The Founders' List: Vitalik Buterin on Bitcoin Maximalism, Currency, and Platform Network Effects
In this episode, NFX delves into Bitcoin dominance, new crypto protocol creation, and the intricacies of side chains and Ethereum smart contracts. They explore network effects in a crypto economic context, discuss the downsides of side chains, and examine the power of currency network effects. The concept of US Beller stablecoin maximalism is explored, alongside Blockstream's funding strategies and Hayekian currency competition.
Key Points
- Bitcoin maximalism suggests that the existence of multiple competing cryptocurrencies is undesirable and that Bitcoin should maintain a monopoly in the cryptocurrency scene, which is a stance that discounts the potential benefits and innovations that can emerge from a diverse ecosystem of crypto platforms and currencies.
- Network effects, which are the increased value of a system with more users, play a significant role in the cryptocurrency industry, but these effects are nuanced and can be categorized into blockchain-specific, platform-specific, currency-specific, and general network effects, each with different implications for the adoption and success of crypto technologies.
- The dual currency model offers a potential solution for balancing the benefits of currency network effects with the innovation of new protocols by having networks that contain two types of currencies: one for transactions and stability, and another for speculation and consensus, which could encourage a cooperative and evolutionary multi-chain crypto economy.
This is The Founders’ List – audio versions of essays from technology’s most important leaders, selected by the founder community.
In this article (published in 2014) Ethereum creator Vitalik Buterin challenges the Bitcoin maximalist movement a few different ways. Bitcoin maximalists believe that all other digital currencies are inferior to Bitcoin. The idea that an environment of multiple competing cryptocurrencies is undesirable and that it is both righteous and inevitable that the Bitcoin currency comes to take a monopoly position in the cryptocurrency scene.
Maximalists argue that a single road—or a single cryptocurrency—will have more value because more people will have to use it.
Vitalik does a deep dive into the technicals of launching a protocol, the network effects that take place, and the incentive/psychological arguments that can be had against the maximalist movement.
Read the essay here - https://blog.ethereum.org/2014/11/20/bitcoin-maximalism-currency-platform-network-effects/
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Transcript
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