Bitcoin maximalists believe that Bitcoin, the most popular cryptocurrency in the world, 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 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 against those who tried to build blockchain-based projects on existing blockchains.
It wasn’t long before some people started using it to describe any project built on top of another, especially if they wanted to have more control over how things worked. This might 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 reaction to 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. This usually involves breaking down large tasks into smaller ones while keeping everything else aligned 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 are still compatible with it. If you have a website, you don’t need to write the code yourself, just buy hosting space somewhere. You can choose from multiple providers, but make sure they are compatible with each other. In general, everything that isn’t broken should stay broken. In this regard, maximalism is not about doing nothing at all. Some people advocate the idea of starting small and growing later, perhaps adding more users gradually. Others just want to do whatever they want without worrying too much about other people’s opinions, even if it means sacrificing functionality. The latter group often call themselves Bitcoiners because they firmly 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 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 tips on how to live frugally and save money. He once wrote an essay titled “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 whatever happens bitcoin is here forever… And I’ll tell you why: Because nobody knows how it works. No government agency controls it. No powerful developer sits around making decisions about what happens in its underlying protocol. No one gets rich on background fees. There is no central body that says we have to change our designs now ‘because someone wants us to.’ Bitcoin doesn’t care about any of that. That 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 be sure to sign up for free bitcoin cashback rewards.
So is Mr. Money Mustache really a bitcoiner? Not really. While he believes Bitcoin must stay true to itself and never compromise, he believes it would 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 admits that because of this position, many people consider him a traitor. Despite this, he is adamant that Bitcoin should be free, private, open source and permissionless. He may not agree with certain precepts, but he is convinced enough of these principles to call himself a “realistic idealist.”
Bitcoiners generally disagree with this opinion, believing that there are a multitude of assets other than bitcoin today. While this may sound strange coming from a libertarian, it is worth noting that many economists subscribe to Austrian School economics, which promotes market efficiency through competition among competing firms. Therefore, they argue that while commodities like gold exist, fiat currency is the only truly valuable thing in the economy.
One of the prominent advocates 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 the books Crisis Economics and Global Financial Meltdown, founder of Roubini Macro Associates LLC, and host of CNBC of the Street Smart show. On Twitter, he describes himself as a realistic optimist. When asked if Bitcoin will die soon, he answers: “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. Entitled “Cryptomania is coming to an end,” the tweet claims that Bitcoin will eventually crash due to a variety of 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 financial issues, but his extreme views sometimes cause confusion. After all, many find his statements difficult to digest given his past as a respected economist. So what does it give? Why does he seem so adamant about supporting Bitcoin despite the many criticisms against it? There are several explanations. First of all, like anyone who builds technology-based products, Roubini understands that Bitcoin’s fundamental design may one day fail. Instead of throwing the baby out with the bathwater, he prefers to deal with problems early rather than wait until they get worse. Second, it tries to avoid emotional attachment to certain technologies because human emotions are not rational. Since Bitcoin is currently experiencing rapid growth, he must see its potential to justify investing time and resources into research. Ultimately, 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 Bitcoin’s current performance, he believes it will continue to gain traction for years to come. Good cryptocurrency record keeping and accounting will also help you along the way.
As stated earlier, not everyone agrees with Roubini’s point of view. Many argue that it takes overly pessimistic views and fails to acknowledge promising advances 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 through fractional reserve lending. Although this practice allows banks to inflate liabilities, it ultimately leads to currency devaluation. So Bitcoin is infinitely rare 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, it is unlikely that regulators will ever try to ban it.
While many view Roubini as a hero or a villain, depending on who you ask, there’s no denying that he’s helped shape mainstream conversations about monetary policy and new technology trends. His predictions have proven to be correct in some cases, for example during the last global financial crisis. At the same time, his arguments did not always resonate with people across ideological lines.
Maybe one day Bitcoiners will finally realize that Roubini is not infallible. Perhaps they will accept 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 go gently into that good night.
Disclaimer: The information contained herein is provided without consideration of your personal circumstances and should therefore not be construed as financial advice, an investment recommendation or an offer or solicitation of any cryptocurrency transactions.