Bitcoin maximalism is interesting. In short, a Bitcoin maximalist is someone who feels like the crypto revolution should begin and end with Bitcoin. Any other alt is a distraction.
Bitcoin maximalism is a phrase often attributed to Vitalik Buterin who described the emerging belief that the only desirable outcome of this “quiet revolution” is a Bitcoin monopoly. All other coins are at best a distraction and at worst a wrench in the chain.
What do you think?
It’s an interesting debate, and you can’t help but wonder. Did Satoshi get it right the first time? Is it really not possible for Bitcoin to be improved upon?
The Argument in Favour of Maximalism
This Twitter thread is a great breakdown of why you should be in favour of Bitcoin maximalism:
The argument can be broken down into two fronts – the existing adoption, and trust factor.
The first is easy to explain. Bitcoin is by far the most adopted crypt-asset in the world, and is almost synonymous with blockchain. A first-time investor needn’t devote much time to additional research (and the possibility of being scammed) if they just stick to Bitocin.
Apart from competing for resources, like developers or capital, bitcoin maximalists also believe other cryptocurrencies steal mindshare from the original coin or provide an excuse for governments to try to shut the whole crypto industry down.
Bitcoin’s trust comes from its development. Bitcoin maxis often note that Satoshi stepped away from the project without profiting from their work. Bitcoin was simply released into the world, with little fanfare or credit.
Compare that to any altcoin, where the names of the projects founders and developers are well-known, giving them outsized influence on the market.
The Argument Against Maximalism
While each of the above arguments have a certain merit, they can be contested. But before we do, let’s look at the primary argument against Bitcoin maximalism.
Bitcoin uses the proof-of-work protocol to verify its transactions. As a result, an enormous amount of energy is needed to process the growing volume of transactions. The amount of power needed to secure the Bitcoin blockchain is getting so large that, as of 2021, it exceeds the total amount of energy consumption of the country of Pakistan.
For all that consumption of energy, Bitcoin throughput is still very low, processing a maximum of 5 transactions per second (TPS). For context, Ethereum manages 30 TPS, and that is still considered slow. Payment gateways like PayPal process 193 TPS at a significantly larger scale.
In other words, Bitcoin’s scalability issue is preventing it from being accepted for widespread use for financial transactions since it cannot handle the volume. As a result, other blockchain networks and their cryptocurrencies are needed, which punches a hole in the Bitcoin maximalist ideology.
This is before getting into more abstract ideas like the fact that every solution can be iterated on, or that specialist solutions exist.
I asked the Z-Team this same question:
‘Do you consider yourself a Bitcoin maximalist?’
The response was an overwhelming no, as 96% of respondents said they preferred a more diversified approach. One response summed it best:
‘I disagree, because finance is too big a space and crypto is too new a space to put all your eggs into one basket’
There you have it. So, what do you think?