Bitcoin Maximalism – Bitcoin’s Proclaimed Reign Over the Crypto Industry

As a result of its significance in the industry, the benchmark cryptocurrency boasts a large follower base. Among this fanbase exists a group of die-hard believers, who believe and argue that Bitcoin is the only viable cryptocurrency compared to the crop of other cryptos (altcoins) in existence today. Proponents of this ideology are called “Bitcoin Maximalists.”

However, others argue that while BTC played a crucial role in the emergence of the crypto industry, the market will evolve beyond its importance.

In this article, we will be taking a deep dive into Bitcoin Maximalism, focusing on the arguments for and against it, use cases of altcoins Over Bitcoin, and other relevant details. So, let’s jump right in!

Understanding Bitcoin Maximalism

Bitcoin Maximalism, and its proponents, dictate that all altcoins—no matter their use case—are antithetical to the ethos of Satoshi Nakamoto (the creator of Bitcoin). Nakamoto designed the primary cryptocurrency with decentralization as the primary focus and as a global peer-to-peer cash system. According to maximalists, the use of semi-permissioned and fully permissioned blockchains contradicts the need for digital currency.

One thing that supports the case of maximalists (maxis) is the compounding effect of the Bitcoin network, which states that the network becomes stronger, more secure, and more stable the more people use it. Considering that Bitcoin is the oldest and most used network amongst any other blockchain, its network remains significantly stronger than any of its competitors, and this advantage will only continue to grow.

However, the network has its shortcomings, and one of them is the massive amount of power required to secure the Bitcoin blockchain via its proof-of-work (PoW) consensus mechanism. Scalability, limited usage, incapacity to host Smart Contract and decentralized applications (dApps), among many others, are additional critical issues plaguing the BTC network.

Regardless, maximalists argue that all these drawdowns are currently getting fixed.

The Argument for Bitcoin Maximalism

Highlighted below are a few supporting factors for the argument of Bitcoin Maximalism and why proponents believe it could render other cryptocurrencies ineffective:

Bitcoin’s Robust Network

Maximalists opine that the test of success for a digital currency is in the performance of its underlying network. BTC proponents have argued that although many digital currencies offer decent modifications to the original idea behind the flagship cryptocurrency, the length and strength of the underlying crypto is the most critical success factor to consider.

To prove this argument, maximalists cite the dominance of other Bitcoin break-aways, like Bitcoin Cash (#16 at press time), Litecoin (#15), Bitcoin SV (#52), and Bitcoin Gold (#90), in the crypto market rankings (based on market cap) as pointers of the efficiency of the Bitcoin network.

Bitcoin’s Widespread Adoption and Recognition

Maximalists argue that new financial assets need to scale a tough hurdle of gaining investor trust. Despite the immense popularity of digital assets today, many investors shy away from altcoin investments due to their relatively poor establishment among investors.

Maximalists hold that the integration process of crypto assets into mainstream finance could take a while. That said, institutional investors are likely to focus on older, more established, and more popular crypto assets.

Over the past few months, this argument has proven to hold water. In September, El Salvador officially integrated Bitcoin as a legal tender in the country, alongside the dollar, as the government plans to pay citizens’ salaries and pensions in BTC. Also, reports show that 87% of all investments into BTC in 2020 came from institutional investors. This trend has only continued in 2021 as institutional investors continue to increase their BTC exposure.

Maximalists argue that Bitcoin has a healthy advantage over the droves of new crypto assets entering the market thanks to its proven reliability, security, and success.

Bitcoin’s Trading Influence and Control on the Broader Crypto Market

The last argument for Maximalism in this article is the sway BTC’s price action holds in the crypto market. Maximalists argue that because altcoins tend to follow the lead of BTC trading sentiment, an investor does not necessarily have a diversified portfolio from investing in them (altcoins). That said, they opine that investors will get better served to invest in only Bitcoin.

However, for a while now, the altcoin space does not always rise and fall with the Influence of BTC. Interestingly, other cryptos—like Ethereum (ETH)—have recently begun dictating broader market moves.

Now that we have explored the argument for BTC Maximalism and maximalist ideologies, let’s examine a few salient points for the argument against Maximalism.

The Argument Against Bitcoin Maximalism (Bitcoin Minimalism)

On the opposite end of the Bitcoin spectrum exists a large group in the crypto community who believe that while BTC got the ball rolling for the industry, it does not render altcoins unnecessary as maximalists claim.The crypto market currently consists of 11,882 different digital assets (according to CoinMarketCap), with most of them solving for one Bitcoin inadequacy or the order. Because of the unique nature of most crypto assets, minimalists believe that the future of the industry rests on a host of crypto assets as opposed to just BTC.

A Short-Lived Dream

In history, flagship projects in new technologies tend to burn out fast. For example, with the advent of the internet came America Online (AOL), arguably the most used tool by the general public in accessing the web in the early internet days. Much like Bitcoin, many (at the time) believed that AOL was an innovative project that would last till Infinity. However, AOL got sidelined and subsequently obliterated by the emergence of better-ranging internet tools and projects. Many minimalists believe that Bitcoin could share the same fate as AOL.

The use of cryptocurrency in today’s world has massively outgrown the idea behind the development of BTC by Satoshi Nakamoto. Today, cryptocurrencies are getting used in supply chain management, intellectual property protection, governing organizations, cross-border payments, micro-payments, and a deluge of other activities, all of which Bitcoin cannot address.

Satoshi developed the flagship cryptocurrency with a fully decentralized blockchain architecture in mind, ignoring the numerous advantages allowing semi-permissioned blockchains could add to the Bitcoin network. That said, minimalists regard BTC as a good store of value, like gold, and nothing more.

Enemy of Innovation

Apart from its inability to host semi-permissioned blockchains (deemed more innovative), scalability remains another drawdown afflicting the BTC network.

As mentioned earlier, Bitcoin uses a proof-of-work consensus mechanism, which requires the assistance of miners to verify transactions and update the blockchain. That said, as the benchmark cryptocurrency grows in popularity, its transaction volume gets a bump as well. Because miners are required to operate, more transactions on the network translate to unfavorable and frustrating latency.

For that reason, more electricity power gets consumed to process the growing number of transactions. This issue remains a critical concern among environmentalists, who criticize the heavy carbon footprint of Bitcoin. Worries like this prevent BTC from reaching its full potential in adoption and create an opening for a better-performing cryptocurrency (like Ethereum or Cardano) to surpass it.

Another critical area where Bitcoin lacks is in the Smart Contracts and decentralized applications (dApps) department. In 2021, DeFi (Decentralized Finance) and NFTs (Non-Fungible Tokens) have stolen the show in the crypto space and the financial industry.

Crypto networks that provide a conducive ecosystem for developers to create and execute these projects have witnessed extraordinary growth, which led to a meteoric boom in their native currencies. Some examples include Ethereum, Binance Smart Chain (BNB), Solana (SOL), Polkadot (DOT), Uniswap (UNI), Chainlink (LINK), and many others.

Interestingly, these coins have significantly dictated the overall market trend in the past few months, thereby disproving some claims mentioned earlier by maximalists. While other blockchains struggle to upgrade their networks to provide Smart Contact capabilities, Bitcoin will most likely get left out in this boom due to its closed blockchain architecture.

Conclusion

While maximalists and minimalists argue about the viability of Bitcoin, one sure thing is that other cryptocurrencies (altcoins) are rapidly gaining more prominence in the digital age. And with the focus shifting from generic functionalities like a store of value, payments facilitation, and speculation to more unique and technical blockchain features, Bitcoin is losing eminence.

However, this does not necessarily mean that Bitcoin could become obsolete. It just means that Bitcoin’s command over the crypto industry is on a decline as altcoins are here to stay.

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