Bitcoin Maximalists vs. Cross-Chain
In the world of cryptocurrency, there are many disagreements in the Bitcoin community over a variety of issues. However, another argument has risen between Bitcoin maximalists and other DeFi blockchains, specifically cross-chains. The question is: will Bitcoin render all other cryptocurrencies irrelevant or will cross chains be the future of digital assets?
The debate
The debate stems from the orthodoxy that one blockchain could provide the basis for all decentralized finance and technology with hardly any need for other tools. In other words, the Bitcoin blockchain can support all DeFi, and all Dapps and remain decentralized and secure – forever.
The Ethereum Network was founded in 2014 as a framework for smart contracts, the practical application of blockchain technology. Smart contracts are a game changer because of their ability to execute code at certain times given certain conditions (i.e. releasing funds when a document is electronically signed).
The Bitcoin community has built the Lightning Network (LN), a Layer 2 solution, to compete with Ethereum Network in the race for the most scalable network.
While Ethereum does not have a native Layer 2 solution until the much anticipated Merge, LN does not have the robust user base that Ethereum does. Add to that, LN is almost exclusively aimed at payment systems whereas Ethereum has a vast array of different blockchain services.
As of this writing, over 7.1 million ETH ($23 billion) are staked in Ethereum 2.0 deposit contracts compared to 2,300 BTC on LN. While Ethereum has its struggles with scalability, it is extraordinarily outpacing LN in market share. Moreover, Ethereum is supported by an infrastructure of well-designed and well-managed projects like Polygon and Cosmos to help bridge its blockchains and provide interoperability.
What is a Bitcoin maximalist?
Someone who believes that Bitcoin is the only true cryptocurrency and that all other cryptocurrencies (altcoins) are inferior, is considered a Bitcoin maximalist, or “maxi.” Known for their solid conviction, maxis have good reason to think Bitcoin is the supreme cryptocurrency.
Bitcoin maximalism is buoyed mostly by the market’s demand for Bitcoin. It is the fastest asset ever to reach $1 trillion, doing so in just 12 years. With a current market cap of over $415 billion – more than twice that of the second largest, Ethereum. With a market price hovering around $21,000 as of this writing, a maximalist position certainly has merit.
On social media, the term is bandied about. Embraced by some who subscribe to maximalism while it is used by others as a pejorative.
One outspoken critic of Bitcoin maximalists is Nic Carter, a general partner at Castle Island Ventures. Carter is not against Bitcoin in any way. Rather, he vehemently disagrees with the all-or-nothing mentality of Bitcoin maximalists such as Pierre Rochard, Giacomo Zucco, and Francis Pouliot whom Carter refers to as a “maximalist cult”.
What is cross-chain?
Cross-chain is a blockchain technology that builds “bridges” between blockchains, independent of the platforms they interface with. This removes security weaknesses in the interface from affecting the blockchain and eliminates third-party intermediaries.
Bridges are necessary for interoperability in Web3 since the ecosystem is largely decentralized. They expunge the need for Web2 data silos – the very embodiment of data centralization – and store data on a public distributed ledger. Some of the top cross-chain projects include Polygon, Avalanche, Cosmos, and Polkadot, and support many large-scale projects [1] [2] [3] [4].
Final analysis
Bitcoin maximalism had its place in the sun for a time but that time has long since passed. Technology evolves and with it comes different business models, new tools, and new problems to solve. Ethereum met needs that Bitcoin could not, and vice-versa. Ethereum is also a business enterprise whereas Bitcoin is not.
There is no one solution to a problem and the point of a free market is to provide people with different choices and let them decide. It is clear that Bitcoin is king-of-the-hill in crypto, but that does not make it the king of all blockchain applications.
From a historical perspective, we see that Microsoft never took out Apple, Nike never took out Adidas, and Pepsi never bankrupted Coke. They provide the market with different solutions to different problems, making them equally valuable to consumers and the same goes for blockchain technology.
