The Breakdown - Is Bitcoin Maximalism a Historical Aberration?

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.iO., Circle, and FTX, and produced and distributed by CoinDes. What's going on, guys? It is Sunday, October 16th, and that means it's time for Long Read Sunday. 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 dive deeper into the conversation, come join us. on the Breakers Discord. You can find a link in the show notes or go to bit.ly slash breakdown pod. Also a disclosure, as always, in addition to them being a sponsor of the show, I also work with FTX. All right, folks, happy Sunday. So for this Longreed Sunday, we're going to turn to one of the

Starting point is 00:00:52 key cultural storylines of this spare market, which is the debate around Bitcoin maximalism. This discussion hit a fever pitch in June when a part of Bitcoin Twitter went after Nick Carter for his firm's investment in Dynamic, which is a wallet-based sign-on company. Now, there were a couple things that made this a bigger deal than standard Toxamaxie cancellation. First, Nick Carter is widely seen as a hugely valuable member of the community, for example, producing a ton of thoughtful content. He has often been seen as one of the best people to defend Bitcoin as relates to environmental concerns. Number two, Nick might be an academic-seeming kind of guy,

Starting point is 00:01:30 but he's got the heart of a bare-knuckle boxer, and there was no way that he wasn't going to clap back and clap back he did. He wrote a long piece, one that I excerpted for Long Read Sunday back then, called Setting the Record Straight or a Ulogy for Bitcoin maximalism. A lot of the piece was about him, but the money shot was in the final section, where to go from here. Quote, it's clear that there's 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 00:02:00 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 from the same half-dozen thinkers and suffer from an ideological monoculture. They cannot extract themselves from their lifestyle or investment, and so when anyone in their 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 having stock to flow are discredited, they feel deep within them the intellectual poverty

Starting point is 00:02:37 of their thesis, so they lash out. Everyone in the Bitcoin and crypto industry knows what I'm talking about. The moral basis for 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 block 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

Starting point is 00:03:13 associated with these people. I am not pessimistic on Bitcoin. 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 than resistance to shocks. than the case these maxis make, because theirs rely on fantasies like the stock to flow, the inevitable collapse of all all coins or hyper-bitcoinization. I'd be upset if I believe those things, too. So the dust-up did a couple of things. First, it turned up the volume on this conversation significantly.

Starting point is 00:03:42 For some, it meant that there was more safe space to reject the maximalist label. Dan Held has talked about being a Bitcoin moderate. You're seeing more people willing to err opinions like this recent tweet from Zach Vohl, who wrote, it's pretty hilarious to watch deranged Bitcoin people crucifies someone for speculative investing to get more Bitcoin because it's unethical, then worship a political leader for buying Bitcoin with funds from taxation and money printing. Now, I obviously think this change in the discourse is healthier, I wouldn't keep covering it. I grew up in punk rock and hardcore scenes, and I didn't come to Bitcoin to get siloed into some new phoing orthodoxy that pretends it's full of heretics, even as it slavishly demands compliance on everything from what you buy to what you eat.

Starting point is 00:04:19 So, that's been one side of what happened after the Nick Carter dust up. However, for those who are maximalists, there was a rally around the flag effect as well. Some of that was just more vicious shit posting on Twitter, but the more interesting counter response was folks actually trying to bring rationality to the debate by better defining its terms. In August, Bitcoin magazine's Pete Rizzo wrote a piece for Forbes called How to Be a Bitcoin Maximalist. He says, quote, my assertion as most Bitcoin maximalists are united in the following beliefs, which while challenging to the status quo are ultimately positive for Bitcoin users and humanity at large. Those beliefs include one, a commitment to safeguarding Bitcoin for future generations.

Starting point is 00:04:56 Quote, Bitcoin maximalists believe that Bitcoin is the lone global digital alternative to state-managed economies, that, by virtue of its design, can withstand both government attack and centralization over time. And thus, it is a loan among monetary systems that has the opportunity to offer a truly neutral money and perpetuity. Two, a commitment to running the Bitcoin software. Three, a commitment to slow software changes and enfranchising users. Quote, Bitcoin maximalists see Bitcoin is the product of decades of failed attempts to build working digital cash, and that this invention does not require significant improvement. Four, a commitment to building products and services on Bitcoin.

Starting point is 00:05:30 Five, a commitment to using Bitcoin to the greatest extent. Quote, they accept that the system today is not capable of yet managing the full financial lives of users, but believe that, over time, they can develop services that extend the use of Bitcoin to encompass more of this activity. Six, a commitment to opposing censorship and surveillance. Seven, a commitment to supporting mining by any and all means. quote, this is because at its heart they believe proof of work is the only consensus method by which a cryptocurrency can be distributed to anyone in the world in a free market without

Starting point is 00:05:57 barriers to entry imposed by any group. Eight, and I'm going to excerpt this one a little bit farther. A commitment to crypto-minimalism. Quote, Bitcoin maximalists are skeptical and critical of claims to technical advances made by other cryptocurrency softwares and seek to maintain and bolster a culture of scrutiny. Still, they acknowledge that there are new services and products made available in the crypto sector, and that the product of this effort can provide learnings to Bitcoin. However, they believe that these crypto assets and services are profiting off the short-term limitations

Starting point is 00:06:23 of Bitcoin, and thus their use should be discouraged in order to inspire and fund the development of like offerings built on the Bitcoin network. After all, any resources spent towards improving other networks as effort that could have bolstered Bitcoin. Examples of this may include U.S. dollar stablecoins like Tether, which are being reimagined via a proposal called Taro and a company called synonym, and even the Bitcoin Lightning Network, which prior to scaling for payments attempted to replace dedicated crypto protocols that claim to be designed for this purpose. They assume that by taking this path, they can encourage alternatives to crypto assets and services that issue tokens, especially when the sale of tokens create separate classes of investors with

Starting point is 00:06:55 different risk profiles based on the project's success or failure. They believe that by building these services on Bitcoin, they can align incentives whereby the value of such services benefit all users of Bitcoin equally, and thus exist without undue benefit to any privileged investor or narrow shareholder group. This bullet obviously deals the most with other crypto assets, which is why I read more of it. But Pete's ninth pillar is a commitment to keeping Bitcoin open for all. He concludes, The definition of Bitcoin maximalism above will doubtless find detractors, and there are some who dismiss it altogether, favoring some stricter or more succinct description. As always, this is

Starting point is 00:07:26 Bitcoin, so recognize that no one is telling you to adopt this framework if it's not useful to you, least of all myself. Still, if Bitcoin maximalism is to succeed as an ism, becoming in the view of author Bologi Shrinivasan, an influential system of beliefs on the world stage, My argument remains that the movement can be more positive and aspirational, less defined by what it is against and more defined by what it is for. At the end of the day, no amount of aggression on the part of Bitcoin Maximilus will make the wider crypto economy or the world of government monies disappear, nor will it fully advance the goals of the Bitcoin movement as a whole. Certainly, the recent events in the crypto sector have drawn a contrast between what Bitcoin is seeking

Starting point is 00:07:58 to achieve and the offerings of the wider crypto world. That is a success. It's up to Bitcoin Maximilist to build on it. Want to keep more profits when trading? Get the business. best possible prices and trade with 50% lower fees on Nexo Pro. The new spot and futures trading platform uses aggregated liquidity of over 3,000 order books collected from multiple sources. Utilizing the complete Nexo Suite allows you to earn interest and borrow funds as you wait for the next trade setup.

Starting point is 00:08:30 Visit pro.nexo.io. That's p.r.0.n-X-O.io and sign up today. The breakdown is sponsored by FTX US. FtX US 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. FDXUS is also the only leading exchange that supports both Ethereum and Solana NFTs.

Starting point is 00:09:05 When you trade NFTs on FTCX, you pay no gas fees. Download the FTX app today and use referral code breakdown to support the show. Now, I don't agree with everything Pete wrote, but I think he's totally right about the path to becoming more influential. And having a cadre of Bitcoiners that are more rather than less influential is, I believe, in everyone's interest. I think Pete's absolutely right to try to define these terms a little bit more so that rather than agreeing or disagreeing in the abstract, there are specific points where we leave each other. That's fine. It's fine to disagree. Anyways, all of this is somewhat prelude to a new entry in the case.

Starting point is 00:09:41 canon, which is going to be the focus of this LRS. The piece is called the rise and fall of Bitcoin Culture, and is by Paul Dylan Ennis, who's a lecturer and assistant professor at the College of Business at the University College of Dublin. Paul was an early bitcoiner, and this piece is getting a lot of attention. So let's dig in. Bitcoin maximalism has become so desperately unhinged I consider it a cultural Chernobyl. The situation was not always so. Bitcoin culture was not maximalist for most of its history. The zealots infecting modern Bitcoin culture are usurpers. I arrived into the world of Bitcoin in 2012. I had heard about the Darknet Marketplace Silk Road and its then elusive leader of Dread Pirate Roberts. As a fan of subcultures, I was enthralled,

Starting point is 00:10:20 and I still think nothing has come close to that era for sheer intrigue. Silk Road led me to look into Bitcoin, which led me to look into cyperpunks and libertarianism terms I had never heard before. The experience was formative because I did not just become a Bitcoiner, but I changed my entire academic research trajectory to Bitcoin. It was a calculated risk that paid off career-wise. I spent the next few years completely immersed in the Bitcoin talk forums. For most of Bitcoin's early history, Bitcoin talk was Bitcoin, and it was amazing. What struck me at the time was how individual everyone was.

Starting point is 00:10:47 Most people there held very unique positions and had varied interests. They were rarely on the same page about anything, including Bitcoin. They did not repeat generic talking points or simplistic memes. This does not mean that users on Bitcoin talk were nice. Discussions were often mean-spirited, but debates were well-informed and not cliche. You could, as shocking as this may sound in the current atmosphere, actually learned new things there. At the time, my research specialization was just Bitcoin because that was the only crypto people in academia recognized, except blockchain, which I sidestepped artfully. I was forced to understand Bitcoin

Starting point is 00:11:17 intimately in all its layers, technical, social, and economic. I remember nims like Thamos, memory dealers, and magical tucks. I knew what Ripe MD 160 is, what Stratum is for, or what F2 pool is. I know what Bitcoin XT was. I know not to confuse my UASF with USAF. The lore is in my very bones. Yet I was never a Bitcoin maximalist. Back then, people who didn't like all coins just ignored them. There was never any suggestion that holding other coins was verboten. Satoshi himself was happy to work with name coin. There was no culturally monolithic embargo on all coins like today. There was no purity test to pass. The term maximalism was coined in 2014 by maximalist's favorite villain, Vitalik Beterran. Quote, one of the latest ideas that has come to recently achieve some prominence

Starting point is 00:11:58 in parts of the Bitcoin community is the line of thinking that has been described by both myself and others as Bitcoin dominance maximalism, or just Bitcoin maximalism for short. Essentially, the idea that an environment of multiple competing cryptocurrencies is undesirable, that it is wrong to launch, quote, 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. End quote. The term is interpreted widely differently depending on what community you belong to. If you are a Bitcoiner then, as Pete Rizzo informs us, it likely means you believe one or all of the following. One, Bitcoin, a computer science invention is the world's first working non-state monetary system.

Starting point is 00:12:32 All other crypto assets compete with Bitcoin by virtue of their existence. None offer long-term advantages without trade-offs. Two, investing in other cryptocurrencies is select one, wrong, stupid, or moral, uninteresting, and should be discouraged and ignored socially for the benefit of others as a form of consumer protection. Three, Bitcoin is only limited by human ingenuity. Anything other cryptocurrencies can do otherwise can be achieved either by Bitcoin or a centralized financial alternative. End quote. If you are belonged to the crypto community, which Bitcoin increasingly defines itself against, then as Coin-desk Daniel Kuhn tells us, it's a pejorative, that is, quote, meant to evoke a certain close-mindedness or lack of imagination in the

Starting point is 00:13:06 Bitcoin community. Sometimes it suggests that Maxis are only out to maximize their profits. I would say that the correct definition lies somewhere in the middle. Maximilism is when you believe in Rizzo's one, two, and three, but you do so in the close-minded, highly aggressive manner captured in Kuhn's definition. Some Bitcoiners, like Rizzo, believe Bitcoin has a unique status among cryptocurrencies after carefully weighing the evidence. But this is not often the type of maxi you're more likely to encounter. No, we encounter an endless onslaught of Triumphilus, populist meme lords hell-bent on portraying every good-faith crypto endeavor as if Sauron himself designed it. How did we get here and can we escape maximalism? Let me be absolutely clear

Starting point is 00:13:42 where I stand. Maximilism is extremely detrimental to crypto, turning it into an endless grid of factionalism. This factionalism is intrinsically self-destructive because it is unappealing to the mainstream, manifesting as aggression, hostility, and toxicity. More and more, the average crypto Joe has learned these traits originate in Bitcoin culture. What is Bitcoin culture to them? It's laser eyes, have fun staying poor, oddball Citadel stuff, and Adam Back saying stay toxic. What kind of insane culture embraces toxicity? The season Crypto Joe knows what to expect, and that's the answer to why nobody wants Bitcoins at their conferences. Why would any other culture want to be berated by a Bitcoin at an event? If Bitcoin wants respect, it can first start by giving respect to others.

Starting point is 00:14:20 Let's turn to the how. I want to stress to the newcomers, especially the infamous Joint 2021 generation, the maximalism is not a Bitcoin norm. It's a recent Curio and can be excised by any robust Bitcoin cultural alternative willing to take on the battle. I trace the origin of today's maximalism back to the Bitcoin Civil War, as we've seen the term originates in 2014, but truly takes off following a contentious debate about block size and scaling solutions that led to the Bitcoin Cash Hard Fork of 2017. A particular vision of Bitcoin won out, favoring smaller blocks, Seguit implementation, and scaling through the Lightning Network. Instead of Bitcoin primarily as digital cash and some gold-like properties, as envisioned by Roger Verr, Bitcoin would be primarily digital gold at the base layer, but with a dedicated

Starting point is 00:15:00 layer two for cash-like payments. The victory in technical terms was clear-cut and clean. The Maoist small blockers saved Bitcoin from an attack by the miners, primarily through the UASF counter-tactic, but also, and this is important for what followed, by adopting relatively sophisticated public relations tactics. Here's how the infamous Dragonsden coordinated its social layer, Reddit R-slash-Bitcoin, Bitcoin Talk, and Twitter, as described in the Block Size War. Quote, The channel was very active and entirely focused on the Block Size War. Most of the conversation revolved around social media, public relations, and how best to expose weaknesses in the narratives and arguments put forward by the large blockers. Many participants in the channel appeared very

Starting point is 00:15:36 committed to the cause. Discussion often focused around how to convince various people to join the small block camp, who was likely to turn, and which would be the most effective issues to focus on in social media. There was also discussion on memes and meme production. This war was also a meme war, and the dragons, as members of the channel were sometimes called, were very involved in meme production. Many of these memes were humorous, designed to make the large blockers appear if they had weak understanding of some of the technical issues in Bitcoin, with Roger Ver, Craig Wright, and Jehan Wu being the main focus of attention. In hindsight, the Dragon's Den set the stage from maximalism's emphasis on adversarial thinking. It is Bitcoin against everyone, where

Starting point is 00:16:09 attack is the best defense. You need only look at how a Bitcoin maximalist comes armed with a set of derivative prepackaged talking points about, say, Ethereum to see the contemporary version of this preemptive narrative formation. There's little to no reflection on Ethereum per se, but there is a deep well of sanctioned generic Ethereum memes that are mindlessly trotted out. As someone who researches both Bitcoin and Ethereum, the degree to which the modern Bitcoin does not understand Ethereum is often shocking, although perhaps the solace of maximalism is that you can just learn Bitcoin and never learn anything else. Relaxing. Maximilism consolidated by firming up expectations on its own members. Most radical subcultures begin by expressing their

Starting point is 00:16:42 eye are outward as maximalists due to crypto, but they concretize around the expected behaviors of its own community members. Acceptable maximalist behavior operates in an interestingly puritanical manner, because it is all about foregoing now to benefit later, which can mean hoddling, but, more importantly, resisting temptation, like decentralized finance or non-fungible tokens. Bitcoin maximalist cultural logic is restrictive. It is about who can behave in the most purest, most ascetic manner. The problem for members, as it is in most puritanical cultures, is that this is a double-edged sword. You can enjoy berating crypto-degens for their excess, but you may find the laws weaponized against yourself for infractions that are a moving target.

Starting point is 00:17:16 One day investing in crypto ventures is acceptable. The next day you are Nick Carter and out in the cold. It is not incidental that the most prominent critics of Bitcoin maximalism like Udi or Arthur Hayes, push back hard against the restriction on other coins. They recognize the absurd quasi-religious undertones involved. Purity is an accelerant. The most moral, the most pure, the most serious is invariably the new convert. When you get into a tangle with a Bitcoin maximalist on Twitter today, an occupational hazard, you will soon encounter the phenomenon known as Join 2021. These user does not debate, they meme. Specifically, they meme with an aesthetic best described as boomer uncle on meta. Uncle Bitcoin is entirely predictable. Bitcoin only, wanting Ethereum to be a security more than the security.

Starting point is 00:17:54 and Exchange Commission. QAnon-style conspiracies about Joseph Lubin and Consensus. Uses outdated terms like ICOs alt-coins, revealing they are trapped in a 2017 time warp. Hyper-bitcoinsation is inevitable, even though nobody knows how a Bitcoin-based deflationary economy would work in practice. Proof of work is the only viable consensus mechanism for all possible use cases, until the heat death of the universe, some kind of Michael Saylor-inspired esoteric Bitcoin metaphysics. And that's the stuff that is at least contextually coherent. You already know Uncle Bitcoin only eats steak. Push a little more, and Uncle Bitcoin will treat you to some fedora-tipping manosphere energy, and before you know, a goddamn Jordan

Starting point is 00:18:26 Peterson is speaking at Bitcoin Miami. Uncle Bitcoin's talking points ultimately flow downstream from a small cadre of Bitcoin influencers who produce more misinformation than a Russian boff farm. Their irresponsibly misleading tweets are the pinnacle of Brandelini's law. Where would one even start the fantastical idea that Bitcoin has 40 million transactions per second? Or how do you respond to a tweet comparing proof of stake to slavery? What's the solution to the weirdening of Bitcoin? We could grant Bitcoin maximalism its wish and separate Bitcoin from crypto. I know this amounts to their secession from crypto and we should oppose it on principle, but it's what they want. They're Texas in analogy and spirit, and let Texas be Texas.

Starting point is 00:19:00 This could be symbolized by removing Bitcoin from Coin Gecko and Coin Market Cap. This immediately would move Ether to the top position it has been envisably eyeing since its inception. Everyone would be happy. Yet I think this would be a depressing outcome. Bitcoin's original culture was a synthesis of determined cypherpunk and thoughtful libertarianism. It drew on previous movements, certainly, but this combination was completely ex-Nahilo, a once-in-a-generation cultural event. It set down to the core principles of crypto culture, decentralization, and censorship resistance. These remain are red lines. And Bitcoin remains the gold standard in both cases. I do not want to leave the

Starting point is 00:19:32 impression that this is simply a critique of Bitcoin. My words are directed squarely at the triumphant nihilism of Bitcoin maximalism. I want to emphasize that cultures ebb and flow. We do not have to be fatalistic about the stranglehold maximalists have, but it will be hard work to push back. You can probably already imagine the blowback I will receive from them for this article. And any Bitcoin are challenging them will face the same toxicity, but it has to be done. To encourage the pushback, I propose another path, one where Bitcoin is positively affiliated with the rest of crypto. Crypto is a vast design space of crypto economic experimentation emanating from the Genesis block, and those operating in the emerging fields of decentralized autonomous organizations,

Starting point is 00:20:07 defy and NFTs are exploring it. Now imagine a Bitcoin culture that rather than aggressively berating the rest of crypto used its considerable experience and know-how to positively encourage decentralization and censorship resistance, taking up a paternal rather than paternal role befitting Bitcoin's history. Instead of focusing on the scams and casino capitalism that blight crypto and once blighted Bitcoin when it was the only game in town, Bitcoiners could help build the full suite of decentralized organization, finance, and creativity that a post-centralized society will need. We will not win by simply having hard money. We'll need hard everything for the crises to come. All right. So back to NLW here. I'm not going to do a long op-ed on my

Starting point is 00:20:45 feelings about this. I did much more of that when I read Nick Carter's piece if you want to go back and find that from June. I just want to throw in the ring my belief that the vast, vast majority of folks in the Bitcoin space, people who would consider themselves Bitcoiners, are there not because they hate everything else? And not because they don't understand that other types of tokens and protocols could have different types of tradeoffs, but because they value the uniqueness of the censorship resistance of the decentralization that Bitcoin provides. I'm very happy that that type a Bitcoinser is finding a louder voice and challenging some of the consensus narratives among louder Bitcoin or communities, such as the Twitter maximalists. I remain fundamentally optimistic

Starting point is 00:21:27 about Bitcoin and Bitcoin community. And I even think there's a place for people who truly are maximalists in the purest sense of the term. I just think that accuse me of being a snowflake all you want, when you act like dicks, no one's going to listen to you for long. Listen to Paul, listen to Pete, and start having conversations that matter. And for those of you that do, who genuinely think that Bitcoin only is something incredibly important, there will always be a space for you here on the breakdown as well. For now, I want to say thanks again to my sponsors, nexus.com, circle and FTX, and thanks to you guys for listening. Until tomorrow, be safe and take care of each other. Peace. I want to tell you about CoinDesk's new event, the investing in digital

Starting point is 00:22:11 enterprises and asset summit or ideas. The event facilitates capital flow and market growth by connecting the digital economy with traditional finance. Join CoinDesk October 18th and 19th in New York City for a 360-degree investment experience, where you can source, invest, and secure the next big deal in digital assets. Use code Breakdown 20 for 20% off at General Pass. You can register today at coindex.com slash ideas.

The Breakdown - Is Bitcoin Maximalism a Historical Aberration?

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.