What Is Bitcoin Maximalism?
Although bitcoin may not have been the very first attempt at a decentralized cryptocurrency, it has unquestionably been the most successful thus far. Indeed, bitcoin's (BTC) popularity effectively ushered in the age of cryptocurrencies. Thanks to BTC's overwhelming success, hundreds of other digital currencies have been launched in the past few years. Many of these cryptocurrencies are built from the basic bitcoin structure in some way or another, while others are so-called altcoins, or digital currencies based on blockchain technology but not necessarily on the bitcoin network specifically. It's not uncommon for cryptocurrency investors to search for the "next big thing." After all, one of the strongest and most common criticisms of the space is that it is plagued by speculative investing, and shady ICOs do not necessarily help enhance the reputation of the industry. Nonetheless, there is a vocal group of bitcoin supporters that back BTC above all other digital currencies. This faction has come to be known as the "bitcoin maximalist" group.
Bitcoin Maximalism Explained
Bitcoin maximalists often hold that, although the world's leading digital currency by market cap may have issues with scalability, smart contracts applications, and more for the time being, that there will be a point in the future at which the bitcoin network provides everything that investors want in a digital currency. In this way, maximalists are unapologetically in favor of (or at least in agreement about the inevitability of) a bitcoin monopoly at some point in the future.
Ethereum developer Vitalik Buterin, long known for being an outspoken voice in the cryptocurrency space, both inside and outside of the Ethereum network itself, has commented on the idea of bitcoin maximalism. In 2016, he stated that maximalism reflects "the idea that an environment of multiple competing cryptocurrencies is undesirable, that it is wrong to launch 'yet another coin,' and that it is both righteous and inevitable that the bitcoin currency comes to take a monopoly position in the cryptocurrency scene." Buterin distinguished the maximalist philosophy from "a simple desire to support bitcoin and make it better; such motivations are unquestionably beneficial...rather it is a stance that building something on bitcoin is the only correct way to do things and that doing anything else is unethical. Bitcoin maximalists often use 'network effects' as an argument, and claim that it is futile to fight against them."
Many bitcoin maximalists today support the idea that the success of a digital currency is dependent upon the underlying blockchain network. It is common to hear the idea that, although other digital currencies may offer modifications upon the original bitcoin premise which are designed to address issues inherent in the bitcoin network, the ultimate marker of success is the length and strength of a blockchain. Because bitcoin's underlying network is as strong as it is, the thinking goes, and because features of any particular digital currency can be freely co-opted by another digital currency, the network itself is the most important factor. Maximalists may point to the dominance of bitcoin, bitcoin cash, and bitcoin gold in the leaderboard of digital currencies by market cap as evidence of this principle. Bitcoin cash and bitcoin gold have limited features in comparison with many newer altcoins; however, they maintain a higher value because of their connection to the bitcoin network. The wealth, the size of the userbase, and the history of success are features which set the bitcoin network apart from other blockchains.
Another argument for the maximalist perspective is the principle that new financial instruments must face a high barrier to building investor trust. Even as digital currencies have become exponentially more popular in the past several months, there are still many major financial institutions and individual investors that prefer to bow out of the market. Bitcoin maximalists believe that the process of integrating digital currencies fully into the world of mainstream finance and investing will be a slow one. As such, outsiders are likely to pay the most careful attention to the oldest, most popular, and most established networks. In the case of digital currencies, that would be bitcoin. With dozens of new, untested digital currencies emerging every month, bitcoin has a strong advantage in that it has proven reliability and success. When other cryptocurrency networks suffer from hacks or other negative publicity, bitcoin maximalists tend to see this as further evidence in support of their argument.
A final argument for the maximalist philosophy has to do with diversification within a cryptocurrency or broader portfolio. Because the price of bitcoin tends to influence the price of the altcoin world more broadly, investing in altcoins may be a questionable way of diversifying one's cryptocurrency holdings. The argument then follows that investors would be best off making a leveraged investment in bitcoin than taking chances with other coins or tokens.