Bitcoin Maximalism? What Is It?
Bitcoin Maximalism believe that Bitcoin, the world’s most popular crypto, is the only digital asset desirable in the future. Maximalists have confidence that all other digital currencies are lesser than Bitcoin. The maximalist ideology argues that other cryptos fall short of the ideals of the pseudonym Satoshi Nakamoto, who created Bitcoin in 2009.
Bitcoin differs from government-issued currencies, known as fiat currencies, managed by a centralized authority. Instead, Bitcoin is devolved, and its blockchain is a publicly distributed ledger, meaning transactions are shared with participants and are transparent.
However, despite Bitcoin’s popularity as a seriously traded digital asset, it has also led to several other cryptocurrencies. Bitcoin maximalists think these different cryptocurrencies, called altcoins, are useless and inferior.
The Central Thesis Of Bitcoin Maximalism
Bitcoin maximalists are sure that Bitcoin is the only digital asset wanted in the future.
Bitcoin maximalists believe that all different digital currencies are inferior to Bitcoin.
However, Bitcoin’s scalability problem has led to other blockchain networks handling higher transaction volumes.
Bitcoin maximalists would probably argue that it can fix Bitcoin’s shortcomings, but investment in alternative blockchains grows.
Understand Bitcoin Maximalism
While Bitcoin may not have been the first attempt at a decentralized cryptocurrency, it was undoubtedly the most successful to date. Bitcoin maximalists believe that the Bitcoin web will offer everything investors could wish for in a digital currency in the future. In this way, maximalists uncompromisingly advocate (or at least accept as inevitable) a bitcoin control at some fact in the coming.
Ethereum developer Vitalik Buterin commented on the idea of bitcoin maximalism in 2014. Buterin described bitcoin maximalism as “bitcoin dominance maximalism”. Buterin went on to explain the maximalist view.
The idea that an environment of manifold competing cryptocurrencies is undesirable, that introducing “yet one more coin” is wrong, and that it is correct and inevitable that Bitcoin will monopolize the cryptocurrency scene: coins
Buterin Distinguished Maximalist Philosophy As Such:
A simple desire to support and improve Bitcoin; Such motivations are undeniably beneficial. It’s more of an attitude that building something on Bitcoin is the only right way to do things and anything else is wrong. Bitcoin maximalists frequently use “network effects” to dispute, claiming that fighting them is useless.
The Bitcoin Blockchain
Distributed ledger technology is at the core of the Bitcoin blockchain network. Share sending store copies of the data to members within the sharing web. The distributed ledger is advantageous because it allows transactions. Therefore, this transparency helps increase security and prevent fraud. If an attacker modifies part of the blockchain, other participants with copies of the original transactions can determine what the scammer changed and recover the legitimate trade.
However, the popularity of Bitcoin (BTC) ushered in the age of cryptocurrencies and led to hundreds of other digital currencies. At the same time, other digital currencies are based on blockchain technology, but not necessarily specifically on the Bitcoin network. In other words, the Bitcoin distributed ledger has to be used for other purposes and not just as a peer-to-peer cash payment system as originally intended.
Modified Blockchains Of Bitcoin Maximalism
The growing popularity of blockchain technology has led to modified versions of bitcoin’s distributed ledgers called private blockchains. Businesses and governments can create private blockchain networks
Only a few participants can access the network after being verified or authenticated.
These private blockchains can be permitted or semi-authorized networks, allowing for a mix of public and private functions. Within these networks, specific participants are granted individual permissions only to perform specific activities on the web. The network may also impose restrictions on features allowed by subscribers, such as B. Read-only and edit access. An example of a semi-private blockchain system would be a local government that permits certain taxpayers and businesses access to legal title and record-keeping while restricting access to those records to the general public.
While public blockchains are decentralized, meaning they don’t have a central authority with oversight powers, private blockchains have a central entity, such as a government or corporation that manages and controls the network.
Bitcoin maximalists believe that decentralization is a crucial feature of the Bitcoin blockchain network. Using private, semi-private, and permission blockchains goes against the purpose of cryptocurrencies, as they should be open, transparent, and not centrally managed.
Reasons For Bitcoin Maximalism
Maximalists are a vocal group of Bitcoin groups who endorse Bitcoin ahead of any other digital currency. Below are why maximalists trust bitcoin will render all other cryptocurrencies ineffective.
The Bitcoin Network
Many Bitcoin maximalists today support the impression that the success of a digital currency depends on the underlying blockchain network. It’s common to hear the idea that while other digital currencies offer modifications to the original Bitcoin premise aimed at solving the problems inherent in the Bitcoin network, the ultimate indicator of success is the span and strength of a chain of blocks is. As Bitcoin’s underlying network is as strong as is believed. And because the properties of a given digital currency are free to be adopted by another digital currency. The most critical factor is the network itself.
Differentiate The Bitcoin
The wealth, size of the user base, and track record are characteristics that differentiate the Bitcoin network from other blockchains. Maximalists can point to the dominance of bitcoin and bitcoin cash in ranking digital currencies by market cap as evidence of this principle. Bitcoin Cash and Bitcoin Gold have limited functionality compared to many newer altcoins. However, altcoins retain a higher value due to their connection to the Bitcoin network.
Bitcoin Is Well Establish
Another argument favoring the maximalist perspective is the principle that new financial instruments must overcome a high barrier to gain investor trust. Although digital currencies have become exponentially more popular. Many large financial institutions and retail investors still prefer to exit the market.
Bitcoin maximalists believe that the process of fully integrating digital currencies into the world of traditional finance and investing will be slow. As a result, foreigners are likely to pay more attention to older, more popular, and established networks. Among the digital currencies, Bitcoin is the most found.
With the emergence of dozens of new and unproven digital currencies, Bitcoin has a significant advantage as it has proven its reliability and success. When other crypto networks experience hacking or other negative publicity, Bitcoin maximalists see it as further evidence to support their argument.
The Trading Impact Of Bitcoin On Altcoins
A final argument favoring the maximalist philosophy relates to diversification within broader crypto or portfolio. Since the price of bitcoin tends to influence the cost of the altcoin world more broadly, investing in altcoins can be a questionable way to diversify one’s cryptocurrency holdings.
Then follows the argument that investors are better off investing in a blue-chip asset like bitcoin than risking their money by investing in other coins or tokens. However, Bitcoin’s rising price hasn’t always propelled altcoins higher. But maximalists might argue that this is due to the lower quality.