Don’t believe the “maximalists”: bitcoin is indistinguishable from crypto
If you’ve ever dared to criticize the crypto world, chances are you’ve received some charming reprimands. You’ve probably been told to “have fun being poor” since you’ll “never make it”; your criticism has probably been dismissed as mere “FUD” (fear, uncertainty and doubt); and you may well have been informed that you are in fact nothing more than a “salty no-coiner”.
But there’s another slightly more sophisticated flavor of counter-criticism that’s finding its way into my inbox with increasing regularity these days. It usually starts with something designed to please – some sort of agreement that crypto is immoral, a scam, or some version of a Ponzi scheme. But then it quickly reverses course, to explain that none of this applies to bitcoin.
Bitcoin, the bitcoiners tell me, is not crypto. And you understand, crypto bad, bitcoin good. Very very good.
“Bitcoin is a lifeline for so many people around the world,” an altruistic bitcoin holder told me recently. “Please stop lumping it in with crypto, which is morally reprehensible.”
I recently suggested that one way to practice the art of “intellectual humility” is to “steelman” your opponents’ position—that is, instead of finding their weakest points and arguing against them, you present the strongest version of the argument possible. And so I’m going to try using these techniques here, before I explain why I think they’re wrong.
Why do the so-called “bitcoin maximalists” – the purists who claim that bitcoin is the only cryptocurrency that has value – make this claim? They state that the organic way bitcoin was created cannot be copied, and that while bitcoin can be copied, it will always have a first-mover advantage and therefore cannot be set aside.
They also point out that there was no market for bitcoin when it was invented, and so the network was maintained not for profit, but by people who believed in the value of the system – unlike later coins, some of which were issued by large corporations. Bitcoin did not originate as a way to make money, but from a libertarian internet subculture that believed technology, especially cryptography, was the key to driving social and political change.
Maximalists also say that bitcoin’s incentive mechanism, the energy-intensive “proof of work” mining process that rival Ethereum ditched last week, is the only way to ensure a truly decentralized system.
But while you can see why bitcoiners might be keen to distance themselves from the plethora of scams and mistakes that have occurred in cryptoland, their arguments don’t hold up.
First, it doesn’t matter what bitcoin’s origins were – the people pushing it now have the same financial incentives as those pushing other crypto tokens. Satoshi Nakamoto, the creator of bitcoin, may have intended it to be used as money, but it does not – it meets none of the necessary criteria, and instead operates in a pyramid-shaped structure that relies on constantly recruiting new members.
Second, bitcoin is not actually decentralized – not only do miners group together to form “mining pools”, but the wealth is also hugely concentrated. On Tuesday, MicroStrategy announced that it had purchased an additional 301 bitcoins, meaning that this company alone now has nearly 0.7 percent of the entire supply.
Third, a “first-mover advantage” does not always last. Other crypto-tokens already have various functions that bitcoin does not, and there has been renewed talk of a “flipping”, where Ethereum’s value surpasses that of bitcoin due to the former’s transition to a less carbon-intensive form of mining.
In the end, there is not even a consensus on what bitcoin is. For the vast majority, it is the digital coin also known as “BTC”, which is currently changing hands at around $19,000. But there are other versions that have spread, such as the one promoted by Craig Wright, the man who claims to be Satoshi and who says BTC is a scam.
The real reason bitcoin maximalists want to separate bitcoin from the rest of crypto is to create the illusion of scarcity in a world where there is none. CoinMarketCap now lists more than 21,000 different crypto tokens, which bitcoin maximalists call “shitcoins.” Of course they do – if there is an infinite supply, how can there be any value? This is still the core problem with crypto and bitcoin cannot solve it.
This is not to say that there aren’t some crypto projects and tokens that are better than others. But a spade, no matter how shiny, is still a spade. And bitcoin, I’m afraid, is still crypto.
