Bitcoin maximalists believe that Bitcoin, the world’s most popular cryptocurrency, is the only digital asset that will be needed in the future.
In 2017, a year when every single altcoin was either dead or dying and everyone had lost their minds over ICOs (initial coin offerings) – a new type of fundraising mechanism for cryptocurrencies like Ethereum, Cardano, Stellar Lumens, etc. – the word “maximalism” came into vogue as an insult to those trying to build blockchain-based projects on top of existing blockchains.
It wasn’t long before someone started using it to describe any project built on top of another, especially if they wanted to have more control over how things work. This may explain why many call Libra, Facebook’s upcoming stablecoin, “the first real Maximalist Project”. But what does this really mean, and why has there been such a backlash against it? What makes something a maximalist project?
Maximalism in Bitcoin
Maximalism can be defined as both a philosophy and a method of building software systems. It usually involves breaking down large tasks into smaller ones, while keeping everything else consistent with each other. For example, instead of creating your own payment system, you can use PayPal, Venmo, AliPay, etc., all of which are different forks of Paypal, but still compatible with it. If you run a website, you don’t need to write the code yourself, just buy hosting space somewhere. You can choose between several providers, but make sure they are compatible with each other. In general, anything that isn’t broken should stay broken. That said, maximalism is not about doing nothing at all. Some advocate the idea of starting small and growing big later, perhaps by adding more users gradually. Others simply want to do what they feel like without worrying too much about other people’s opinions, even if it means sacrificing functionality. The latter group often refer to themselves as Bitcoiners since they strongly believe in decentralization and freedom of choice. They also tend to believe that others should not be able to dictate the rules of the game unless they are willing to pay a price for it.
This attitude is best exemplified by Andreas M. Antonopoulos, better known as “Mr. Money Mustache,” who runs his own blog where he shares stories of personal finance triumphs along with advice on how to live frugally and save money. He once wrote an essay called “Why I’m a Bitcoiner,” outlining the reasons behind his support for decentralized currencies. One reason stood out because it reflected the mentality of Bitcoin maximalists:
I’m a maximalist because no matter what happens, bitcoin is here forever… And I’ll tell you why: Because nobody knows how it works. No government body controls it. No powerful programmer sits and makes decisions about what happens in the core protocol. No one gets rich from the back-end fees. There is no central authority saying we have to change our designs now because someone wants us to. Bitcoin doesn’t care about any of that. It is very important.
So far, the term “bitcoin maximalism” seems synonymous with libertarian ideals. However, according to the Merriam-Webster dictionary, it actually comes from Satoshi Nakamoto, the creator of Bitcoin, who used it to refer to himself. Also remember to sign up for free bitcoin cashback rewards.
So is Mr. Money Mustache really a bitcoiner then? Not completely. While he believes that Bitcoin must stay true to itself and never compromise, he believes it will serve society well if governments eventually get involved in regulating the industry. In fact, he writes three times on his blog that he supports the regulation of crypto trading platforms. Moreover, he acknowledges that many consider him a traitor because of this position. Nevertheless, he is adamant that Bitcoin should be free, private, open source and permissionless. He may not agree with certain rules, but he feels strongly enough about these principles that he calls himself a “realistic idealist.”
Bitcoiners generally disagree with this sentiment, believing that a multitude of assets beyond bitcoins exist today. While this may sound strange coming from libertarians, it is worth noting that many economists subscribe to Austrian school economics, which promotes market efficiency through competition between competing firms. Therefore, they argue that while commodities such as gold exist, fiat currency is the only truly valuable thing in the economy.
A prominent proponent of this line of thinking is Nouriel Roubini, professor emeritus at New York University Stern School of Business, former senior adviser to US Treasury Secretary Steven Mnuchin, author of the books Crisis Economics and Global Financial Meltdown, founder of Roubini Macro Associates LLC, and host of CNBC -the show Street Smart. On Twitter, he describes himself as a realistic optimist. When asked if Bitcoin will die soon, he replies: “No, but it won’t survive long.”
To understand why he holds such views, let’s take a look at a few tweets from his timeline.
Here’s one from February 2018 titled “How did Blockstream manage to destroy Bitcoin?” And here’s another from April 2019. Titled “Crypto Mania Is Coming To An End,” the tweet claims that Bitcoin will eventually crash due to various factors, including increased adoption rates, increased supply, speculative bubbles, and rising interest costs.
Many experts say Roubini has good intentions to help educate the public about economic matters, but his extreme positions sometimes cause confusion. After all, many find his statements difficult to digest given his background as a respected economist. So what gives? Why does he seem so adamant about supporting Bitcoin despite many criticisms against it? There are several explanations. First of all, like anyone who builds products based on technology, Roubini acknowledges that Bitcoin’s underlying design may one day fail. Instead of throwing the baby out with the bathwater, he prefers to fix problems early instead of waiting for them to get worse. Second, he tries to avoid becoming emotionally attached to specific technologies because human emotions are not rational. Since Bitcoin is currently experiencing rapid growth, he must see the potential to justify investing time and resources into research. Finally, he believes that people should focus less on short-term gains and start focusing more on long-term value creation. With this mindset, regardless of how Bitcoin is performing right now, he believes it will continue to gain traction for years to come. Good record keeping and cryptocurrency accounting will also help you along the way.
As mentioned earlier, not everyone agrees with Roubini’s point of view. Many argue that he takes overly pessimistic views and fails to acknowledge promising advances made in areas such as privacy, scalability, speed, security and governance. Furthermore, proponents point out that unlike traditional currencies backed by physical commodity reserves, Bitcoin cannot be easily printed overnight via fractional reserve lending. Although this practice allows the banks to inflate liabilities, it ultimately leads to the devaluation of the currency. Thus, Bitcoin is infinitely scarce and cannot lose value quickly or dramatically. Finally, Bitcoiners argue that it took decades for legacy institutions to create systemic risk after the Great Depression and the global recession of 2008. Given that Bitcoin has been around for about 10 years already, it is unlikely that regulators will ever try to ban it.
While many see Roubini as a hero or a villain depending on who you ask, there is no doubt that he has helped shape mainstream conversations around monetary policy and emerging technology trends. His predictions have proven accurate in some cases, such as during the recent global financial crisis. At the same time, his arguments have not always resonated with people across ideological boundaries.
Maybe one day Bitcoiners will finally realize that Roubini is not infallible. Perhaps they will embrace his message that we should treat cryptocurrencies rationally and cautiously, considering all possible outcomes. Or perhaps Bitcoiners will decide that the way forward lies in abandoning radical ideologies altogether and embracing gradual progress with the rest of society. Whichever path Bitcoiners choose next, history tells us they won’t be walking gently into the good night.
Disclaimer: the information herein is provided without regard to your personal circumstances and should therefore not be construed as financial advice, investment recommendation or an offer for, or solicitation of, transactions in cryptocurrencies.