Bitcoin Maximalism: The Pros and Cons
‘Belief’ — an enchanting concept that has enough power to sway the most powerful minds amongst us into taking action, no matter how subliminal the thoughts based on in it might be. That is one way to describe as to how ‘Bitcoin Maximalism’ came into existence.
‘Bitcoin Maximalism’ is a strong rooted belief that Bitcoin is the only crypto-currency worthy of existence in the digital currency world. Bitcoin supporters cultishly known as ‘Bitcoin Maximalists” have always put forward sound arguments in lieu of their judgement.
Bitcoin Maximalism — A million dollar dream and the hypothetical reality laid forth:
For any product or service to gain trust and value, it needs to go through a longstanding grind and should prove its worth. This is a fundamental argument put forward by Bitcoin Maximalists in support of Bitcoin Maximalism.
This is not the only notion that drives a hardcore Bitcoin Maximalist’s devotion. It goes further to emphasize on the harm newer currencies otherwise known as Altcoins cause by diverting investments and stirring speculations in the digital trade. Smart contracts and the underlying blockchain networks of these crypto-currencies are mostly built on basic bitcoin structure but they have neither existed since the dawn nor had any of them stood the test of time.
Metcalfe’s law and the Network Effect
If Metcalfe’s law is to be believed, it means that the value of a network with a certain number of participants is much greater than the value of a series of networks with the same combined networks.
Taking a look at it with simple algebra, (n) is the number of network participants. According to Metcalfe’s law the value of a network is equal to (n2). Mathematically, the value of a single network with a certain number of users is worth more than two different chains even if they have the same number of total users when combined.
One of the colossal pillars of success supporting Bitcoin is its underlying blockchain network and the huge number of traders. When compared with other altcoins, where the participants are distributed, and majority of these coins have its end value reconnected to Bitcoin’s base itself, Bitcoin outperforms them beyond compare.
Trading into the Future
The immeasurable Bitcoin trading network that had taken root across multiple mediums of exchange and investment is already testament to its value and acceptance. As the trade with Bitcoin increases, the more it liquefies into markets and the more valuable it becomes for investors and traders as an investment. This in turn reduces its volatility and it becomes a greater medium of digital monetary exchange.
Development of other Coins under Bitcoin’s Environment
Almost all Altcoins in one form or the other have always relied on Bitcoin. Two factors are a given, first the blockchain algorithm that any crypto-currency is built on is simply a modified version of the Bitcoin platform and second their value is always dependent on Bitcoin.
Since the interconnection is inevitable due to dependence of majority of altcoins on the Bitcoin environment, Bitcoin Maximalists propose that any other crypto-currency network should be built as a sidechain to Bitcoin blockchain itself rather than creating a new one, technically the mechanism is known as ‘pegged sidechains”. Developing separate side chains to the Bitcoin network without having a native token is one way to go about creating a new network without compromising on security and providing smart contracts.
The Defiance of the notion “Bitcoin Maximalism”
A few people are simply opposed to the notion of taking stance against other competitors with adherence to only one maxim which restricts overall growth. Others argue that newer smart contracts cannot be built on the Bitcoin platform.
Smart contracts are the best way to attract investors and transact in the real world. Adding these features to the bitcoin platform would not only make it unstable and perilous but might prove to be a disaster for the $230 Billion of its value.
Bitcoin Maximalists are aware of these shortcomings hence the idea for a combined network with side chains was proposed.
Limitations of Protocols and Sidechains
Advanced features like ‘Non-interactive zero-knowledge proofs’ and other privacy-based protocols are too complicated to be added to the current Bitcoin Blockchain algorithm. Similarly, advancements in decentralized technology such as DAGS (Directed Acyclic Graphs) have a completely different data structure and do not rely on blockchain at all.
Creating Sidechains is not only a mammoth task, also the lack of native tokens itself is a beastly hurdle that the developers and supporters are supposed to overcome for Bitcoin Maximalism to succeed in the true sense.
The other major problem is that certain amount of the Bitcoin should be in the sidechain reserve. Since no coin is created in the sidechain, the only incentives for block propagation would be the transaction fees.
Common Ground. Is it possible?
The arguments are sound from both the ends but they all have a common goal: ‘Decentralizing systems of power’.
Bitcoin is the undisputed champion as of now; there is no denying to that but since the current advanced technology is almost impossible to build on top of Bitcoin, Bitcoin Maximalists should go easy on the Bitcoin Maximalism approach and give some space for other genuine and more secure decentralized-cryptocurrencies to grow. This not only helps the digital assets market to evolve into something better but also breathes in life into the crypto-ecosystem.
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