Vitalik Buterin Explains Why You Should Keep Holding Your Bitcoins

2022-04-07, 01:22

1. In his latest article titled In Defense of Bitcoin Maximalism published on his blog on April 1, Vitalik Buterin, the founder of Ethereum, calls for investors to hold Bitcoin.

2. Bitcoin supremacists believe that Bitcoin's supremacy among all encrypted assets is unchallenged.

3. Vitalik wrote that the world we live in is not wonderful, in it, deception and irrationality prevail, and Bitcoin is the best medicine to help us survive and defend our freedom.

4. The impossible trinity in the crypto space are scalability, decentralization, and security. Bitcoin features almost complete decentralization and theoretically, the best security.

5. Compared to some later projects, Bitcoin, which is purely altruistic, has purer goals.

Vitalik Buterin, the founder of Ethereum, published his latest article In Defense of Bitcoin Maximalism on his blog on April 1, April Fools' Day. However, Vitalik was not telling a joke. Though he built Ethereum and created blockchain 2.0, Vitalik is actually a staunch "Bitcoin supremacist".

What does Bitcoin Supremacy mean?

Bitcoin Supremacy (also known as Bitcoin Maximalism) is an investment concept or a belief for investors in the crypto space. A Bitcoin Maximalist holds that Bitcoin enjoys supremacy among all encrypted assets and this status is unchallenged. With the most extensive consensus and community foundation, Bitcoin is the first and largest application of blockchain technology. Technologically, it also boasts the highest level of security and decentralization. All this will help Bitcoin keep its leading position in the field of virtual currency.

There is also a more extreme form of Bitcoin supremacy where it is believed that Bitcoin is the only valuable currency and is the only one worth "HODLing '' among all crypto assets. It is believed that other crypto assets are air coins, and ultimately they will become useless. Any attempt to modify the Bitcoin protocol is deviant. This can be regarded as a kind of "Bitcoin Fundamentalism".

Bitcoin supremacy came into being in an era when Bitcoin had just gained in popularity worldwide, and many newly-created currencies were just parodies of the Bitcoin concept or even completely copied Bitcoin’s code. It is no wonder that the Bitcoin fundamentalists at the time were so pessimistic about the progress of blockchain technology. But then we learned that Bitcoin had a hard time taking on the role of a global currency, and truly ingenious projects like Ethereum kept popping up due to scalability. As the underlying facility that makes Bitcoin a success, blockchain, has been separated from Bitcoin as a general technology. Now more people believe that "the future belongs to the blockchain, not Bitcoin".

However, the above points are exactly what Vitalik argues against in his latest article.

Why is Bitcoin said to be irreplaceable?

Vitalik believes that we’re living in a dangerous world where deception and irrationality prevail, and Bitcoin is the best medicine to help us survive and fight for freedom. The impossible trinity in the crypto space is scalability, decentralization, and security. Only two of the three can be obtained. Practical experience also shows that once the focus is on solving one or two problems, another problem will follow, solving one problem only to find another cropping up. Bitcoin, the world's first cryptocurrency, has almost achieved complete decentralization and theoretically the best security. To some extent, it is less scalable, which is actually a worthwhile sacrifice.

Bitcoin has a very simple philosophy. It creates scarcity by limiting the total volume of 21 million by virtue of the algorithm and sets multiple challenges for nodes who want to obtain mining rewards through the PoW mechanism. It gives to get because this high cost, at the same time, discourages any possible attackers. To generate a Bitcoin block, it needs to consume a lot of computing power. Even at that, the generated node needs to be confirmed by most of the nodes in the entire network before they can be finally launched on the chain. Although it slows down transaction speed and consumes high energy, Bitcoin is indeed the currency closest to Satoshi Nakamoto's ideal decentralized token: completely transparent and immutable.

So far, Bitcoin still adheres to a relatively simple operating logic. This is not that Bitcoin does not want to make progress, but that developers and the community want to do so. Bitcoin is inefficient but reliable, and it is not easy to be controlled by a "center". In contrast, Ethereum, although extremely powerful, is unavoidably plagued by problems such as miners' extractable value (MEV).

Compared to some later projects, Bitcoin has purer goals and it is purely altruistic. Bitcoin is the first virtual currency project and has no initial share allocated to the founder; Ethereum, established in 2014, allocated 25% of the tokens to the founding team or foundation; in 2020, Projects including Flow and Solana distributed over 50% of the tokens to the founding team. At the very beginning, Bitcoin was just a string of codes that anyone could run; but now other imitations have gradually become centralized, and the community and tokens are often just a bonus for investors. There are even lots of scammers swarming in. They come to create projects with a catch-and-run attitude. This once again indicates the idealism and particularity of Bitcoin.

Conclusion

To quote theories by Adam Smith and Samuelson, it can be said that Bitcoin's value is anticipatory self-fulfillment. It is precisely the "belief" of the entire crypto community in Bitcoin, its special status and long-term value, that endows Bitcoin with true value. And this "expectation" can now also be called "consensus".

As Vitalik said at the end of his latest article, maybe each of us should be brave to defend our values and beliefs, and become a Bitcoin supremacist.

Author: Edward H., Gate.io Researcher; Translator: Cedar W.
*This article represents only the views of the researcher and does not constitute any investment suggestions.
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