Where does Bitcoin maximalism go from here?

You may have recently seen some of the unhealthy internal drama that engulfs Bitcoiner “society“especially around who is – and who absolutely is not – a” maximalist. “

A Bitcoin maximalist, in the broadest possible definition, is a person who is heavily invested in Bitcoin who believes Bitcoin is the only cryptocurrency that matters, and all other cryptocurrencies are, if not fraudulent, distractions from this one worthy, worldwide project.

The purpose of this project is still the subject of intense debate in the maximalist world: It is monetary theorists who believe Bitcoin is natural “hardness“Guarantees its future status as a global reserve currency; others who believe it should only serve as a buffer against government interference in the money supply; others who view the cypherpunk ideal of censorship as the killer’s use case and downplay other cryptocurrencies primarily because they rely on poorer security architecture.

It is the first group of hard money theorists – known as “toximaxis” because of their tendency to be aggressive on Twitter against anyone who does not share their views – who are currently in crisis.

Most recently, they have a supposed former ally, VC and essayist Nic Carter, after he revealed on Twitter that his fund, Castle Island Ventures, had invested in a company that developed wallet-based login functionality that had nothing to do with Bitcoin. The Maximists fulminated by the apparent betrayal of a prominent supporter. Carter teamed up with one Medium post praised maximalism as a “disease”, and was then joked along with a dreaded “no-coiner”. It was all very infantile and embarrassing.

But it was not the first time a prominent Bitcoiner — like Carter certainly still is – has actively sought distance from a movement whose obsession with purity still costs the support of influential people who would otherwise be natural allies.

The group forever alienates potential fellow travelers: Tweeters Udi Wertheimer and Hasu fled in disgust not long ago, and former Bitcoiner hero Nassim Taleb went as far as bitterly withdraw their preface from a basic maximalist economic text.

Others have softened their rhetoric. Alex Adelman, CEO of the Bitcoin-only shopping rewards app Lolli, now conversations even a “Bitcoin optimist” and praised the NFT culture at NFT NYC, and the former avid maxi Dan Held says he is a “Bitcoin mostamalist. ”

It is not to mention the ranks of Bitcoin pioneers who long ago continued to embrace a multi-church approach to cryptocurrencies, such as Erik Voorhees, Roger Ver and Jesse Powell. And then there are pragmatists, like Carter and Anthony Pompliano, who see the alpha in egging on Bitcoin’s fanatical vanguard – until it turns on them.

There is also a clear sense that the project with hard-money maximalism is cannibalizing itself, that there is a rot among its core supporters. It is remarkable that many in the core group itself, who are unable to resist an attractive market opportunity, have embraced projects that would once have scandalized the virtuous.

For example, another former maximalist, Eric Wall, said he left the movement when influential voices became “increasingly hostile” to his interest in Bitcoin layer 2 chains called “drivechains”, a way to explore “altcoin functionality” like smart contracts and decentralized. exchange via Bitcoin. Drivechain plans were eventually put in the mill for obvious technical reasons, and Wall looked elsewhere.

“That’s how I grew out of maximalism,” he said. It was “the recognition that the Bitcoin base layer was not going to drive these interesting functionalities that we see in other chains, such as. ZK proof technology for scalability and privacy for example. “

The irony was that the same people, primarily employees of the influential developer Blockstream, later rolled out Liquid, an Ethereum-style “side-chain” network that enables token sales and decentralized finance on the Bitcoin blockchain, just as Wall had hoped to see. When Ethereum exploded last year, Blockstream obviously wanted part of the action, marketing a series of NFT launches on the platform just as the NFT market really started to bubble.

The liquid has not completely removed. The majority of floating blocks have on average one transaction: the miner pays for the right to verify the block. The error was a result of “a lack of understanding of people,” Wall said. He added that Liquid’s developers, blinded by fidelity to Bitcoin, were unable to account for such fripperies as user experience and market product customization. “You have to understand people to understand why Liquid is not appealing. Blockstream only cares about its own anal arguments, it’s not how you affect the world.” (Blockstream did not respond to a request for comment.)

Similarly, in recent years, maximalists have supported platforms that enable Bitcoin-based token sales, and many defend centralized stack coins like Tether, which recognizes their role in securing Bitcoin’s capitalization and liquidity. The breath Support for the authoritarian Nayib Bukele’s introduction of Bitcoin as a legal tender in El Salvador was a particularly cruel sight.

All this raises the question: Are the maximalists only so happy to betray their ideals when the opportunity arises? Did the big gains elsewhere in the crypto market corrupt them so easily?

Pete Rizzo, a former CoinDesk editor who now works for the cryptocurrency exchange Kraken and actively identifies himself as a maximalist (although there is a subtle difference), told me that none of the above constituted “rot” or a breach of principle: that it was neither tokens nor NFTs or stablecoins which was the problem. Rather, he said, the danger presented to retail investors is unregulated securities offerings on platforms such as Ethereum.

“The criticism,” he said, “is not that non-Bitcoin tokens are bad in themselves, it is that they are structured in such a way that responsibility is forced on retail investors.”

NFTs actually originated on the Bitcoin platform Counterparty, he added (this is genuine!), and the attempt to bring them to Bitcoin is hardly a big tradition. “Bitcoin maximalism only says that Bitcoin is the only decentralized cryptocurrency,” he said. “It’s the only one where the increase in value and operations actually happen alike, so it’s better to strive to build everything back on bitcoin (no matter how long it takes), with the desired goal of bringing as much to it as possible.”

However, Rizzo’s attestation of a deeply principled approach is difficult to reconcile with the reality of the maximalists’ many side projects: their Supportfor example for the aforementioned Tether, which runs on Ethereum and historically has been less than honest with retail investors, or the most important cases where maximalists have pointed not brought the innovation they are interested in back to Bitcoin. For example, who can forget the time when the former Blockstream potentian Samson Mow, one of Carter’s great critics last month, supported – wait for it – a Ethereum token!

Rizzo quarreled that the token was only available to accredited investors and not a risk for small retail investors, but then you have to ask: Where does these people draw the line? Is it about valuing Bitcoin’s use case above all else? Or about making sure that any crypto innovations only run on Bitcoin? Or that retail is not fleeced? What about the whole country that was skinned of Bukele’s abortive “Bitcoin bond”?

Then there is the abundance of high promises and Byzantine prediction models that, one by one, have gone to waste: the celebrated stock-to-flow modelthe incessant hyped up «halving» Bitcoin as one “inflation hedging,” as “digital cash,” each left at last when the predictions are not confirmed. Other alleged maximalist principles, such as an aversion to state interference, are equally applicable: Recently, maxis has included billionaire Bitcoin bull Michael Saylor cold for regulators to shut down the networks of competitors like Ethereum – even when trying to profit from imitations.

You have to wonder what maximalism stands for, if anything. In Rizzo’s view, the current strain of hard money maximalism has little in common intellectually with the free-marketing-anarcho-capitalist ethos that gave birth to it, and Rizzo observes that many of the more proud libertarian Bitcoin hardliners that Ver and Voorhees left long ago with explicit intent to pursue other possibilities. The remaining core has embraced a quasi-theological lifestyle label version of the ideology completely stripped of libertarianism and its temptations, the sale of seed oils and keto diets and tradwives. It is clear that they also operate in the broader crypto markets – but only under the guise of a number of abstract justifications.

At best, this particular type of “maximalism” is now a tired weathercock ideology, one that sells out and changes brand names with each market correction. Like the girl gang Sugababes and its interchangeable members, the doctrine is entirely of form and zero content. It is an empty ideal that means nothing lasting – rigid enough to instill affection, but mercurial enough to survive the inevitable betrayals of the most “toxic” followers.

That’s why I think Bitcoin maximalism will last forever.

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