Don’t believe the “maximalists”: Bitcoin cannot be separated from crypto


If you’ve ever ventured to criticize the world of crypto, chances are you’ve received some charming rebukes. You’ve probably been told to ‘have fun staying poor’ as ‘you’ll never make it’; your criticisms have probably been dismissed simply as “FUD” (fear, uncertainty and doubt); and you may have been informed that you are in fact nothing more than a “coinless saltine.”

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 appease – some sort of agreement that crypto is immoral, a scam, or some version of a Ponzi scheme. But then he quickly reverses course to explain that none of this applies to Bitcoin.

Bitcoin, as bitcoiners tell me, is not crypto. And you get it, crypto bad, bitcoin good. Very very good.

“Bitcoin is a lifeline for so many people in the world,” one altruistic Bitcoin holder told me recently. “Please stop mixing it with crypto, which is morally reprehensible.”

I recently suggested that one way to practice the art of “intellectual humility” is to “stabilize” your opponents’ position—that is, instead of finding their weak points and arguing against them, you present the strongest possible version of their argument. So, I’ll try to apply that technique here before explaining why I think they’re wrong.

Why do “bitcoin maximalists” – purists who claim that bitcoin is the only cryptocurrency that has value – make this claim? They state that the organic way in which Bitcoin came about cannot be replicated, and that while Bitcoin can be copied, it will always have first mover advantage and therefore cannot be displaced.

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 arose not as a way to make money, but from a libertarian internet subculture that believed technology, specifically cryptography, was 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 abandoned last week, is the only way to ensure a truly decentralized system.

But while you can understand why bitcoiners might want to distance themselves from the many scams and failures that have occurred in the crypto world, their arguments don’t hold up.

First, it doesn’t matter what Bitcoin’s origins are – the people pushing it now have the same financial incentives as those pushing any other crypto token. Satoshi Nakamoto, the creator of Bitcoin, may have intended it to be used as money, but that doesn’t make it one – it doesn’t meet any of the necessary criteria and instead operates in a pyramid-shaped structure that relies on constant recruitment of new members.

Second, Bitcoin is not really decentralized – not only do miners group together to form “mining pools”, but wealth is also highly concentrated. On Tuesday, MicroStrategy announced that it had bought another 301 bitcoins, meaning that this company alone now holds almost 0.7% of the entire supply.

Third, “first mover advantage” is not always permanent. Other crypto tokens now have various functions that Bitcoin does not, and there is renewed talk of a “flip,” where Ethereum’s value overtakes that of Bitcoin due to the former’s shift to a less carbon-intensive form of mining.

Finally, there is not even an agreement on what Bitcoin is. For the vast majority, it’s the digital coin, also known as “BTC,” which is currently changing hands at around $19,000. But there are other versions that have branched out, such as the one promoted by Craig Wright, the man who claims that he is Satoshi and who says that 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 main problem of 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.

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