Don’t believe the ‘maximalists’: bitcoin can’t be separated from crypto

If you have ever dared to direct criticism at the world of crypto, the chances are you will have received some charming rebukes. You are likely to have been told to “have fun staying poor” as you’re “never gonna make it”; your criticisms have probably been dismissed as mere “FUD” (fear, uncertainty and doubt); and you may well have been informed that you are in fact nothing more than a “salty no-coiner”.

But there is another slightly more sophisticated flavour of counter-criticism finding its way into my inbox with increasing regularity these days. It usually starts with something designed to appease — some kind of agreement that crypto is immoral, a scam, or some version of a Ponzi scheme. But then it quickly changes course, to explain that none of this applies to bitcoin.

Bitcoin, the bitcoiners tell me, is not crypto. And, you understand, crypto bad, bitcoin good. Very very good.

Bitcoin is a lifeline for so many people around the world,” one altruistic bitcoin holder said to me recently. “Please stop lumping it in with crypto, which is morally reprehensible.”

I recently suggested that one way of practising the art of “intellectual humility” is to “steelman” your opponents’ position — that is, rather than finding their weakest points and arguing against those, you present the strongest version of their argument possible. And so I’m going to try to apply this technique here, before explaining why I believe they are wrong.


Why do the “bitcoin maximalists” — the purists who argue that bitcoin is the only cryptocurrency that has value — make this claim? They state that the organic way that bitcoin came into being cannot be replicated and that, while bitcoin can be copied, it will always have a first-mover advantage and thus cannot be unseated.

They point out, too, that there was no market for bitcoin when it was invented, and so the network was maintained not for profit but by people who believed in the value of the system — unlike later coins, some of which were issued by big corporations. Bitcoin arose not as a way to make money, but out of a libertarian internet subculture that believed technology, specifically cryptography, was key to driving social and political change.

Maximalists also say that bitcoin’s incentive mechanism, the energy-intensive “proof of work” mining process that rival Ethereum just last week moved away from, is the only way of ensuring a truly decentralised system.

But while you can see why bitcoiners might be keen to distance themselves from the plethora of scams and failures that have occurred in cryptoland, their arguments don’t stand up.

First, it doesn’t matter what bitcoin’s origins were — the people who push it now have the same financial incentives as those pushing any other crypto token. Satoshi Nakamoto, the creator of bitcoin, might have intended it to be used as money, but that does not make it so — it fulfils none of the necessary criteria, and instead operates in a pyramid-shaped structure that relies on constantly recruiting new members.

Second, bitcoin is not in fact decentralised — not only do miners group together to form “mining pools” but wealth is also hugely concentrated. On Tuesday, MicroStrategy announced that it had bought another 301 bitcoins, meaning this company alone now holds almost 0.7 per cent of the entire supply.

Third, a “first-mover advantage” does not always last. Other crypto tokens already have various features that bitcoin does not, and there has been renewed talk of a “flippening”, in which Ethereum’s value overtakes that of bitcoin due to the former’s switch to a less carbon-intensive form of mining.

Finally, there is not even agreement on what bitcoin is. For the vast majority it is the digital coin also known as “BTC”, currently changing hands at around $19,000. But there are other versions that have split off, such as the one promoted by Craig Wright, the man who claims to be Satoshi and who says BTC is a scam.

The real reason bitcoin maximalists want to separate bitcoin from the rest of crypto is to create the illusion of scarcity in a world where there is none. CoinMarketCap now lists more than 21,000 different crypto tokens, which bitcoin maximalists call “shitcoins”. Of course they do — if there is infinite supply, how can there be any value? This is still the core problem of crypto, and bitcoin cannot solve it.

This is not to say that there aren’t some crypto projects and tokens that are better than others. But a spade, no matter how shiny, is still a spade. And bitcoin, I’m afraid, is still crypto.

jemima.kelly@ft.com