The Only Cryptocurrency: What is Maximalism in Bitcoin?
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 kind of fundraising mechanism for cryptocurrencies like Ethereum, Cardano, Stellar Lumens, etc. — the word “maximalism” came into vogue as an insult against those who were trying to build up blockchain-based projects on top of existing blockchains.
It wasn’t long before some people started using it to describe any project built upon another one, especially if they wanted to have more control over how things work. This might explain why many call Libra, Facebook’s upcoming stablecoin, “the first real Maximalist Project.” But what does this mean exactly, and why has there been such a backlash towards it? What makes something become a maximalist project?
Maximalism in Bitcoin
Maximalism can be defined both as 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 could use PayPal, Venmo, AliPay, etc., all of them being different forks 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 multiple providers, but make sure they keep compatibility with each other. In general, anything that’s not broken should stay broken. That said, maximalism isn’t about doing nothing at all. Some people advocate the idea of starting small and growing big later on, perhaps by incorporating more users gradually. Others simply want to do whatever they feel like without worrying too much about other people’s opinions, even if it means sacrificing functionality. The latter group often refers to themselves as Bitcoiners since they hold strong beliefs in decentralization and freedom of choice. They also tend to think that others shouldn’t be able to dictate rules of the game unless they’re 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 am 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 agency controls it. No powerful programmer sits around making decisions on what goes on in its core protocol. Nobody gets rich off the back-end fees. There is no central authority that says we’ve got to change our designs now ’cause someone wants us to.’ Bitcoin doesn’t care about any of that. That’s 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, creator of Bitcoin, who used it to refer to himself. Also be sure to signup for free bitcoin cashback rewards.
So is Mr. Money Mustache really a bitcoiner then? Not quite. Although he believes that Bitcoin needs to remain true to itself and never compromise, he thinks 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 acknowledges that many people consider him a traitor because of this position. Nevertheless, he stands firm that Bitcoin should be free, private, open source, and permissionless. He may not agree with certain regulations, 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’s worth noting that many economists subscribe to Austrian School economics, which promotes market efficiency through competition among competing firms. Therefore, they argue that although commodities like gold exist, fiat currency is the only truly valuable thing in the economy.
One prominent proponent of this school of thought is Nouriel Roubini, professor emeritus at New York University Stern School of Business, former senior advisor to U.S. Treasury Secretary Steven Mnuchin, author of books Crisis Economics and Global Financial Meltdown, founder of Roubini Macro Associates LLC, and host of CNBC show Street Smart. On Twitter, he describes himself as a realistic optimist. When asked whether 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 that Roubini has good intentions to help educate the public about financial matters, but his extreme positions sometimes cause confusion. After all, many people find his statements hard to digest given his background as a respected economist. So what gives? Why does he seem so adamant about supporting Bitcoin despite numerous criticisms against it? There are several explanations. First of all, like anyone who builds products based on technology, Roubini recognizes that Bitcoin’s underlying design may fail someday. Instead of throwing away the baby with the bathwater, he prefers to fix problems early rather than wait until they grow worse. Second, he tries to avoid getting emotionally attached to specific technologies because human emotions aren’t rational. Since Bitcoin is currently experiencing rapid growth, he must see its potential in order to justify investing time and resources in research. Lastly, he thinks 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 performs right now, he believes that it will continue gaining traction in years to come. Good recordkeeping and cryptocurrency accounting will also help you along the way.
As stated earlier, not everyone agrees with Roubini’s viewpoint. Many claim that he takes overly pessimistic stances and fails to acknowledge promising advancements 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 easily be printed overnight via fractional reserve lending. Even though this practice allows 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 assert that it took decades for legacy institutions to create systemic risk following the Great Depression and the 2008 global recession. Given that Bitcoin has existed for roughly 10 years already, it’s unlikely that regulators will ever try to ban it.
While many view Roubini as a hero or a villain depending on whom you ask, there’s no denying that he has helped shape mainstream conversations surrounding monetary policies and emerging technological trends. His predictions have proven accurate in some cases, e.g., during the last global financial crisis. At the same time, his arguments haven’t always resonated with people across ideological boundaries.
Perhaps one day, Bitcoiners will finally realize that Roubini is not infallible. Perhaps they’ll embrace his message that we should treat cryptocurrencies rationally and cautiously, considering all possible outcomes. Or maybe Bitcoiners will decide that the way forward lies in abandoning radical ideologies altogether and embracing gradual progress with the rest of society. Whatever path Bitcoiners choose next, history tells us they won’t go gently into that good night.