Bitcoin maximalists believe that Bitcoin, the world’s most popular cryptocurrency, is the only digital asset needed in the future.
In 2017, a year when every single altcoin was either dead or dying and everyone was going insane over ICOs (Initial Coin Offerings) – a new type of fundraising mechanism for cryptocurrencies like Ethereum, Cardano, Stellar Lumen, etc the word “maximism” came into vogue as an insult against those trying to build blockchain-based projects on top of existing blockchains.
It wasn’t long before some people started using it to describe any project that builds on top of another, especially if they wanted more control over how things worked. This could explain why many are calling Libra, Facebook’s upcoming stablecoin, “the first true maximalist project.” But what exactly does that mean and why has there been such a backlash? What makes something a maximalist project?
Maximalism can be defined as both a philosophy and a method of building software systems. Usually, it’s about breaking down big tasks into smaller ones while keeping everything else consistent. For example, instead of building your own payment system, you could use PayPal, Venmo, AliPay, etc., all of which are different types of PayPal but still compatible with it. If you’re running 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, everything that is not broken should remain broken. However, maximalism is not about doing nothing at all. Some people advocate the idea of starting small and growing later, perhaps by onboarding more users over time. Others just want to do whatever they want without worrying too much about what others think, even if it means sacrificing functionality. The latter group often refers to themselves as Bitcoiners, as they strongly believe in decentralization and freedom of choice. They also tend to think that others should not be able to dictate the rules of the game unless they are willing to pay a price to do so.
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 financial successes along with advice on living frugally and saving money. He once wrote an essay titled “Why I’m a Bitcoiner” in which he laid out the reasons for his support for decentralized currencies. One reason stood out because it reflected the Bitcoin maximalist mentality:
I’m a maximalist because no matter what happens, Bitcoin is here forever… And I’ll tell you why: Because no one knows how it works. No government agency controls it. No powerful programmer sits around making decisions about what’s going on in their core protocol. No one gets rich off the back-end fees. There’s no central authority saying we have to change our designs now because someone wants us to. Bitcoin doesn’t care about any of that. This is very important.
So far, the term “Bitcoin maximalism” seems to be synonymous with libertarian ideals. However, according to the Merriam-Webster dictionary, it actually came from Satoshi Nakamoto, the creator of Bitcoin, who used it to refer to himself. Sign up for free bitcoin cashback rewards too.
So is Mr. Money Mustache really a bitcoiner? Not quite. While he believes Bitcoin must stay true to itself and never compromise, he believes it would be good for society if governments eventually got involved in regulating the industry. In fact, he writes three times on his blog that he supports the regulation of crypto trading platforms. He also admits that many people consider him a traitor because of this position. Despite this, he firmly believes that bitcoin should be free, private, open source and permissionless. He may disagree with certain regulations, but he feels strong enough about these principles that he calls himself a “realistic idealist.”
Bitcoiners generally disagree with this opinion, believing that a variety of assets beyond bitcoins exist today. While this may sound strange from libertarians, it’s worth noting that many economists subscribe to Austrian School economics, which promotes market efficiency through competition between competing firms. Hence, they argue that while there are commodities like gold, fiat currency is the only truly valuable thing in the economy.
A prominent exponent of this school of thought is Nouriel Roubini, professor emeritus at New York University’s Stern School of Business, former senior adviser to US Treasury Secretary Steven Mnuchin, author of Crisis Economics and Global Financial Meltdown, founder of Roubini Macro Associates LLC, and Host of the CNBC 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 last 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 one from April 2019. The tweet titled “Crypto Mania Is Coming To End” claims that bitcoin is dying due to various factors , including increased adoption rates, increased supply, asset bubbles and rising interest costs, will eventually crash.
Many experts say Roubini has good intentions in educating the public on financial matters, but his extreme positions sometimes cause confusion. After all, given his background as a respected economist, his comments are hard for many to digest. So what’s up? Why does he seem so adamant in supporting Bitcoin despite numerous criticisms? There are several explanations. First of all, Roubini, like everyone who develops products based on technology, recognizes that Bitcoin’s underlying design could one day fail. Rather than throwing the baby away with the bathwater, he prefers to solve problems early rather than wait for them to get worse. Second, he tries to avoid becoming emotionally attached to certain technologies because human emotions are not rational. As Bitcoin is currently experiencing rapid growth, it needs to see its potential to justify investing time and resources into research. Finally, he believes people should focus less on short-term gains and more on long-term value creation. With this mindset, regardless of how Bitcoin is currently performing, he believes it will continue to gain traction in the years to come. Good record keeping and cryptocurrency accounting will help you with this as well.
As mentioned earlier, not everyone agrees with Roubini’s point of view. Many claim that he takes overly pessimistic positions and fails to acknowledge promising advances in areas such as privacy, scalability, speed, security and governance. Additionally, proponents point out that unlike traditional currencies, which are backed by physical commodity reserves, Bitcoin cannot simply be printed overnight via fractional reserve lending. While this practice allows banks to inflate liabilities, it ultimately leads to currency devaluation. Bitcoin is therefore infinitely scarce and cannot lose value quickly or dramatically. Finally, bitcoiners claim that it took decades for legacy institutions to create systemic risk after the Great Depression and global recession of 2008. Given that Bitcoin has been around for around 10 years, it is unlikely that regulators will ever try to ban it.
While many consider Roubini a hero or villain depending on who you ask, there’s no denying that he helped shape mainstream conversations about monetary policy and emerging technological trends. His predictions have proved correct in a number of instances, such as during the recent global financial crisis. At the same time, his arguments did not always resonate with people across ideological lines.
Perhaps 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 maybe bitcoiners will decide that the way forward is to abandon radical ideologies altogether and embrace gradual progression with the rest of society. Whichever path bitcoiners choose next, history tells us they will not go gently into this good night.
Disclaimer: The information contained herein is provided without regard to your personal circumstances and therefore should not be construed as financial advice, investment recommendation or an offer or solicitation to engage in transactions in cryptocurrencies.