial wallets. At least, for now. <\/p>\n

How Bitcoin The Movement Still Wins<\/h2>\n

The main things that altcoins can\u2019t match are the monetary properties and decentralization of Bitcoin. But in addition, they can\u2019t match the size and quality of the Bitcoin movement. There are Bitcoin meetup groups around the world, developers working to advance the protocol and applications, peer-to-peer bitcoin trading in many cities and miners distributed around the world.<\/p>\n

Many people work to advance Bitcoin\u2019s adoption because they believe it is the right thing to do. As a community of advocates, educators, builders \u2014 we do have the ability to drive the direction in terms of what gets built out, and the products and services that get taught to newcomers, especially if they are our family and friends. Altcoin communities are nowhere near as stable because the alts are so fickle, one day they are pumping 10 times, and the next it\u2019s all gone bust or imploded. While the vast majority of altcoins that pump are basically one-hit wonders, as explained by Sam Callahan and Cory Klippsten of Swan Bitcoin<\/a>, Bitcoin remains and carries on growing over time.<\/p>\n

<\/figure>\n

While there are lots of users who aren\u2019t strongly engaged with the movement, they do end up benefiting from the things done by \u201cBitcoin the movement.\u201d I believe driving adoption of non-custodial scaling technology and privacy technology will be done by ideological Bitcoiners who want to ensure that Bitcoin remains freedom technology. And the benefits will flow down later to the \u201cneutral\u201d users who don\u2019t really care that much either way. <\/p>\n

Summing Up<\/h2>\n

So in summary, Bitcoin Maximalism is the view that we\u2019ll live on a bitcoin standard. Maximalists want to clearly distinguish Bitcoin from \u201ccrypto.\u201d They are focused on development, building, education and community growth. There is pressure not to shitcoin scam or shitcoin grift, and this is generally done for the sake of retail consumer protection. Other projects may exist, and they may even attempt to interoperate or connect with Bitcoin in some way, but ultimately, this is about the Bitcoin monetary revolution.<\/p>\n

Thanks to my friends <\/em>Michael Goldstein (aka Bitstein)<\/em><\/a> and <\/em>Giacomo Zucco<\/em><\/a> for their feedback on this article.<\/em><\/p>\n

This is a guest post by Stephan Livera. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

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