What is Bitcoin Maximalism?

What is Bitcoin Maximalism?

Bitcoin maximalists believe that Bitcoin, which is the most popular cryptocurrency in the world, is the only digital asset that will be needed in the future. Maximalists believe that all other digital currencies are inferior to Bitcoin. Maximalist ideology believes that other cryptocurrencies do not conform to the ideals set by the pseudonymous Satoshi Nakamoto, who created Bitcoin in 2009.

Bitcoin is different from government-issued currencies, called fiat currencies, which are managed by a centralized body. Instead, Bitcoin is decentralized and its blockchain is a publicly distributed ledger, meaning that transactions are shared with participants and are transparent. However, despite Bitcoin's popularity as a heavily traded digital asset, it has also given rise to many other cryptocurrencies. Bitcoin maximalists believe that these other cryptocurrencies, called altcoins, are unnecessary and inferior.

While Bitcoin may not have been the first attempt at a decentralized cryptocurrency, it is undoubtedly the most successful to date. Bitcoin maximalists cling to the belief that the Bitcoin network will provide everything investors want from a digital currency in the future. In this way, maximalists are unapologetic about (or at least agree on the inevitability of) a Bitcoin monopoly at some point in the future.

The Bitcoin Network

Many Bitcoin maximalists today support the idea that the success of the digital currency depends on the underlying blockchain network. It is common to hear the idea that while other digital currencies may offer modifications to Bitcoin's original premise, which are designed to solve problems inherent to the Bitcoin network, the ultimate measure of success is the length and strength of the blockchain. Because the underlying Bitcoin network is as strong as it is thought to be, and because the features of any particular digital currency can be freely co-opted by another digital currency, the network itself is the most important factor.

Bitcoin is well known

Another argument for the maximalist perspective is the principle that new financial instruments must face a high hurdle in building investor confidence. Although digital currencies have become exponentially more popular, there are still many large financial institutions and individual investors who prefer to withdraw from the market.

Bitcoin's Impact on Altcoin Trading

The final argument for a maximalist philosophy is about diversification within a cryptocurrency or broader portfolio. Since the price of bitcoin tends to influence the price of the altcoin world more broadly, investing in altcoins can be a questionable way to diversify one's cryptocurrency holdings.