Some followers of Bitcoin have made strong cases for the relevance of the impact of Bitcoin. Others have opposing views and believe that Bitcoin merely opened the doors for the cryptocurrency industry. Ultimately, however, Bitcoin has long been caught in the middle of heated debates. In this article, we will examine the tenets of Bitcoin maximalism, the ideology at the center of most crypto debates, supporting arguments, and criticisms of the ideology.
Bitcoin Maximalism, or Bitcoin dominance maximalism, is an ideology that proposes that Bitcoin, the premier cryptocurrency, is the most important coin. According to Vitalik Buterin, founder of Ethereum, Bitcoin maximalism is based on the idea that Bitcoin should always monopolize the cryptocurrency scheme. Followers of the belief are called Bitcoin maximalists, and they believe that launching, supporting, or investing in other coins is wrong and that the process strays away from the vision of Satoshi Nakamoto, the creator of Bitcoin. VItalik was the one who coined this term, at first as an insult, but recently he has shown some impartiality through an article entitled “In Defense of Bitcoin Maximalism”.
Bitcoin maximalists argue that there is no use for altcoins and propose that all innovations within the cryptocurrency industry should be built on the Bitcoin network. Bitcoin maximalists should not be confused with mere followers of Bitcoin. While Bitcoin users merely express their desire for the growth of Bitcoin, maximalists believe that no other coin comes as close as Bitcoin and can’t be challenged.
Bitcoin maximalism is largely built on the purpose for which Satoshi Nakamoto created Bitcoin- to serve as a decentralized peer-to-peer monetary system. Thus, maximalists believe that Bitcoin is larger than an asset class and should be considered the future digital currency. Some maximalists, commonly referred to as platform maximalists, believe that all innovations, such as smart contracts, DAOs, and lending platforms, stray from the original purpose, and if they were to be built at all, they should exist only on the Bitcoin network.
At the core of the Bitcoin Maximalism argument is the dominance Bitcoin has over other cryptocurrencies and the fact that it is the foundation upon which newer crypt innovations stand. Nevertheless, the Bitcoin network has some features that make the philosophy desirable.
Bitcoin’s technology is set up in a way that sets it apart from other protocols. Bitcoin’s blockchain network has something referred to as the network effect. The network effect is a value or feature of a network that makes it so that the system’s value is equal to its use rate. This means that as much as Bitcoin’s users continue to grow, the network will continue to grow. This network effect results from some specific features of the Bitcoin blockchain model.
These features include its size stability effect; Bitcoin, with over 39% of the market share and a market cap of over 300 billion, can remain more stable. Additionally, Bitcoin is the most widely used coin and is more likely to be the first coin that new cryptocurrency users invest in.
Bitcoin’s network is designed to discourage attacks. It is based on the Proof of Work consensus model, which requires many nodes to reach a consensus. At the time of writing, Bitcoin has over 40,000 reachable full nodes, which is much higher than any other network. Its blockchain system provides the biggest protection from 51% attacks because it discourages centralization.
Furthermore, the cost of performing a 51% attack on Bitcoin is much higher than any other network. According to Crypto 51, the cost of a one-hour hash attack on Bitcoin stands at $910,495, while its hashable percentage is at zero.
Because Bitcoin dominates the cryptocurrency industry, the success of smaller coins is tied to the performance of Bitcoin. According to a report by Binance, the prices of all cryptocurrencies in the industry are correlated to Bitcoin at 0.78, which is high when put in view that 1 is a perfect correlation. If the price of Bitcoin falls drastically, the rest of the industry will fall along with it. Because it is the largest coin and controls the largest market cap, most of the investment loss will come from it.
Even though Bitcoin is yet to suffer an attack, it is obvious that if the network were to fail or suffer a serious attack, the cryptocurrency industry would suffer a serious blow to its credibility. This feature encourages some Bitcoin maximalists to propose that investing in other coins is a waste of time.
While some developers and notable figures in the cryptocurrency industries have argued strongly against Bitcoin Maximalist, the fact is that the ideology stands strong. Here are some of the notable figures in the industry that make that possible.
While most Bitcoin maximalists can overlook the problems with Bitcoin, these problems remain, and for maximalism to become the preferred view, the network needs to overcome these hurdles.
Critiques of Bitcoin often raise the following points in their arguments against Bitcoin maximalism:
While the popularity of Bitcoin is a good thing when examined through the lens of the network effect, the truth is that Bitcoin’s consensus model cannot handle a large volume of transactions. The level at which a network can process transactions and validate them is referred to as scalability. With such a large number of users and transactions on the network, the volume of transactions on the Bitcoin network has grown so much that the network nodes are now getting overwhelmed and having trouble processing enough transactions on time.
Additionally, to process the growing volume of transactions, the Bitcoin network would need to add more nodes, thus increasing the computing power needed to validate transactions on the network. This use of computational power is so much that it exceeds the total energy consumption of Pakistan and is detrimental to the environment.
While the market cap and popularity of Bitcoin allow the cryptocurrency to maintain a relatively stable price, the coin is still subject to fluctuations within the market. The coin fluctuates too wildly and can not be considered a medium of exchange.
Perhaps the most innovative developments in the cryptocurrency industry are smart contracts and dApps. Smart contracts are automated lines of code that contain terms and agreements between two parties. dApps, on the other hand, are applications under the decentralized finance movement. Both of these innovations cannot yet be hosted on the Bitcoin network. Without these innovations being built on the network, the use cases for Bitcoin are limited and, as such, cannot be considered the be-all, end all of the cryptocurrency industry.
At the center of many debates in the cryptocurrency industry are Bitcoin maximalists, often referred to as a small, flailing shrinking group of bit coiners who have made Bitcoin their entire personality. This group has received a lot of criticism and bashing from others in the industry, notably Nic Carter, prominent venture capitalists.
However, these critics have not explicitly defined an opposing view. After a recent attack on Nic Carter, Carter distanced himself from the movement with an article criticizing the Bitcoin maximalist movement. Other pioneers have merely redefined their stance. Alex Adelman, CEO of Lolli, refers to himself as a Bitcoin optimist, and Dan Held, a formerly zealous maximalis,t now calls himself a Bitcoin mostamalist.
Nevertheless, while these opposing views and ideologies have little features that distinguish them from one another, we may group them as one view that opposes maximalism. Thus, the ideology on the other end of the cryptocurrency war is referred to as Bitcoin Minimalism. Minimalism is an ideology that recognizes Bitcoin’s dominance in the industry but also accepts that Bitcoin is the coin that opened the doors for inspiring blockchain innovations.
Bitcoin minimalists accept that building more complex innovations on the Bitcoin network may be impossible and accept using alternatives for this purpose. Some minimalists are also hopeful for the future of Bitcoin. They hold on to news of newer updates like the layer 2 platforms that will open Bitcoin up to dApps, smart contracts, and NFTs.
However, Bitcoin minimalists do not fail to commend other coins, such as Ethereum, for birthing and giving space for these innovations. They accept the role of other coins, particularly stable coins like tether, in supporting the capitalization and liquidity of Bitcoin.
Finally, Bitcoin minimalists accept the monetary value of Bitcoin and, like their colleagues, the maximalists, compare it to the store value of gold.
Notable Bitcoin minimalists include Vitalik Buterin, founder of Ethereum, and Jamie Dimon, CEO of JPMorgan Chase.
The cryptocurrency war may never end, but one thing is certain, the possibilities of the blockchain are near endless. Even now, financial institutions have adopted cryptocurrencies like Litecoins, proving that Bitcoin is not the only coin that can be used as a digital medium of exchange. Ultimately, the cryptocurrency industry will continue to sprout more blockchain solutions, and one day, digital assets, Bitcoin, altcoins, and stable coins alike will be considered a staple in daily transactions.