The case for Bitcoin Maximalism

A look at the most valid arguments that Bitcoin is the only cryptocurrency that matters.

There has always been a bit of strife between those that consider themselves “Bitcoin maximalists” and those that see value in other cryptocurrencies. The former arguing that all other cryptocurrencies have no value and that Bitcoin is the only one that matters. The latter claiming that Bitcoin is old, slow and expensive; that something else will — or even should — replace it.

There is, of course, a whole lot of middle ground between these two views as well, however browsing through Bitcoin and Cryptocurrency Twitter quickly exposes you to these more extreme sides.

I have spent a lot of time thinking about the positions on both sides and have tried to rationalise the different viewpoints. In this chapter, I want to explore what I think are the three most valid arguments from the “Bitcoin maximalist” side and try to summarise the thinking behind Bitcoin being the only coin that matters.

Bitcoin is the only digital asset that had a truly “natural” distribution.

The truly unrepeatable aspect of Bitcoin was the fact that it had no value for the first 1.5 years of its existence. Being the first of its kind at its genesis, and not yet in the limelight, meant that it didn’t trade on any exchange. In fact, there weren’t even any exchanges capable of doing so. Likewise, nobody used it to purchase goods or services and therefore nobody could place a value on this magical internet money. This meant that bitcoin circulated freely amongst those that were interested in it — the cypherpunks that idolised non-state money, the tech-geeks that recognised the genius of the system, and the (very) early adopters that didn’t immediately dismiss the idea.

This meant that Bitcoin was not immediately bought up by whales, hedge funds and institutions — a feat that is simply irreplicable in a world where everyone is looking for the next bitcoin. New cryptocurrencies get bought up while they’re cheap, in the hope to replicate the extraordinary investment opportunity that Bitcoin was in its early days, and therefore not achieving the same fair distribution that Bitcoin did.

Nothing can ever replicate the truly natural formation and circulation of bitcoin.

Cryptocurrencies are not all created equal — and proof-of-stake coins are simply not as immutable as Bitcoin.

This is a point that I think is easy to forget. It’s easy to get caught up in the latest-and-greatest technology that claims to solve the issues of Bitcoin — improving the transactions per second, removing transaction fees, or enabling more complex functionality on the base layer. However, all of these things come at a cost, and this cost often comes in the form of security, immutability and decentralization; the 3 pillars of Bitcoin.

One example of this is Proof-of-stake, which is often pointed to as “the solution” to the Proof-of-work energy cost of the Bitcoin network. They usually fail to mention, however, that it drastically changes the immutability of the chain as there is no external cost involved in rewriting the history of transactions. Another example is a block size or block time increase to increase the base layer throughput — both of which reduce decentralization over time as the size of the blockchain increases and nodes become more expensive to run.

Even if another coin launches which does seemingly improve on some aspect of Bitcoin and theoretically doesn’t have a trade-off associated with it — in this situation, Bitcoin already has a 12 year lead on the trust that has been formed around it. Ultimately any new cryptocurrency would need to prove itself, which can only be done through years of being battle-tested with lots of money at stake. In this regard, nothing would be able to catch up to Bitcoin, unless Bitcoin had a serious technical issue that suddenly came to light.

Put simply; there is no other cryptocurrency that meets these 3 pillars while being time-tested to the same degree — which leads to a high degree of faith in the security of the system as a whole. This isn’t to say that there isn’t any useful innovation happening in other cryptocurrency projects, or that these other coins won’t have their own uses and be successful in their own way — but it is important to remember where Bitcoin shines.

Bitcoin currently makes up 60% of the market capitalisation of all cryptocurrencies (of which there are thousands). If we were to compare only with other cryptocurrencies that are trying to be money (as opposed to fancier applications such as smart contracts), this percentage would be even higher.

The fact that this dominance continues to be this high, even after 10+ years of altcoins shows just how much of a network effect lead Bitcoin has.

When you also take into consideration that tons of other cryptocurrency projects are filled with scams, pre-mines and hidden centralization, and keeping in mind the things I mentioned above; it’s easy to understand why people might choose to simply ignore everything that isn’t Bitcoin.

Looking from the perspective of someone that is only really interested in replacing/hedging state-issued money, and who values decentralisation and security above all else, these aforementioned issues are glaringly important. Bitcoin must be hyper-secure, immutable and decentralised in order to be a trustless global currency/asset, and it needs to be distributed as naturally as possible. Bitcoin has already solved this problem, and frankly — already won.

However, I do think that the innovation happening in the rest of the cryptocurrency space is still worth paying attention to. Having too narrow of a view does a disservice to the sheer potential that other decentralized trustless systems could enable in other areas — systems that are not necessarily looking to compete directly with Bitcoin in the first place.

Bitcoin, rightly so, is slow to adopt new features — something that is important for a global hard monetary asset. But this means that innovation is pushed out to the edges and forced into new projects — some of this going upwards onto layers built on top of Bitcoin, and some going sideways to other cryptocurrencies entirely. And sure, these other projects have issues that Bitcoin doesn’t, but the diamonds that might come out of the rough could revolutionise something that we haven’t even considered yet.

Just be sure to remember: these projects are making trade-offs somewhere. Make sure you know what they are - and consider whether they are actually worth it.

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