2022 and the Rise of Bitcoin Anti-Maximalism
As we enter 2023, crypto clings onto bitcoin for dear life. It is time to sever the chord.
2022, among many things, may be remembered as the year in which it became fashionable to proudly declare oneself a ‘Bitcoin Anti-Maximalist’. Whether it was the ‘eulogy’ for maximalism written by Nic Carter, this piece decrying the degeneration of bitcoin culture from
, or ‘don’t believe the maximalists’ from Jemima Kelly; the Maxis received a bashing from all sides. Fighting a battle on two fronts is rarely fun. The never-ending skirmish with a seemingly unlearning mainstream media establishment during a bear market was hardly remarkable; however, the attacks from within the wider bitcoin ranks were at the very least more intellectually stimulating.Knives Out
With the block size wars all but settled, a newer, more nuanced war-of-the-narratives has firmly taken hold. The debate no longer concerns whether bitcoin should be changed (unless you are a certain environmental NGO in receipt of funds…), and very few would now earnestly claim that another cryptocurrency has superior monetary properties (though there are, of course, always some). The bone of contention is rather about whether and to what degree one should promote bitcoin only and dismiss everything else as a scam that is bound to fail.
Pete Rizzo has repeatedly made the case for bitcoin maximalism better than I ever could (here and here), so the purpose of this piece isn’t to echo his work. Rather, it is to emphasise some of the notable inconsistencies in the “let’s all just be one big happy crypto family and stop calling everyone else scammers” camp.
Burn Bridges, but not the Steak
I will make one caveat before proceeding. It is my subjective experience that Bitcoin Maxis seem to be more predisposed than average towards certain things including ‘traditional values’, believing in God, eating meat, rejecting vaccines, and dismissing human-caused climate change. I generally fall somewhere between disagreement and agnosticism on these things. I also think, from a purely strategic viewpoint, that the justifiable perception of the prevalence of these opinions is off-putting to those looking at bitcoin from the outside, who often can’t help but judge an idea based on their impression of its proponents. Then again, I also sense a Lord of the Rings correlation, of which I strongly approve; so perhaps I am seeing patterns in the sand that don’t exist.
In any event, when you take a group of people that realise just how badly wrong the incumbent financial and economic orthodoxy is, it’s not difficult to imagine why there would be a higher-than-normal tendency to distrust experts and mainstream opinion in other areas. The correlation, if real and not just confined to Twitter which it may well be, makes a degree of sense. I would personally prefer if Maxis concentrated their energy and intellectual efforts on fixing the money; but who am I to tell them what to do, and more importantly, who cares? Despite the MRNA vaccine coursing through my veins, I consider myself a full-blown Maxi, because it is important not to conflate support for the primary mission with more tangential side-quests. The golden thread that binds us is a desire to fix the money and the belief that bitcoin alone will achieve this.
If You Don’t Stand for Something…
While the Anti-Maxis are very articulate in making generalisations about the flaws of maximalism, they rarely endorse anything more concrete than a general tolerance for the rest of the crypto space, or more specifically an intolerance towards the Maxi’s intolerance of it. One thing they tend to do is bemoan how things used to be, ‘back in their day’. If you’re new to this, you could be forgiven for thinking that early bitcoin culture consisted solely of higher-order beings sitting around a campfire singing Kumbaya while meditating deeply on the future of humanity. If you’re reading this, you’re probably just a degenerate, shouty pleb, with an overly simplistic take on the world, and don’t appreciate the nuanced ways in which crypto is going to lead to financial liberation.
The Anti-Maxis would have you believe that a now irrelevant maximalism is breathing its last breath and has, through its failings, jeopardised the very prospect of a decentralised money. However, the objective evidence couldn’t indicate a truth further from this. By practically all measures, we are closer to achieving the separation of money and state than ever before. And yes, the ‘we’ refers to Bitcoiners. Everything else is either inconsequential or actively pulling in the opposite direction. I’m not here to decentralise the financial system. If that happens, super- increased efficiency in financial services, but it’s not the main effort. I am here to decentralise the money itself, which is a very different thing. That is the 99.9% problem that results in considerable inequality within and between countries, and I struggle to find an argument indicating that anything else is of even remotely comparable importance.
With everything currently occurring in the world of finance and geopolitics, the rubber is in the process of meeting the road. This is the time for laser focus, not starry-eyed pining for an ideologically purer and simpler time. The Anti-Maxis rarely demonstrate an understanding that the emergence of over 20,000 other ‘coins’ seeking to ride on bitcoin’s coattails is bound to somewhat change its cultural dynamic and make its more ardent supporters somewhat less inclined to treat everything else as interesting and innovative unless proven otherwise.
Every Gun is Loaded, and Every Altcoin is a Scam
Bret Weinstein popularised the concept of a ‘metaphorical truth’. It refers to a belief that, although not literally true, is beneficial to adopt as if it is true because of the behaviours it results in. ‘Porcupines can shoot their quills’ or ‘every gun is loaded’. We live in an unfathomably complex world and the future is uncertain, and therefore we all rely on tools of oversimplification and metaphor to navigate our lives and guide our actions. With over 20,000 crypto projects in existence, what possible abstraction provides a suitable framing for navigating the crypto space ourselves and explaining it to others? “Much innovation?”
I obviously can’t say for certain that every other crypto project will fail. It wouldn’t even be humanly possible to evaluate them all. I certainly don’t believe everything else is an intentional scam, and I have no doubt there are numerous well-meaning altcoiners out there. I can and do however hold a reasoned and thus-far empirically justified general opinion that the only important and workable use of a truly decentralised blockchain is as money, and that Bitcoin best serves this purpose.
It seems to me that treating every altcoin as if it is a scam is eminently suitable for elevation to the level of metaphorical truth. Nobody has ever been harmed by picking up a weapon and checking that there isn’t a round in the chamber- I know what you’re thinking, stop being pedantic- fingers don’t count. Similarly, when you look at the potential danger of missing nuance on both sides of the equation when it comes to bitcoin maximalism, it seems to me that the far more destructive message to give to new entrants to ‘the space’ would be something along the lines of “bitcoin is great, but there are loads of other really interesting of projects that are going to change to world, and it’s still early”. Given recent events, I don’t feel the need to spell out the real human harm actually caused by this approach. Even if we were to add to the latter message- “Do be careful though because there are an awful lot of scams out there”, I think that would be an understatement significantly more harmful than the more absolutist Maxi position.
The performance data in support of this is pretty clear. Altcoins have overwhelmingly proven themselves to be one-hit-wonders, as set out in this piece by Swan Bitcoin. Tens of thousands of projects that mostly undergo one ‘pump’, with only two from the top 100 in 2017 making a new all time high against Bitcoin in 2021. One of these was Doge- which rallied in anticipation of Elon Musk’s Saturday Night Live appearance. The second was Binance’s token- BNB. Given what we now know about the manipulation of FTX’s token FTT, I am sure the native token of the world’s largest offshore crypto exchange has reached a totally legitimate market capitalisation through strong fundamentals and free-market price discovery…
The Balance of Harms
Actual performance aside, if we are agreed (and many Anti-Maxis appear to be so agreed) that Bitcoin doesn’t suffer serious competition from altcoins as base money, then why on earth would you invest in them, or encourage anyone else to consider doing so? Even if we were to give them all the benefit of the doubt and assume the motivations of the thousands of token issuers are good, what possible blockchain use case, if achievable at all, would make a better investment than the emerging monetary network?
In what possible scenario would buying a token or ‘gas’ in an ecosystem with the espoused mission of executing smart contracts, maintaining medical records, or providing decentralised finance be a better investment for your everyday retail investor than buying the emerging money? What sort of incredible service is your chosen blockchain going to provide that will result in your ‘quasi-equity’ being a valuable investment that other legitimate users will pay for? Our decentralised future is going to be expensive for anyone that didn’t get in early and has to pay the system’s new rent-seekers. Benefit of the doubt aside, for the vast majority of altcoins, it is clear that the supposed ‘project’ exists to support the token, rather than the other way around. Retail investors are generally just exit liquidity for insiders and venture capitalists. The Anti-Maxis, when confronted with this usually say “yes of course there are loads of scams, I wouldn’t deny that”. But they rarely emphasise it when attacking the Maxis. If we’re picking sides to err on, I won’t be caught on the fence.
What potential harm is caused by the Bitcoin Maxi message? Surely any projects with legitimate use cases will emerge in the absence of blind speculation from those without the knowledge or bandwidth to do in-depth research. Stablecoins on Ethereum seem to be a genuinely useful thing during the transition from fiat to a bitcoin future. Monero also appears to be useful while bitcoin’s privacy functions are improving. Super. But if your project is reliant on hordes of unsophisticated investors providing liquidity, its probably not a good project. If it is a noble and sustainable venture, don’t worry- I am sure you’ll find investment in spite of the Maxis lumping you in with everything else. If you want other people’s money to fund your experiments, either get it from VCs, or register as a security and have at it with the general public.
Let’s be explicit- the point I am making is that the maxis don’t bear the burden of conclusively proving that there is no needle hidden somewhere in the haystack. Their message is the correct one by virtue of the fact that the hay is overwhelmingly, if not exclusively, composed of manure.
Everything Else is a Distraction
There are a number of other common themes to the message of the Anti-Maxis. One is to scoff at the idea of hyper-bitcoinisation as if it were some childish utopian belief. Given the importance of network effects, money’s tendency towards one medium, bitcoin’s superior security and liquidity, absolute scarcity, divisibility, and the layered scaling solutions currently being built out; it appears to me that to dismiss eventual hyperbitcoinisation as a mere hope is itself a fantastical intellectual leap. What’s not to get?
For the sake of balance, I would add that there are some, such as Erik Voorhees, that do make a compelling argument that several decentralised monetary networks are better than one. Such debates are healthy. The argument I find more compelling however is that because the security of a blockchain scales with size, having only one to protect prevents a divide-and-conquer style attack on distinct chains. In any event, from an economic perspective, humanity’s actions are most efficiently coordinated using a single yardstick by which to measure value and allocate capital. That is the system that best represents truth and allows people to live their lives predictably and fairly.
Hypothetically, let’s imagine we end up with global value distributed across two or three major blockchains- a form of crypto oligopoly. Ultimately, it seems likely that one will emerge as more liquid and secure and will eventually swallow the value from the others- much like the dollar is currently doing to other fiat currencies. That means that a significant portion of the world’s population lives waiting for the guillotine to fall, and their purchasing power to diminish, depending on the outcome. It is far more desirous for a very necessary financial migration to occur once only, ending a global culture of forced speculation for good. And yes- of course the market should decide. My argument favours it deciding now, given that there is one obvious and workable choice.
Character
What is perhaps more important than the technical specifications of various cryptocurrencies is their cultural energy. Like it or not, the overwhelming majority of the life-force of the sound money movement is in bitcoin. Well, more truthfully, it is in both bitcoin and Gold; but if you’re reading this, you probably understand that bitcoin gives us a tool that may actually succeed where Gold failed. That energy isn’t going to dissipate and re-coalesce in another crypto asset. Certainly not soon, probably not ever.
If bitcoin fails for some reason, it is highly unlikely that trust will ever reform in another decentralised system. The conditions for its creation cannot reoccur. When it comes to achieving a sound monetary system, bitcoin is not just our best shot, but likely our only remaining shot. That is why it matters. That is why we aren’t willing to entertain those sitting on the fence and telling others they should be open minded to an ‘industry’ riddled with scams and grifters. We are laser focussed and aiming to sever the head of the serpent from its body.
The Anti-Maxi message is a distraction that detracts from the overall mission. If you’re not with us, you’re against us. You’re siphoning the trust built by bitcoin over 14 years and deploying it for personal gain. You’re not just hurting the people investing in your ‘project’, you’re hurting those that desperately need a global sound money sooner rather than later.
The Immune Response
It would be a shame to end on a negative. The Anti-Maxis do provoke a degree of thought and self-reflection among us Maxis which itself probably cannot be a bad thing. I often think of Maxis as forming part of bitcoin’s immune system, a layer of defence to repel ideological attacks and grifters. As much as we like to say, ‘tick tock, next block’, bitcoin’s spread is fundamentally a function of human ideas and does depend on the collective ‘us’. I don’t believe it is inevitable, and it is always necessary to evolve. Perhaps the Anti-Maxis provide a form of check and balance on this immune response, ensuring it doesn’t function like an auto-immune disease attacking the host. The Anti-Maxis have caused me to reflect upon my conviction and consider how I choose to articulate my views, and I thank them for it.
Another cause for optimism is to be found in the most unlikely of places- Jemima Kelly’s Financial Times article. Like this piece from the New York Times, it demonstrates welcome signs that the mainstream is now aware of and acknowledges that there is at the very least a case to be made made that bitcoin and crypto aren’t the same. To deny the truth of a narrative is to accept its existence. At first Jemima ignores you, then she fights you.
There are promising signs that we are coming to the beginning of the end of the parasitic relationship between bitcoin and crypto. You can have one without the other, but you can’t have the other without the one, and the ‘crypto industry’ knows full well that it is the dependent. While the sun may be setting on the information and regulatory arbitrage that has allowed it to thrive, there is no room for complacency. Just like the Balrog, our soon-to-be estranged ‘partners’ are bound to do everything possible to cling on for as long as possible. 2023 will be a year to ensure that we properly challenge those that would give them the ideological cover to do so.
Great
" When it comes to achieving a sound monetary system, bitcoin is not just our best shot, but likely our only remaining shot. That is why it matters. That is why we aren’t willing to entertain those sitting on the fence and telling others they should be open minded to an ‘industry’ riddled with scams and grifters. " - nail, head.
another brilliant article Rich.