Updated: Feb 21
When we talk about cryptocurrency, ideology is the elephant in the room. Most influencers in the crypto ecosystems are like fish in a pond; they are unable to identify the water that surrounds them and keep them alive. The same goes for the crypto world. Ideology is the key component of their YouTube channels, newsletters, podcasts, and the like, and many deliver their speech as evidence devoid of any alternative.
So, it is time to update the term ‘bitcoin maximalist’ as it has been perceived as “toxic” by people who invested in currencies and projects other than bitcoin. They feel threatened, especially as we are going through a bear market. Another factor of instability, fear and uncertainty is the growing number of bankruptcies and scams affecting what maximalists call ‘shitcoins’ (In other words, all the coins other than bitcoin).
What is going on in the crypto ecosystem?
The truth is that thirteen years after the creation of bitcoin, everything still revolves around the degree of decentralization of cryptocurrencies. Those who stray furthest from this concern are desperately trying to apply blockchain to some business solutions. We will see why these efforts are at odds with what Satoshi wanted to achieve.
From a maximalist point of view, something great is happening on bitcoin thanks to the development of the Lightning Network and its breakthroughs on layers two and three. The big problem with blockchain is an obvious lack of worldwide successful projects (such as the Lightning Network), which should have proven their usefulness for humanity. It is true that this new technology is still in its infancy, but far from offering solutions that liberate the people, it is more concerned with maximizing the production costs of companies by encouraging disintermediation which, in turn, makes it possible to save money. Disintermediation, huge savings, better storage solutions, rationalization of costs, increased transparency of production processes, real-time auditing, all these improvements are remarkable and benefit greatly the companies that embraced blockchain. But all these solutions are centralized or operate with some degree of centralization. As we mentioned earlier these efforts are at odds with what Satoshi wanted to achieve.
We can therefore say without controversy that for the time being, blockchain is not a revolution but rather a technological breakthrough which has favored a wave of remarkable innovations. But, let's face it, we cannot speak of a paradigm shift. On the contrary, everything about bitcoin is a paradigm shift. We will see why in the next paragraph.
Let's now look at what is happening in the cryptocurrency sector. From people considering bitcoin and other cryptos, things are looking great. The 2022 bear market is ending, and indicators show that the next bull will be incredible. Projects such as Solana, Avalanche, Cardano, Hedera, etc., are partnering with well-known legacy companies that promise amazing results. But from a maximalist point of view all these projects are “centralized garbage” as the crypto influencer Max Keiser declares. A common mistake is to describe the maximalists as a group of extremists whose intransigence is unique to lunatics. On the contrary, they know perfectly well the technologies they criticize, and explain very clearly why they defeat the purpose of Satoshi's views. The main argument is centralization.
It is a mistake to think that behind the term "centralized garbage" hides an admission of ignorance as to what these projects offer. What the maximalists are saying is that these projects, because they are centralized, can only behave like old-world weak/inflationary assets. In other words, they are all going to zero. It is just a matter of time.
The maximalists ask:
Why would you invest in projects that are doomed to fail?
Bitcoin: an incredible paradigm shift
This phenomenon can be summed up in the following expression: ‘Absolute Digital Scarcity.’ What makes this sheer scarcity possible is the Proof-of-Work consensus mechanism.
For those who studied the subject, the miracle happened when Satoshi found a way to protect a distributed system by the very entities (Humans) who endangered it. The question was:
“How to find an honest human being? An actor in a system in which Trust is not an issue anymore?”
Satoshi's genius is to have entrusted the safety of the system to beings moved only by greed; capitalists (miners) who, far from being moved by altruistic feelings, think of only one thing; survive until tomorrow, obsessed with preserving at all costs the system that provides them with enough money to make a profit and survive against their competitors. It is through this struggle for survival that they create a Trustless environment (and bitcoins), in which they free us from the burden of putting our trust in the equation. This genius reorganization of feelings and fears in the capitalist matrix deserves a Nobel Prize. And it should come as no surprise that we only talk about feelings when we analyze in depth the nature of bitcoin currency. To come to such a conclusion, one must have studied a lot and understood what the true nature of money is.
People become maximalists because they clearly see the depth of this miracle. Before bitcoin it was impossible to create an online closed, sustainable system that couldn’t leak; an energy-preserving, thermodynamic, network in which any value could grow exponentially in the long term. These preservation and scarcity conditions are only found in bitcoin. The other currencies are not built on such decentralized structures. They might be used for other purposes (Business and centralized financial operations) but they do not meet the necessary conditions to become an absolute scarce asset.
A US District Court ruled in favor of the SEC (The Securities & Exchange Commission) on the 7th of November 2022 against a blockchain file sharing and payment ledger LBRY. This sentence echoes recent statements by the chair of the SEC, Gary Gensler, who warned that the majority of unregistered ICOs were securities. According to LBRY the court ruling could make “every cryptocurrency in the US a security, including Ethereum.” This statement has shaken the whole crypto ecosystem.
Even if we should not draw hasty conclusions, this ruling creates, at the very least, an atmosphere of uncertainty which can be damaging for almost 99% of the cryptocurrencies in circulation today. Bitcoin, of course, is never and will never be considered a security. This certainty, together with the court's sentence, helps to strengthen the arguments of bitcoin maximalists.
Prominent bitcoin investors are very vocal about the fact that “if it’s not bitcoin, it’s a security.” Max Keiser declares in a tweet from the 8th of November 2022:
“As a former securities dealer for many years on Wall Street, I’ve been making the point that anything not Bitcoin can easily be classified as a security by the SEC, if they are so inclined, and believe me, they are extremely motivated to do so.”
This wind of panic is further reinforced by spectacular bankruptcies which are making headlines. We remember the collapse of Luna this summer, then Celsius and Voyager and the incredible FTX & FTT meltdown on the 8th of November 2022. These events certainly shook the foundations of the crypto world in 2022 and helped create more bitcoin maximalists than in the last 5 years.
Maximalism is not extremism
Indeed, maximalists try to warn everyone against those who think that crypto is a get rich quick scheme. Maximalists like to say: “DYOR (Do Your Own Research), don’t listen to scammers who want to sell you some centralized “garbage” AKA securities.”
Maximalists stick to what Satoshi wanted to achieve, that is to say: a truly decentralized peer-to-peer payment network.
Every other coin in the market is somehow centralized, DeFi included. Maximalists are purists, they hate centralized entities because third parties can control what you do, think, buy, sell, exchange, etc. Third parties also have the power to confiscate or manipulate your assets. Either way, in the long run you always lose.
So, next time someone you know accuses people to be “Maximalists”, think twice.
Read what they say, understand their thinking process and you will discover that they are everything but scammers and/or lunatics.
The exponential growth of the crypto ecosystem since 2016 is due to a handful of speculators and companies who lead people to believe that they are buying decentralized financial products. The events of the past few months have proven the contrary.
Michael Van de Poppe said on November 8, 2022:
"Just like that, crypto turned into a centralized world".
He was wrong, however. Excepting bitcoin, crypto was, from the beginning, a centralized world.