The Paradox of the Bitcoin Maximalist

When Bitcoin is dominated by major institutions (and Bitcoiners are asking for approval from presidential candidates) we are in danger of creating centralized

Bitcoin was created in the aftermath of the Great Financial Crisis as a people’s currency, designed to bypass the manipulation and mismanagement of the financial system by governments, financial institutions and special interest groups.

But as the dust settles and institutions begin to show interest in crypto, a paradox emerges within the Bitcoin maximalist community – that of believing in the ideals and purpose of Bitcoin, yet celebrating and depending upon the very institutions Bitcoin was built to circumvent.

With governments, ETFs dominated by financial institutions, corporations and major whales adding to their share on every price correction, the increasing concentration of Bitcoin is undeniable. Today, the top 15 holders of BTC possess about 7.5% of the total supply.

As governments and Wall Street squeeze in on crypto and influence its volatility, while the decisions of central banks on interest rates zig-zag the price of Bitcoin in high single digits within hours, can we still walk the original path?

Or are we heading toward a dead-end through excess enthusiasm? The fact that Trump’s proposal in Nashville to make Bitcoin a strategic reserve excited the crypto community might be telling of where we’re at.

Institutional activity signals “major gains” the everyday holder of Bitcoin. Promises of financial gains are overriding any allegiance to decentralized principles. There is an emanating “look the other way" that neglects the very real scenario in which Bitcoin becomes indistinguishable from a traditional financial asset.

We saw lines blur with Venezuela’s attempt to support the Bolivar with their self-created Petro-cryptocurrency back in 2018. Whilst thwarted, plenty of other power-grabbing initiatives are clearly unfolding at an alarming rate. The government of El Salvador is buying one Bitcoin a day; the FBI recently uncovered North Korea’s fraudulent social engineering schemes to steal Bitcoin from their people; U.S-based MicroStrategy holds nearly 250,000 Bitcoins.

Soon, Bitcoin may be inseparable from the influence of traditional capital markets. When the Bitcoin price moves in sync with stocks and interest rates, we’re in a dangerous place. Failure to curtail growing institutional influence on Bitcoin could result in centralized decentralized finance. Yes, in case you’ve not considered it: Ce-DeFi is a reality that we’re facing.

At ground level, this could extend to institutional influence over mining operations and node providers, undermining principles of distributed control. If corporate interests meld into blockchains themselves, not just into cryptocurrencies, ecosystems could become susceptible to

data manipulation and censorship measures. Big top-down decisions could start to compromise privacy and pseudonymity customs. Eventually regulatory advances could yield.

However, dystopia is not an inevitable outcome. The onus to act, with purpose, still lies with crypto natives, and more specifically those who claim to be Bitcoin maximalists. While institutional dominion is a problem, the more immediate problem is the lack of acceptance that Bitcoin is a people’s currency. The sooner it is accepted that Bitcoin may be treated like any other asset, the sooner that full focus can be given to maximizing its value for everyone. If global crypto adoption is to truly manifest, minds must change and grassroots action must be taken.

Crypto investors, innovators, and influencers must recognize their power. Their decisions can greatly influence the market in ways that extend beyond their investments. Through the projects they interact with, the way they talk about crypto, and the information that they seek and share, Bitcoin’s sovereign potential can still be championed. Open-source initiatives that target core communities must be propagated sufficiently. Those such as the OpenSats Education Initiative, a grant-oriented scheme that delivers educational content for all levels of expertise, encourage people to obtain knowledge rather than chase profits. It is ultimately the expansion of knowledge that will birth new innovative utilities of Bitcoin and drive its value to a greater degree than investment can.

In placing open-source projects at the front and center, blockchain technology is kept accessible to everyone, in spite of rising institutional investment. Crypto enthusiasts and everyday investors will always maintain sovereignty over the initiatives that they engage with. They must thus be diligent in favoring those that promote decentralized principles.

Expanding decentralized governance

Decentralized governance as a notion is the most transformative quality of blockchain technology. Of course, the intended revolution is centered in finance, but the industry must not pass on the chance to change how systems are governed. In fact, the risk of institutions dominating Bitcoin should inspire the community to double-down on innovating governance models. This could include more participation in Bitcoin Improvement Proposals (BIPs), where anyone can propose changes to the Bitcoin protocol. Individuals must use their power to influence decisions as often as possible.

Social media's ability to influence public opinion has to be leveraged persistently. Popular crypto influences have to take responsibility for the content they create. It must increasingly emphasize Bitcoin's decentralized, censorship-resistant origins. Audiences should be constantly reminded that Bitcoin is a tool for financial freedom, not profit maximization. Strengthening values that naturally repel institutionalized control will drive people