An opposing view of Maximalism
Bitcoin maximalists believe that Bitcoin alone is all that is needed as a cryptocurrency and that any other attempt is inferior. If that is true, then why are there so many cryptocurrencies? Why do these “alt coins” persist? Before we dive into the ever-expanding world of cryptocurrencies let’s take a look at the fiat currencies of the world.
Currently there are 180 fiat currencies being used in the world today. Most are specific to countries and others like the Euro are used in a union of countries such as the EU. Could one fiat currency ever be adopted for the entire planet? Probably not and the reason is simple. The world is full of diversity when it comes to both economic and political policy. In 1944 John Maynard Kenyes advocated for a single currency for the western world during the Bretton Woods conference. This conference is what created the gold pegged dollar as a reserve currency. Economic imbalances however, forced President Nixon to abandon the gold peg in 1971. The economic and political structures were too different, and it created surpluses, deficits and inflationary pressures. In order for there to be one world currency there would need to be one economic policy and one political policy dictated by a “central” power.
Maximalism is centralization
Bitcoin maximalists believe that Bitcoin is the standard for decentralization but doesn’t having only one choice lead to centralization? The answer is clearly yes. The more cryptocurrencies that gain traction and real-world utility the more decentralized crypto as a whole becomes. A lack of competition always leads to centralization or monopoly which is bad for the majority of participants. Competition in cryptocurrencies, however, creates independent eco systems and a much wider distribution of wealth and power.
Having a choice
I personally never trust anyone who wants to limit my choice. Choice creates competition which then leads to innovation, improvement and new opportunities. Many millionaires have been created by simply owning and holding Bitcoin but there are also crypto millionaires that never owned a single Bitcoin. Is that good or bad for wealth distribution? It is clearly beneficial. A crypto investor who was late to Bitcoin but early to Ethereum was much more successful than someone who instead got into Bitcoin late. Not only is the early Ethereum investor better positioned but that person is now part of a thriving eco system. It doesn’t end there, an investor who was late to Ethereum but early to Cardano or Solana is now better positioned than if they instead invested in Ethereum late. Not only are they better positioned but they are now able to capitalize by being an early adopter of a network that may solve some of Ethereum’s shortfalls. This is proof that choice can create better wealth distribution and new opportunities for investment.
Diversity meets Interoperability
Some maximalists will argue that the “Network Effect” is far too great for earlier cryptocurrencies and that it is too much of an obstacle for newer entrants to overcome. The idea of network effects in crypto are grossly overstated. Network effects work best in the physical world. In the digitized world of crypto it is effortless to move from one network to another. Also, bridges are being constructed so that you don’t even have to sell the asset. You can now move assets directly from one chain to another. This feature allows users to navigate freely between chains wherever it may suit them best. Alliances are now being formed such as the UTXO alliance. This is an example of different projects collaborating on a specific goal. Additionally, some chains may be good at doing certain things while not being good at others. Why does one blockchain project have to do everything? There is an evolution taking place where projects are becoming specialized at doing something really well. Coti for example wants to focus on payments and stablecoin technology. Chainlink focuses on connecting smart contracts to external data. Both of these projects are not limited to working with any single blockchain or entity because they benefit by working with everybody.
The evolution of crypto didn’t begin and end in 2008. Maximalists are a stubborn bunch but stopping human innovation and the drive to create something better is an impossible feat. The one crypto to rule them all idea really only makes sense for those majority owners who wish to preserve and grow their wealth. Don’t let the laser eyes blind you. Crypto is becoming more diverse by the minute and it’s for the best.