The Breakdown - After Bitcoin Maximalism

Starting point is 00:00:04 Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. The breakdown is sponsored by nexus.com, and FTCS, and produced and distributed by CoinDes. What's going on, guys? It is Sunday, July 3rd, and that means it's time for Long Reads Sunday. And, oh boy, are we getting spicy today? Before we get into that, however, if you are enjoying the breakdown, please, go subscribe to it, give it a rating, give it a review, or if you want to dig deeper into the conversation, come join us on the Breakers Discord. It's a place where people actually discuss

Starting point is 00:00:44 things without everything devolving into stupid personal invective, which as you'll see is kind of hard to come by. So come on over to bit.combe slash breakdown pod and have fun with us. Lastly, a disclosure as always, in addition to them being a sponsor of the show, I also work with FTX. In case it's not abundantly clear, bare markets are. big, big on psychodrama. This week, unbelievably, the big drama was around Nick Carter and his credentials as a bitcoiner. It started when he announced his venture firm's investment in Dynamic, which is a wallet-based sign-on company. Almost immediately, a horde of folks started calling him a shi-coiner, saying that they couldn't believe that Nick Carter, defender of proof of work,

Starting point is 00:01:30 eloquent explainer of Bitcoin himself was a sh-poiner. Now, if you've ever heard Nick talk, you will know that he is not a wilting violet. And when the fight was brought to him, he had no problem fighting back. One of the results of this was a medium post called Setting the Record Straight, or a eulogy for Bitcoin maximalism. I actually think that Twitter fights aside, it's a really important topic. And because apparently I'm a glutton for punishment too, I decided it would be a good idea to step in this Hornets Nest on this Longreed Sunday. Now, I'm not going to read Nick's entire piece. If you want to go read about dynamic and what it does or doesn't do, or Nick Carter's

Starting point is 00:02:10 work at Castle Island Ventures, a venture capital firm, you can go do that. Where I'm going to pick up the story is in the section called On Bitcoin Maximalism. I'm not owed any deference or anything at all because of my prior work on Bitcoin. What I do think it does unquestionably is establish my pro-Bitcoin credentials. If you think I'm a Bitcoin grifter, tediously building up a reputation in Bitcoin land, over five years through countless articles, appearances, podcasts, and tens of millions of capital deployed, all of a sudden to turn on Bitcoin, that's the most long-term and expensive grift of all time. Also, I don't monetize my audience. You get all my content for free all of the time. I earn a living through my own fund and I'm accountable to my LPs alone. This grift seems to bear a disturbingly

Starting point is 00:02:57 close resemblance to hard work. I've never towed the line on standard Bitcoin ideology. I've never been intimidated by orthodoxy. For instance, back when the S2F hype was at its fullest, I criticized the model with a detailed article. The hardcore maxi crew almost universally worshipped the model. It's obvious now that they were blinded by ideology. I knew what would happen. A lot of newbies would be duped by the fantastic promises of the model, would buy in, and would become disillusioned when it failed. By being realistic, I was trying to stave off this outcome. Now that the model has obviously failed, as it was always going to, these people are upset and lashing out. Maybe reserve your ire for the charlatans that sold you a fake model, rather than the people

Starting point is 00:03:39 trying to course correct you back in the day. I was also an early voice supporting the view that stablecoins and Bitcoin were synergistic, and that stablecoins didn't really pose a threat to Bitcoin. Now, this is a popular view among Bitcoiners. It is evidence that Bitcoin ideology isn't really fixed. I also don't support the idea that's pervasive in the Bitcoin community, a la Rothbard, that all banks should be full reserve, and that fractional reserve is fraud. You just need to read some Selgin to know that this is a stupid idea. I also don't think all altcoins are just going to vanish. That seems absurd. I don't think other blockchains are useless. Just look at the data. There's over $100 billion of stable coins on other blockchains. They are objectively useful.

Starting point is 00:04:18 They are used in real-world transactions more than Bitcoin is. To deny this is to deny reality. The fact that people pay fees to use these other blockchains vastly exceeding by an order of magnitude in the case of Ethereum, the fees paid to use Bitcoin indicates that there's a material, markets-based demand for these alternative block spaces. Bitcoin maximalists that deny this are denying the markets an evidence-based approach that they claim to venerate. In short, I depart from conventional wisdom that pervades the Bitcoin community. I'm not entirely sure what the contemporary definition of a maximalist is. But if it means thinking it's immoral to invest in any non-bitcoin asset,

Starting point is 00:04:52 a moral to invest in startups building on other blockchains, and believing that everything will inevitably collapse back down to Bitcoin, I am definitely not that. On Bitcoin-only companies. We invest in plenty of Bitcoin-only or Bitcoin-focused companies. The good news for founders building Bitcoin firms is that there are a few Bitcoin-focused venture firms out there. If you want your lead to be 100% explicitly Bitcoin-aligned,

Starting point is 00:05:14 you should consider them. A few names, Stillmark, TVP, 1031, HiveMind. Truth is, the vast majority of VC-backed Bitcoin companies have taken capital from VC firms that aren't just Bitcoin only. You can't really afford to be that picky when you're raising around. Of course, you can prefer that your investors are aligned. We certainly are. But if you want to raise VC, you will at some point run into generalist funds. For this reason, I've never encountered a serious founder in the Bitcoin space, wanting to raise VC that was completely adamant about raising only from lifelong hardcore Bitcoiners.

Starting point is 00:05:46 Most actual founders and builders are realistic, pragmatic people. On the Twitter mob, Getting piled on absolutely sucks, especially when it's by industry colleagues you've known for five plus years and have always acted pleasantly towards you. I'll survive, but I'm really disappointed by the people whom I've known for a long while turning on me for a drop of clout. I don't need to name names, you know who you are. I've done plenty of their shows and podcasts and had lunch with them, spoken at their conferences. I suppose the self-righteous rush of trampling on someone who strays from orthodoxy is just too appealing. I've seen some honestly disgusting attacks. I can handle a lot, but attacking my family is beyond the pale.

Starting point is 00:06:24 Some of you are targeting my dad because he works at the World Bank. I don't see what that has to do with anything, but to be clear, he likes Bitcoin. Thanks to my relative proximity to the bank, I've had the opportunity to share my views with them on Bitcoin and hopefully win hearts and minds. The bank has written some good stuff on the topic. Of the two Bretton Woods orgs, the bank is definitely more open to Bitcoin. The IMF seems to be openly hostile. But regardless, what my dad does for a living is completely immaterial.

Starting point is 00:06:49 If you have a problem with what I do, your quarrel is with me. Most of the people attacking me are acting confused about non-Bitcoin investments because they mistakenly thought I was a Toxia and know nothing of my work, my views, my podcast, or fund. Maybe they did think I was a steak-eating Toxiaxie who believes every financial asset other than Bitcoin was a scam. I can see how you would get whiplash from that. Truth is, that's never been the case.

Starting point is 00:07:12 I've never been a maximalist. I hate the term. I've never described myself that way. And I've always been open-minded. The same open-mindedness that brought me to Bitcoin a decade ago has served me well, and I'm not abandoning it any time soon. In times like these, security of your assets should be your number one priority. If you want to offset risk as much as possible and still stay in crypto,

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Starting point is 00:08:16 For organizations like Gemini, Crypto.com, and BlockFi. Gain unparalleled visibility and maximize your potential with the leading blockchain data platform by visiting us now at chainalysis.com slash coin desk. The breakdown is sponsored by FTXUS. FtXUS is the safe, regulated way to buy and sell Bitcoin and other digital assets with up to 85% lower fees than competitors. There are no fixed minimum fees, no ACH transaction fees, and no withdrawal fees. One of the largest exchanges in the U.S. FtXUS is also the only leading exchange that supports both Ethereum and Solana NFTs. When you trade NFTs on FTX, you pay no gas fees. Download the FTX app today and use referral code breakdown to support the show. Where to go from here? It's clear that there is an awful sickness pervading the Bitcoin space. Most Bitcoiners are normal good people. For the vast majority of them, there's no lifestyle associated with owning Bitcoin as it should be.

Starting point is 00:09:21 But there's a subset of people, a small, flailing, shrinking group, who are mostly new to Bitcoin, made Bitcoin their entire personality, and became completely emotionally invested in it. They are spoon-fed on a diet of the same half-dozen thinkers and suffer from an ideological monoculture. They cannot extricate themselves from their lifestyle and investment, and so when anyone in the tribe or adjacent says anything that remotely contradicts their established dogma, which is inconsistent, morally confused, and indefensible anyway, they go on the attack. Now that they've all lost money and treasured ideas like we never draw down below previous cycle highs, and the halving slash stock to flow are discredited, they feel deep within them

Starting point is 00:09:58 the intellectual poverty of their thesis, so they lash out. Everyone in the Bitcoin and crypto industry knows what I'm talking about. The moral basis of these people is cartoonish. It's something that might appeal to a toddler. It's a dreadful binary. Every financial asset other than Bitcoin is a scam. Every blockchain other than Bitcoin is a scam and doomed to fail, even if they are objectively thriving and charging more for blocks.

Starting point is 00:10:19 space than Bitcoin? If anything interesting is built anywhere other than Bitcoin, it will inevitably return to Bitcoin, even if this has been false for the last 10 years. Investing your time or effort anywhere other than Bitcoin is misallocation, malinvestment, grifting, or a scam. I'm cringing, even typing these words out. I'm genuinely embarrassed to be associated with these people. Ultimately, Bitcoin is not a lifestyle. Bitcoin is not a steak dinner. Bitcoin is not a meme, and it's not laser eyes. Bitcoin is a profoundly useful tool. It is impregnated with some ideology, but it is not the ideology that these people profess. The core Bitcoin values have to do with property rights, individual human dignity, self-determination, privacy, autonomy, and monetary predictability.

Starting point is 00:11:02 Bitcoin attracts me for that reason, and I'll keep supporting it, with all the resources available to me, regardless of how anyone describes me. I'm not being sacrificed and I am not rage- quitting. I've been here much longer than virtually all of my critics and I am certain I will outlast them. I can also pretty much guarantee you I will continue to be far more impactful than them. Their ideology is extremely brittle and grows more strained by the day. The testable tenets of Bitcoin maximalism, as I interpret it, are getting bleaker all the time. The S2F model is discredited. The halving is moronic. The side chain thesis did not happen. Liquid did not succeed. Lightning is interesting, but not everything. Bitcoin is not the reserve currency of anything,

Starting point is 00:11:42 not even the crypto industry. Elsewhere, smart contract stuff is interesting and worthwhile. Roll-ups and whether interesting L2 models are gathering steam. Defi is worthwhile in getting more sophisticated with the rise of uncollateralized lenders. NFTs aren't going away and are getting more creative and useful. Non-monetary applications like decentralized social graphs or decentralized domain systems are gaining traction and genuinely matter. None of that is getting built on Bitcoin right now. The critical mass of developers, liquidity, and dev tooling is elsewhere.

Starting point is 00:12:12 Ethereum isn't going to vanish no matter how hard the Maxis prey to Gensler. Defi liquidity isn't going to dry up. What's actually likely to happen is Bitcoin the network and the asset will be decoupled, with Bitcoin settling on other transactional spaces. That's how Bitcoin and Defy will be harmonized. The maximalist coming at me lacked the perspective in depth to even consider something like this. They are intellectually stunted. I am not pessimistic on Bitcoin.

Starting point is 00:12:36 I'm just interested in the world as it actually is instead of the world of utopias and pleasant illusions. My case for Bitcoin has always been more robust and resistant to shocks than the case these Maxis make, because theirs rely on fantasies like the stock to flow, the inevitable collapse of all coins, or hyper-bitcoinization. I'd be upset if I believed in those things too. I've always spurned externally imposed labels, and now is no different. Call me whatever you want. You can keep your laser eyes and beefsteak dinners. I'll be here doing my thing. Back to NLW here. Nick pulls no punches and needs no further support, frankly, but I did want to share how I think about this and how it impacts the show. First, a note on terminology. I'm not going to wrap everything in the mantle

Starting point is 00:13:22 of quote-unquote Bitcoin maximalism. There are tons of folks out there who are first or only interested in Bitcoin who don't fit the patterns of what I'm going to talk about. If you've spent even five minutes on crypto-Twitter, you know exactly the type of folks we're talking about here. It's the aggressive, come out of the woodwork to fight you for any perceived slight folks that we are talking about. People who don't seem to know any other words besides Bitcoin and scam. These are the people who claim toxic like a badge of honor and then spend every day trying to live up to the title. First of all, it's important to note that there is history here. There have been big battles in Bitcoin. The New York Agreement, the block-sized wars, these were battles that genuinely challenged

Starting point is 00:14:03 the way that Bitcoin was developing and that needed the plebs to rise up. I fear, though, that they've trained people to think that Bitcoin needs to be defended at all times. I don't believe that's the case. Second, I want to be very clear that I believe strongly that Bitcoiners skepticism can be an extremely significant asset to the industry. It helps people prioritize their time. It helps people stay focused on what the long-term goals of these spaces are. And there is a real question of the power balance in whatever the hell Web 3 is evolving in to be. You can meme Bitcoiners versus the venture capitalists, but I don't mind that there's a voice asking about asset ownership and control in the blockchain space. Third, no matter what people say or how much they want to call

Starting point is 00:14:50 other snowflakes or any other bullshit like that, tone and the way that people talk to each other matters. The way that many of the loudest voices in this space think it's appropriate to engage with people is a complete fucking turnoff for any human being who's even a little bit reasonable or had a smidge of a proper upbringing where they talked about how you treat others. These folks may just think they're telling it like it is, but to anyone else with half a functioning brain, you're just an asshole. When my second child was born, I made a conscious decision to radically reduce Twitter, because the conversations driven by these folks, which are basically every conversation on that

Starting point is 00:15:30 platform, turns everything that might be good into god-awful trash, some stupid, invective, and swirling, boring, tired arguments that don't actually deal with anything in the real world. I will note here, by the way, that a lot of ETH Maxis and Chain Maxis in general have picked up the same habits, and they should stop too. Fourth, just like tone matters, so does nuance. There is a real boy who cried scam thing going on. Every time someone takes a victory lap for calling a Celsius, the rest of the casual observers could point to the 10 trillion other things they've also called scams. And guess what? All of those, quote-unquote, scam callouts make every other person take their correct calls ahead.

Starting point is 00:16:09 hell of a lot less seriously. As an aside, I also always think it's hilarious when people say that they're calling out scams to protect people from getting hurt. Listen, man, which is it? Are people smart enough to figure things out for themselves and make their own decisions? Or do we have to paternalistically preach at them because they're too stupid to get it otherwise? But I digress. The real thing that I see, and I see it all the time, is people who live and die by this particular mob, contorting themselves to warp their opinions in the way that they express them so as not to inflame the hoard around them. And it's made worse any time they want to express an opinion that's maybe evolving or a little bit different. There is nothing so sad to me as a group of people who pride themselves as heretics

Starting point is 00:16:53 and dissidents who are actually nothing more than their own new, brittle orthodoxy. Look, I'm not trying to convince you not to be a Bitcoin maximalist in the sense of only caring about Bitcoin. I'm interested in other stuff in this space, but I think focusing on Bitcoin is a completely defensible position. But when you produce hundreds and hundreds of shows about Bitcoin, in every imaginable context from every imaginable angle for years on end, and constantly get called a shi-coiner for simply mentioning anything besides Bitcoin by Twitter dweaves who have contributed nothing other than they're shouting, you kind of stop caring to engage with that level of stupidity. When it comes down to it, I stand by what I said on Twitter the other day.

Starting point is 00:17:41 One of Bitcoin's greatest attributes is that you don't have to give a fuck what Bitcoiners think to appreciate and use Bitcoin. Now, that includes me, of course. So for those that do enjoy hanging out here, I appreciate it. And so to wrap just quickly on what I actually do think and how it impacts the show, I came to the crypto space when I started to imagine the Sudanese refugees who I had worked with in Cairo in 2004, 2005, 2006, fleeing places like Darfur, being able to take their wealth or some portion of it with them in a way that was so much less subject to confiscation, to theft, to appropriation.

Starting point is 00:18:19 It shifted the narrative that I had been introduced Bitcoin to, which was the payments narrative in San Francisco in 2012 and 2013, and made it about something that I really cared about. It was a real-world use case that is so clear and so present and so obvious to me that I have never for a moment been able to convince myself, even if I tried, that Bitcoin was anything other than inevitable. As you hear every day, this is a show about big-picture power shifts. A non-sovereign, truly uncontrollable money,

Starting point is 00:18:49 is clearly part of a big-picture power shift. And that's why so much of the show focuses on Bitcoin. I've done now in the 800s or 900s of shows, and I guarantee if you go back and look at the number of titles that have Bitcoin in them to say nothing of the shows that focus on Bitcoin, it's a pretty high preponderance of them. So where do other things fit in? If you've taken the time to pay attention to the way that I talk about things like NFTs, you know that a lot of it comes through this lens of power.

Starting point is 00:19:18 It's questions that are worth exploring like what it means for creator power relative to traditional intermediaries. I'm not dismissive of Web 3 because I agree with the condemnation of Web 2 as an inherent network structure that comes with really dangerous externalities on the power dimension. I think the idea underlying Defi of a system that has fewer intermediaries is immensely powerful and of course worth exploring. The reason that I don't talk about these things as much or as frequently or as in depth as Bitcoin is that they have not made it to the inevitability stage yet. They are still in the midst of their journey, their exploration. They are possible power shifts, possible tools and implements of power shifts that have not happened yet.

Starting point is 00:20:03 I've lost listeners because they were surprised that I would cover anything other than Bitcoin when the orthodoxy says that you're not supposed to. But to me, it's never been about one asset or another. I've never feared Ethereum competing with Bitcoin on what Bitcoin is trying to do and who it matters for. I'm interested in what all of these things might mean for the world that I want to live in, and to the extent anyone tries to define where the boundaries of my interests are or aren't allowed to lie, that is someone that I am simply not interested in engaging with. Disagree with me, yes. Veimently, yes. Come to the Discord and have a respectful conversation about how you disagree with me. Yes, yes, yes. If it gets too hot, we'll move it to the debate section. We've got this

Starting point is 00:20:52 figured out. But try to tell me what and how to think, and you're the thought police man, and you've lost the plot. This is not a time for the thought police. There's plenty of that out there. This is a time for curiosity and wonderment and excitement and exploration and intellectual openness. That's what the breakdown's here for. And if you're still here, I'm glad to have you. Tomorrow's the day America declared independence and burned its own path forward in the world. There could be worse days for us to take a moment to think about the world that we might want to build next. Until Tuesday, be safe and take care of each other. Peace.

The Breakdown - After Bitcoin Maximalism

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