10 Reasons Supporting the idea of Bitcoin Maximalism | KoinOK Blog

You might think that there’s a rivalry only between fiat money (USD, INR) and cryptocurrencies in terms of which one is a better form of money. But there’s a greater rivalry within the cryptocurrency space itself. And that is between Bitcoin Maximalists and those who don’t identify themselves as Bitcoin Maximalists.

“Maximalism” was a term coined by Vitalik (creater of Ethereum) for Bitcoin extremists who are strongly against utility or even existence of any other cryptocurrency, including, Ether.

Bitcoin Maximalism is essentially about a strong opinion that bitcoin is the only cryptocurrency which matters. Every other feature can be built on top of it, on layers above the base layer, e.g. smart contracts, privacy, low cost transactions, high transaction throughput etc., and there’s no real need for any other cryptocurrency.

Bitcoin Maximalists believe that true decentralization is present only in Bitcoin and all the other cryptocurrency project owners are essentially opportunists who are exploiting human greed by baiting normal users towards their coin X with a value proposition that “Don’t worry if you missed bitcoin’s growth, get into X”, when essentially it is a centralized team doing the work and doesn’t offer the same decentralization benefits as present in bitcoin.

However, it is to be noted that this is an opinion of Bitcoin Maximalists and may not necessarily hold true. We know for a fact that Ethereum has enabled implementation of turing complete smart contracts for the first time; it has a backing of thousands of developers now as well as a strong community of supporters. Additionally, although DApps are facing scalability challenges right now, but to see them operational is itself a big feat. No product is perfect on the first day, and we are talking about such a nascent industry. Additionally, projects built on top of Ethereum Network like Augur (building decentralized prediction market) have overcome several criticisms and challenges to finally make their products live.

Not just Ethereum, Monero and ZCash have strong core value propositions — as privacy coins. Decred has a value proposition of enabling on-chain governance to reduce miner influence. This side of the community believes that bitcoin is an open source protocol, which gives others an opportunity to innovate on top of it. So, any sincere efforts put into the crypto ecosystem should not be stifled with irrational allegations.

Anyways, let’s look at the supporting arguments for Bitcoin Maximalism. It will help you appreciate the true value of bitcoin as well as keep a fair eye on how much effort an alternative project will have to make to justify its existence:

1. Security

Bitcoin is undoubtedly the most secure blockchain today with its hash rate reaching a peak of 52 quintillion per second. In its 10 years of history, it has never been hacked. The success of bitcoin’s immutable blockchain is why all the enterprises went bullish over the potential of blockchain since 2014.

As Bitcoin’s hashrate increases further, it will continue to become more secure.

2. Team

There is no central team in Bitcoin. Instead, it is continuously made better by a decentralized team of highly qualified bitcoin developers contributing from various parts of the world. There are no direct monetary incentives for these developers to work on bitcoin, so it is their conviction in the idea of bitcoin/decentralization and more than money which attracts them to put their energy to it. As bitcoin is open source, any new developer can join the ecosystem and start contributing.

3. It’s the most decentralized

It is the number of full nodes, supporting the network by maintaining the whole blockchain data, which matters when we talk about decentralization. And there are over 100,000 full nodes in the ecosystem. This means that if a bad player wants to hack the network, it will have to modify not one centralized database, but blockchain data stored in over 100,000 full nodes, which is next to impossible.

4. Speed

Decentralization comes at the cost of speed. Ideally, a centralized entity is most suitable for solving the speed problem (e.g. transaction throughput) if that was the biggest problem to solve. But, here decentralization is paramount. However, with continuous innovation on top of bitcoin base layer in the form of Lightning Network, it seems that this layer 2 solution, through payment channels, will enable million transactions per second. This Layer 2 is connected to the base layer through Hashed Time Locked Contracts and thus ensures the same level of security as bitcoin.

5. Transaction Cost

The cost of on-chain transactions depend on a number of factors: price of 1 bitcoin, transaction velocity being sent to mempool etc. The cost can go high during bull markets when adoption rate (and resulting transaction rate) grows exponentially and the price of bitcoin also grows (as fees is paid in satoshis/sub-satoshis) as seen during December 2017.

However, with Lightning Network, this problem is expected to get resolved as layer 2 transaction costs will be in sub-satoshis. This could lead to a lot of innovation in several industries, made possible by micro-payments for the first time. Today, with options like PayPal, Visa and Mastercard, micro-payments were never an option.

6. Scalability

Bitcoin’s base layer scalability is enough to accommodate its value proposition as digital gold because if it mostly used as a store of value, then the number of on-chain transactions would be limited. However, even if there is huge demand for transactions, bitcoin’s network give utmost priority to security of the network over scalability challenges.

This is why scalability issues are being tackled by innovators by building layers on top of bitcoin base layer, where a balance between security and scalability could be reached. Again, Lightning Network is a great step in this direction.

Apart from this, it is not that on-chain scalability innovations are being overlooked. Segwit was a great adoption which led to over doubling of block size from 1 MB blocks previously.

7. Volatility

Although Bitcoin’s volatility seems very high as compared to fiat money (USD, INR etc.), however if we compare bitcoin with other cryptocurrencies, its volatility is the least because of largest marketcap (which has been over $100 billion for several months now). This means more buying/selling is needed to change the price of bitcoin by 1% as compared to changing the price of Ethereum/other coins by 1%.

8. Privacy

Bitcoin’s blockchain is a public ledger and thus all transactions are public to everyone in the network, and there’s no privacy, unlike ZCash and Monero which facilitate on-chain private transactions. However, in Bitcoin, layer 2 solutions like MimbleWimble are being proposed which will ensure P2P private transactions between two parties who don’t want to broadcast it to the network. Whether it could prove to be a reliable alternative to using privacy coins, only time will tell!

9. Strongest brand and best network effects

After the last rally that went till December 2017, almost everyone throughout the world knows about bitcoin or atleast heard of it. They may be in support of it, they may be against it, but they can no longer claim ignorance of its existence. Everyone’s entrance into the crypto world is through an investment in bitcoin which shows that it has the best network effect. And network effects compound as the network grows further!

Right now, a lot of people outside crypto believe that bitcoin was a bubble which is bursting currently, but as bitcoin continues to exist in time, more and more users will be attracted towards it. Lindy Effect makes the strongest case for bitcoin as no other crypto has existed for 10 years.

10. Dominance

Bitcoin’s dominance in terms of proportion of total marketcap in cryptocurrencies stands at over 50% today, which means that the combined market cap of all other 2000 cryptocurrencies and crypto-tokens including Ethereum, NEO, IOTA, Monero etc. couldn’t match that of bitcoin.

This says a lot about what the market is believing in. Although retail investors have diversified themselves into several coins, when it comes to institutional investors, they’ve mostly limited themselves to bitcoin. There’s only Bitcoin Futures in CME and CBOE. Custody solutions are primarily being developed for Bitcoin. New York Stock Exchange owner wants to open “Bitcoin” Exchange. This shows that big players are mostly interested in bitcoin.