Is it time for Bitcoin maximalists to look at altcoins?
For Intermediate/Advanced Readers
Bitcoin maximalism is defined as the belief that there is only one cryptocurrency that matters — Bitcoin. Maximalists argue that other cryptocurrencies, labeled as “altcoins”, simply distract and divert resources away from the one coin that is ultimately going to win over the entire cryptocurrency market, Bitcoin.
Bitcoin, being the first-ever cryptocurrency, has been dominant in the cryptocurrency marketplace since its launch in 2009. Earlier this year, that dominance took a hit with the spike in popularity of Ethereum. For the past few months, with massive amounts of press exposure and buzz, the Bitcoin has been on an upward trend once again regaining nearly 60% of the entire cryptocurrency market cap.
However, underlying all of this hype is a civil war that is being waged within the Bitcoin community around “block size”. One side of this war is represented by Bitcoin users and developers who aim to keep blocks small (1MB) and resist the centralization of mining under a select few who can afford it, even if it means that the Bitcoin network is not as efficient as it could be in the short-term. The other side is represented by the mining community, now mainly represented by ASIC users serviced by Bitmain, as well as corporations such as Coinbase and Bitpay. They want to see blocks increase in size (2MB+) to accommodate more transactions per block and ultimately make the Bitcoin network more efficient.
Both sides of the Bitcoin debate have valid points and concerns. One side, the big blockers, align with Satoshi Nakamoto’s original vision for Bitcoin as expressed in his whitepaper. The other side, the small blockers, believe that Satoshi could not have predicted what they perceive as corporate takeover of Bitcoin’s mining power by Bitmain and others. This truly is a philosophical battle, and in a case like this, only one side can win.
But, there is one thing that hasn’t often been mentioned in conversations surrounding the Bitcoin debate. Everything that each side wants already exists within the current altcoin market.
Let’s take a look at the “big block” movement. They want block sizes to increase to at least 2MB. However, in August 2017 there was another Bitcoin hard fork which resulted in Bitcoin Cash (BCH). Bitcoin Cash is a clone of Bitcoin that was fomented by the mining community and its affiliates including Roger Ver and Jihan Wu of Bitmain. The biggest difference between Bitcoin and Bitcoin Cash is that the latter has 8MB blocks instead of 1MB blocks. Bitcoin Cash is currently the #3 largest cryptocurrency in the world with around $1 billion in volume daily.
Now, let’s take a look at the “small block” movement. This side, which is comprised mostly of grassroots users and legacy developers, is interested in keeping blocks small so that users can have a chance of validating their own transactions. As block sizes grow, they say, then the odds of an individual being able to run their own full node for self-validation decreases. They are also concerned with Bitmain having a monopoly on the production of ASIC mining equipment.
You don’t hear it mentioned very often by “small blockers” that cryptocurrencies already exist that address both of their concerns. For example, let’s look at Vertcoin (VTC). With built-in ASIC resistance, Vertcoin was designed specifically to be mined only on CPUs and GPUs. This keeps Vertcoin mining from ever centralizing under ASIC/Bitmain’s sphere of influence. Vertcoin also has 1MB blocks, Segwit, Lightning Network and Atomic Swaps — the latter two being tech layers that Bitcoin’s core developers hope to implement on the Bitcoin network at some point in the near future.
While other cryptocurrencies such as Bitcoin Cash and Vertcoin directly address the desires of each side of the Bitcoin debate, the struggle for power within the Bitcoin community continues. Clearly, both sides have a massive amount of resources invested in Bitcoin, and neither side is interested in letting go of its golden goose.
As more cryptocurrencies arise that turn out to be a better match for users’ desires than Bitcoin is, will Bitcoin’s market cap dominance be able to continue? If Bitcoin’s dominance in the crypto world falters again like it did with the Ethereum boom, then will Bitcoin maximalists begin to look for alternatives?
The free market is an amazing thing, and the cryptocurrency world is the closest thing that we have to it right now. As it continues to evolve to meet users’ demands, there’s a very strong likelihood that Bitcoin will be challenged for its “top dog” spot.
Start researching and hedging your bets now with cryptocurrencies that match your philosophical desires. It’s very possible that the altcoins of today could be vying with Bitcoin for crypto market leadership tomorrow.
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You can find me on Twitter @ChrisBlec.
Disclaimer: This is my personal blog. The views expressed here are based on my own personal opinion and experience and are simply intended to spark new ideas and educate. Nothing written here should be considered to be investment advice.
Disclosure: I hold long positions on Bitcoin, Bitcoin Cash and Vertcoin.