Bitcoin Maximalism

Bitcoin Maximalists consider that Bitcoin, the world’s most adored cryptocurrency is the only digital asset required shortly. The maximalists believe that all the other cryptocurrencies are less valuable than Bitcoin. The maximalist view believes that all other cryptocurrencies do not conform to the principles formulated by an anonymous Satoshi Nakamoto, who invented Bitcoin in 2009.

Bitcoin is different from government-issued currency, referred to as fiat currency controlled by a central authority. However, Bitcoin is decentralized, and its blockchain is a distributed ledger. That means the transactions are shared among the participants and are open to the public.

But, despite its popularity as a widely trading digital currency, it also caused the development of numerous other cryptocurrencies. Bitcoin maximalists believe that these other cryptocurrencies–called altcoins–are unnecessary and inferior.

Features

· Bitcoin Extremists believe Bitcoin can be the sole digital currency used shortly.

· Bitcoin maximalists believe that all different digital currencies are superior to Bitcoin.

· But, the issue of scaling is a reason for the creation of alternative blockchain networks that can handle the increased volume of transactions.

· Bitcoin maximalists will likely claim that Bitcoin’s weaknesses could be fixed however the amount of money invested in alternative blockchains is growing.

Understanding Bitcoin Maximalism

While Bitcoin might not be the first attempt to develop a decentralized cryptocurrency, it is, without doubt, the most successful to date. Bitcoin maximalists believe that the Bitcoin network will provide all the features investors desire for an electronic currency in the coming years. This is why maximalists are unapologetically in support of (or at the very least, in agreement on the necessity of) an eventual Bitcoin decentralized system at one point in the future.

Ethereum creator Vitalik Buterin spoke about the notion of Bitcoin maximalism in 2014. Buterin explained Bitcoin maximalism as “Bitcoin dominance maximalism.” Buterin then went on to explain the views of maximalists.

The idea is that a world with multiple competing currencies is unsuitable as it is illegal to introduce a different currency. It is both just and inevitable that Bitcoin currency will eventually become the sole player within the cryptocurrency market. 1

Buterin identified the philosophy of the maximalist in this way:

Simply a desire to support Bitcoin and improve its performance. These motives are undeniably beneficial… instead, it’s a belief that building something based on bitcoin is the only legitimate way to go about things, and any other method is not ethical. Bitcoin maximalists typically employ “network effects” as an argument and say it’s futile to oppose them.

Bitcoin’s Blockchain

The distributed ledger technology is the core of Bitcoin’s Blockchain network. The distributed ledger can be beneficial as it allows sharing transactions by transmitting recorded copies of data to the participants in the shared network. This transparency can help increase security and reduce the risk of fraud. Suppose a criminal alters some part of the blockchain that is not visible to other users. In that case, those that have backup copies of transactions can see the changes made by the criminal and then reinstate the original transaction.

But the, Bitcoin’s (BTC) growth has brought us into the age of cryptocurrencies, leading to the development of many different digital currencies. Many of these currencies are based on the Bitcoin structure in one manner or another, and others are based on blockchain technology but not specifically on the Bitcoin network. Also, the distributed ledger in Bitcoin has been modified to ensure that it could be used for different reasons and not just an exchange of cash between peer-to-peer users as it was initially designed. 

Modified Blockchains

The growing acceptance of blockchain technologies has led to variations of the distributed ledger used by Bitcoin, known as private blockchains. Businesses and governments can establish private blockchain networks where only a small number of participants use the blockchain after being authenticated and verified.

Private blockchains are semi-permissioned or permissioned networks that permit private and public characteristics. In such networks, you will find permissions given to specific users to carry out certain activities within the network. The network may also place limitations on the types of functions permitted by the participants, including editing and read-only access. An excellent example of a semi-private blockchain network is the local government, which allows certain businesses and taxpayers access to official titles and records but restricts access to those records to people in general.

Although public blockchains can be described as not decentralized, which means they do not have a central authority with oversight power, private blockchains have central control, a type of business or government that oversees and manages the network.

Since Bitcoin maximalists think decentralization should be the most essential feature of Bitcoin’s blockchain network. The utilization of semi-private, private, and permissioned Blockchains is in opposition to the purpose of cryptocurrency in that they are transparent, open, and not governed by a central authority.

Reasons for Bitcoin Maximalism

The maximalists are an active group of Bitcoin supporters who believe in Bitcoin over other digital currencies. Here are a few reasons that the maximalists believe Bitcoin will render other digital currencies useless.

Bitcoin’s Network

Today, many Bitcoin maximalists believe that the digital currency’s viability depends on the blockchain’s underlying network. It is not uncommon to hear that other digital currencies might have their own variations on the Bitcoin base and are created to address the inherent issues of Bitcoin’s Bitcoin system.

The primary measure to measure success will be the size and the strength of a Blockchain. Because the Bitcoin network’s core is as robust as it is, the idea is that since characteristics of any specific digital currency can be adopted by other digital currencies, the system itself can be considered the primary aspect.

Maximalists might refer to the dominant position in the market of Bitcoin and Bitcoin Cash on the leaderboard of digital currencies based on market capitalization as proof of this concept. 3 Bitcoin cash and Bitcoin gold have a few limitations compared to other altcoins. But, they have an increased value due to their connections with Bitcoin. Bitcoin network. The size, wealth of users, and long-standing successes are the main factors that make the Bitcoin network above other blockchains.

Bitcoin Is Well-Established

Another argument favoring the maximalist view is that new financial instruments have to face an obstacle to gaining trust among investors. While digital currencies are becoming increasingly popular, numerous financial institutions and private investors prefer to stay out of the market.

Bitcoin maximalists believe that integrating digital currencies into traditional finance and investing is slow. Because of this, people outside the financial system will likely pay the most focused attention to the longest-running, most popular, well-known, and established networks. When it comes to electronic currencies, the one that is the best famous is Bitcoin.

With numerous digital currencies that are brand new and untested, Bitcoin has a decisive advantage due to its established reliability and success. While other cryptocurrency platforms suffer from security breaches or receive negative press, Bitcoin maximalists tend to consider this evidence to back their case.

Bitcoin’s Trading Influence on Altcoins

The final argument favoring the maximalist ideology is diversification in crypto or a broader portfolio. Because the cost of Bitcoin is a significant factor in the value in the altcoin world, it is possible that investing in altcoins is a questionable method of diversifying the cryptocurrency portfolio.

The conclusion is that investors are better off investing in a top-of-the-line asset, like Bitcoin, rather than risking their money investing in tokens or coins. The rise in Bitcoin’s price has not always led to altcoins up, but some may suggest that this is due to the lower standard of these coins. 4

Concerns About Bitcoin Maximalism

Bitcoin maximalism has hurdles to conquer If Bitcoin is the sole cryptocurrency. The majority of altcoins and the subsequent variants of blockchain networks came due to their limitations with the Bitcoin blockchain and cryptocurrency. Some of the problems that Bitcoin faces and the rules it has Bitcoin include:

Scalability

Cryptocurrencies such as Bitcoin utilize the “proof-of-work” (PoW) procedure to confirm transactions via the blockchain. 5 Those accountable for verifying the transactions and ensuring they’re authentic are known as miners. Miners are the auditors of the blockchain by checking commerce’s legitimacy and helping prevent fraud.

When newly added transactions to the blockchain are made, copies are distributed to all the nodes, including the participants and computers. But, as the popularity of Bitcoin grows, so is the amount of transactions. If we imagine the blockchain as a database shared by multiple parties, the more data added, the more the system is clogged up and causes delays.

This means that massive amounts of energy are required to handle the increasing number of transactions. For instance, the energy needed to secure bitcoin’s Bitcoin blockchain is now too large that by 2021, it will be more than the total energy consumed by the nation that is Pakistan. 6

The latency or slowness in Bitcoin’s blockchain has hindered the cryptocurrency’s ability to scale. Also, Bitcoin’s capacity issue has prevented it from being widely accepted for use in financial transactions because it cannot handle the volume. This is why other Blockchain networks and their cryptocurrency are needed, which is holes in the Bitcoin maximalism.

Trading Volatility

Another obstacle to Bitcoin becoming a well-known way to pay is its price fluctuates too much, a phenomenon known as volatility. When the value fluctuates rapidly, it can be difficult for both individuals and businesses to use cryptocurrency as an alternative means of exchange. It is also difficult for businesses and individuals to use for daily business transactions.

Smart Contracts

In the beginning, Bitcoin was limited in its application and didn’t have the tools needed to build Smart Contracts and applications decentralized (dApps) that other blockchains were specifically created to assist with. Smart contracts are self-executing contracts containing conditions that govern a contract between buyers and sellers. The contract is written on computer software. The digital code governs the terms and performance of the contract.

Smart contracts permit transactions with two parties, like selling or purchasing a vehicle. There isn’t any central power required as the contract can only be implemented if both parties complete the tasks stipulated by the contract.

Smart contracts utilized within the Ethereum blockchain network are gaining acceptance in the financial sector. While Bitcoin’s blockchain has grown in its capability by allowing smart contracts, it’s not quite as advanced as Ethereum in financial transactions.

Alternative Blockchains

In recent years Blockchain networks have been created by industries and businesses. These alternative blockchain networks do not necessarily need the cryptocurrencies generally traded. Instead, these companies are developing their own networks and cryptocurrency to be utilized privately by a particular group.

For instance, a bank group headed by the Union Bank of Switzerland (UBS) has created a sandbox that lets them explore the potential of blockchain technology in payment transactions within the financial industry. By doing this, UBS collaborates with banks from other significant banks–created its own cryptocurrency known as The Utility Settlement Coin (USC), which is referred to in The Finality initiative.

The USC could function like cash, as it can convert on a one-to-1 basis to a fiat currency like the U.S. dollar. The central bank will also support the USC, entirely different from Bitcoin’s cryptocurrency. This means that the financial sector has taken over bitcoin’s cryptocurrency and blockchain by establishing its own network to make payments between companies, customers, and bank-to-bank transfers.

Future of Bitcoin Maximalism

Bitcoin maximalists say that any problems with the Bitcoin blockchain are solvable and are currently being developed. Whether companies, governments, and investors decide to go with Bitcoin’s blockchain or alternatives will determine the extent to which Bitcoin maximalists win in the end. With the investments in different networks and cryptos, there will likely be a lot of other cryptos in the many years to be.

Bitcoin Maximalism

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