Libertarians can, and should, reject Bitcoin maximalism
A lot of inspiration for the blockchain technology and cryptocurrencies has certainly come from libertarianism, the ideology, or, more precisely, a broad attitude on the ethically justified use of physical force that roughly holds that it is unethical to initiate force or credibly threaten to do that against someone who represents no immediate physical threat to anyone or anyone’s property. The justifications for this stance may vary from consequentialism to natural rights accounts to more exotic strands like eudaimonism but the broad idea about which uses of force are ethical and which are not remains the same.
Since government policies, regardless of the form governments take, are ultimately rooted in a credible threat of the use of force and occasional actual such use, and since governments legitimately claim an ultimate monopoly on it, their activities have, naturally, become the subject of most of the libertarian ethical and political discourse.
Many libertarian proponents of cryptocurrencies, especially Bitcoin, believed or still believe that they can be used to limit the reach of interventionist governments in all kinds of ways, especially in what concerns the relative money-issuance monopolies characteristic of all modern states.
However, it increasingly appears that the libertarian view on the crypto space has become more and more associated with the position widely shared by the supporters of the most widely-used implementation of the Bitcoin protocol, namely Bitcoin Core. Without trying to answer the question whether this project stayed true to the vision of Satoshi Nakamoto, whether the block size should have been increased and so on, my aim in this essay will be to argue that Bitcoin maximalism is incongruent with libertarianism and should, therefore, be rejected.
But before we move on, one may reasonably object that any ideology about what blockchain space should look like is, strictly speaking, outside the scope of libertarianism proper, as long as it does not touch on the questions whether use-of-force-like behaviours like hacking or 51% attacks are ethically justified or how the blockchain community should react to them in a quasi-legal sense.
Two brief responses seem appropriate here. First, in my view, expressed in much more detail here and here, libertarianism is merely a political-ethics manifestation of a broader human intellectual response to the imperfect but intelligible world that we inhabit. This response has alternatives and if an attitude to the blockchain space is a manifestation of one of them, it may be incongruent with libertarianism even if it does not directly contradict it.
In addition to this, Bitcoin maximalism actually does include ideas about the ethical status of use-of-force-like behaviours and the way the blockchain community should handle them. The latter will be briefly discussed in section 2.
1. A single dominant blockchain is not a problem but nor is it inevitable
Before we get to the essence of and the problems with Bitcoin maximalism, I need to clarify that the reason for my disagreement with it is not the desire to avoid the scenario with a single predominant blockchain or global cryptocurrency, as Dominic Williams (as cited here) has suggested.
Economic theory, correctly understood, does not really imply that all situations with a single producer are cases of harmful monopoly. Barring certain outlandish scenarios with single producers of breathable oxygen and the like, if there is one dominant producer in a market without physical (usually politically generated) barriers to entry, this means that it is good at satisfying consumers compared to the alternative approaches that have been available thus far.
Of course, this does not imply any judgement as to whether it will be beneficial to have only one blockchain and one cryptocurrency to rule them all in the end. An economists who understands the complexity of the realities she deals with may not make such claims with a straight face. In other words, only the market process can demonstrate which arrangement is suitable for a particular industry.
The desirability of a single dominant currency is also complicated. Are we talking about some form of a base money, like gold prior to 1971, or, perhaps, 1933? There is, indeed, a good case to be made that such an arrangement would be beneficial. However, it is unclear whether the role of base money should necessarily be played by a Bitcoin-like rigid-supply cryptocurrency. Perhaps, free experimentation will reveal that gold or some other good beats something like Bitcoin for this purpose.
Bitcoin proponents may of course argue that the gold standard is too vulnerable to government interference. However, so arguably is Bitcoin. In fact, the Chinese government could probably easily disrupt Bitcoin through a massive assault on miners mostly concentrated in China if it wanted to. And in any case, governments will always be able to marginalize currencies that they dislike, except, perhaps, in the Venezuelan collapse-style situations.
At the derivative money level, it may well be useful to have several competing cryptocurrencies, just like it was the case in the Scottish and Canadian free banking systems. Especially, given the increasing interoperability (in particular the WBTC project) among various blockchains, it may be possible for some blockchains to issue their currency on top of the reserves denominated in the base cryptocurrency.
So, libertarianism does not imply Bitcoin maximalism but if the dominance of one blockchain platform and (or) cryptocurrency is not necessary a negative outcome, why do I claim that libertarians should reject Bitcoin maximalism?
To answer this question, it may help to consider the deeper philosophical attitude behind that ideology and whether it has counterparts with regard to other social issues. Interestingly, in this respect, the most thoughtful commentators in both the pro- and anti-maximalist camps have already recognized that there is something more to maximalism than the particular set of positions about how the blockchain space should shape up. In other words, Bitcoin maximalism cannot be dismissed as mere self-interest on the part of the early Bitcoin adopters or irrational attachment to the original breakthrough that Bitcoin represented.
2. Attempts to define the meta-maximalist view
Both prominent proponents and opponents of Bitcoin maximalism have recently recognized that it may be rooted in a certain more basic standpoint.
On the maximalist side, Yassine Elmandjra and Arjun Balaji drew an interesting parallel between the pro- and anti-maximalist positions and the two visions of society first theorized by respected American free-market conservative economist and philosopher Thomas Sowell.
Sowell hypothesized that there are two fundamental views on the social world: the constrained vision and the unconstrained one. The former, according to Elmandjra and Balaji, recognizes the fundamental limitations of the human capacities and the structures of human interaction:
Under the constrained vision, the only way to improve is to understand the fundamental laws of nature and the only way to innovate is to remain consistent with the specific parameters set forth by these laws.
The constrained vision realizes that while A may be better than B, it does not matter if A simply cannot be done. For instance, while achieving flight by wishing away gravity or ending war by wishing away violence would be great, it is simply not within the realm of possibilities. Consistent with the constrained vision are concepts like Smith’s Invisible Hand and Zhuangzi’s Spontaneous Order, which recognize the limitations of man and prescribe ideas that transform these limitations into progress.
Meanwhile, its opposite, the unconstrained view denies the fundamental limits to what humans can achieve and blames problems of lack of imagination or the right motivation:
Those with an unconstrained vision believe that the only limitation to achieving a desired outcome is our lack of imagination. Through this lens, the underlying problems in any system exist only because people are not wise, caring, imaginative, or bold enough: with the right mindset, scarcity can be eliminated, man’s self-interest can be corrected, imperfections perfected, and all evil eradicated. Instead of building mechanisms to work around any fundamental limitations, the unconstrained vision sees it possible to re-engineer the world to eliminate its flaws. As such, “intractable problems with painful trade-offs are simply not part of the unconstrained vision.
Elmandjra and Balaji go on to associate what looks pretty much like Bitcoin maximalism with the constrained view and to brand those who support things like Turing-complete smart contract platforms, multiple cryptocurrencies, the need for relatively powerful blockchain governance mechanisms and rules beyond just code, etc. as the adherents of the unconstrained vision.
In an unrelated essay, one of the core researchers behind Ethereum Vlad Zamfir criticized one of the thinkers Elmandjra and Balaji hold in high esteem, the author of the idea of smart contracts and the creator of a Bitcoin precursor Bitgold Nick Szabo.
In particular, Zamfir takes Szabo to task for his role in the entrenched opposition by many members of blockchain community to changes in base blockchain protocols that are not necessary for technical maintenance. One of the cases that Zamfir certainly alludes to is the unrelenting opposition of people like Szabo to the Ethereum hard fork that returned the funds siphoned by the DAO hack to the DAO token holders.
What Zamfir is criticizing here is, arguably, the part of Bitcoin maximalism that is directly relevant to libertarianism as it deals with the way the blockchain community is supposed to respond to what looks very similar to the paradigm cases of unprovoked use of force. While it is beyond the scope of this article to discuss Zamfir’s position, we may ask the question whether the dichotomy between Bitcoin maximalism and Zamfir’s position is genuine, and what the plausible libertarian response to it may be.
3. Elmandjra and Balaji misrepresent the constrained vision concept
Logically speaking, the constrained vs unconstrained vision dichotomy as described by Elmandjra and Balaji may seem sound but one does have a sense that it is actually false because it appears to equivocate in the constrained category the arguably incompatible conservative and libertarian views of society.
Free-market conservatives like Sowell like to think that there is indeed no fundamental difference between the two. One of the greatest classical liberal thinkers who came up with the concept of spontaneous order F. A. Hayek criticized this view in the famous essay Why I am Not A Conservative but he arguably did not help matters with this emphatic embrace of evolutionary explanations of social institutions and tradition in his late period, as exemplified in the book Fatal Conceit.
However, the earlier Hayek was right to argue that libertarianism and conservatism were incompatible. Moreover, what Elmandjra and Balaji refer to as the “constrained vision” is actually closer to libertarianism than to what Sowell used this term to describe.
In their treatment of the constrained vision, they emphasize the idea that social reality is governed by laws that determine what actions should be taken in order to achieve progress, and that these laws may not be neglected. However, in his work, Sowell emphasized something very different. Building on the conception of the nature of man as a very intellectually and morally limited, highly egocentric being, he focuses on the social processes like moral traditions, the marketplace and families that keep human and social imperfections in check and help the humanity navigate the trade-offs towards improvement.
Sowell, approvingly citing the later Hayek and Burke, also claims that most useful social knowledge consists of “the social experience of the many, as embodied in behaviour, sentiment and habits.” He also suggests that most of this knowledge is based on long-term accumulation of experience stretching deep into human history. Like Hayek, he believes that the survival of the right patterns of behaviour is ensured by the competition among societies.
One may understand the key problem with this view by momentarily setting aside the evolution of social institutions and norms and looking at the natural science. It may be true that societies embracing genuine science have a serious advantage over those who lag behind. In fact, colonialism was a sad demonstration of just that. However, it would be deeply implausible to say that scientific knowledge mostly consists of tacit habits of mind. While no single individual can grasp even a small portion of it, the bulk of it can be expressly stated.
At the same time, natural science is, in fact, no different from its social counterpart in the sense that it is impossible to predict complex outcomes from first principles and the initial position of the elements of the world. That is why weather forecasts are not made for the whole year in advance, not even for whole months.
In fact, Hayek initially developed his conception of the knowledge problem in society to convey an analogue of the latter point with regard to the complex order of exchange in production in the modern economy. His key insight was that following price changes allows people to avoid trying, and inevitably failing, to reason about the myriad of constantly changing factors affecting the resources they use and the things they produce.
However, this does not mean that the understanding that the price system is necessary for economic calculation itself evolved this way. In fact before Hayek and his mentor Ludwig von Mises, no one had clear grasp of this momentous idea. It is the set of the existing prices that comes from the past interactions of an unthinkable multitude of factors, not the idea that unconstrained price mechanism is needed for rational allocation of resources among competing uses.
What the late Hayek and Sowell conflate, in other words, is the knowledge of what is necessary for a good and prosperous society to develop and persist, and the detailed knowledge of how the current social realities with all their minute elements like the exact prices for Coca Cola in various places or the ways of greeting the people one meets came to be.
4. Bitcoin maximalism is closer to Sowell’s original constrained vision
At this point one may wonder, however, if the fact that Elmandjra and Balaji misinterpret Sowell really matters. In fact, I believe it does and it has a bearing on how libertarians should view Bitcoin maximalism.
If one looks at Bitcoin maximalism more closely, one may notice that it is centred around stubborn defence of certain design choices that were initially made by Satoshi Nakamoto and his successors. In defending those choices much more emphasis is arguably made on the fact that the Bitcoin (Core) blockchain has never been seriously compromised and has retained its dominance in terms of market capitalization than on the general ideas about how blockchains and cryptocurrencies should function to succeed.
In fact, in various discussions, the aforementioned Nick Szabo went so far as to say that the Bitcoin block size should not be a matter of public discussion at all but just a parameter of the system taken as a given. The fact that the parameter in question was chosen by engineers does not mean that it is incompatible with Sowell’s constrained vision. The latter does not necessarily imply that the initial adoption of a norm is necessarily completely spontaneous (like the initial trajectory that the first person to start a trail makes in the snow, to cite a famous example given by Hayek). It may be introduced by a someone at a higher than the grassroots level, even a ruler or religious leader. The only requirement is that it should be seriously time-tested.
In other words, far from being the difficult-to-argue-with set of ideas described by Elmandjra and Balaji, Bitcoin maximalism (like Sowell’s constrained vision) seems to actually belong to the family of ideologies that fall under the label of conservatism.
Interestingly, the libertarian movement, especially in the U. S., has a long history of confusing a certain strand of conservatism with libertarianism, and Bitcoin maximalism (as it is actually mostly practiced) can well be thought as one of the latest manifestations of this phenomenon.
5. The conflation of conservatism with libertarianism
Most people in the blockchain space are not aware of this but the Bitcoin maximalist view of the role of blockchain technology and related issues like the block size, the need for extensive smart contract capabilities, the best consensus mechanism, etc. seem to be related to positions on issues that have little to do with blockchains. Those clustering issues (that are often termed ‘Special Libertarian Olympics’) are fractional-reserve banking, immigration, and even the desirability of privatization of everything.
The supposedly libertarian thinker that is the best representative of this strand is Hans-Hermann Hoppe. Its basic idea seems to be that a genuinely free society is only achievable only if a certain set of limiting circumstances is in place. It requires that property owners have absolute control over their domains, and Hoppe mostly imagines them as white male heads of households, even though the set of sovereigns does not have to be so limited. The money supply should be as tightly limited as possible, hence the total opposition to fractional-reserve banking that is considered to be dangerous mass fraud enterprise even without a central bank. The only culture that is capable of assuring the preservation of the society of sovereigns is moral traditionalism in the Christian vein. In the economic sphere, in this view, everything should be subject to very strictly defined absolute property rights.
As a result of these background views, members of other cultures and modern attitudes to work, sex and family are considered incompatible with a libertarian society, hence, the spirited opposition to immigration, the total distrust of much of the academia and the rejection of modern forms of marriage beyond the traditional nuclear family. Meanwhile, fractional reserve banking is rejected because the property rights to the deposited funds become murky and the strict privatization is advocated for everything, including all roads, streets, forests, rivers, etc. Extreme proponents of this view even claimed that minors are property of their parents who should thus be allowed to abandon them at will.
With the caveat that most Bitcoin maximalists of broadly libertarian persuasion may not even be aware of the Hoppe-style confusion, is not difficult to see the parallels between the latter and the various positions they advocate. A blockchain platform and community can only function robustly, if there is a single canonical implementation, the ledger should be unchangeable in any circumstances, even if a hacker abused the system to siphon user funds, the core protocol should only allow a very limited set of actions (and not Turing-complete computational capabilities) and so on.
Both the Hoppean conservatism and Bitcoin maximalism are incongruent with libertarianism because they ultimately treat what they proclaim to view as a means to a certain end as an end in itself, a transcendent set of social or blockchain elements that have to be preserved no matter what.
6. But is Bitcoin maximalism really worth all the fuss?
All that said, one can surely express agreement with what I have written above and still express bewilderment about whether Bitcoin and other maximalisms even deserve the attention that they receive. Perhaps, they are as harmless as. say. the hatred of Star Wars prequels by the fans of the original franchise? Perhaps, the fans of various protocols can just be left to fight it out on Reddit and Twitter?
The fundamental problem with Bitcoin maximalism is that, since it is sincerely adhered to by a lot of actors in the blockchain space, from developers to investors, it politicizes much of blockchain research and development and does it in for the sake of a mistaken set of ideas.
Direct politicization of R&D should, in general, be minimized, even if the ideology behind it is solid. As most of the decisions involved in building blockchain tech are not directly pertinent to politics, they can be shielded from it, as much of blockchain R&D is already arguably in itself an affront to the predominant political order, even if it mostly does not clash with it directly at this point.
To use a non-blockchain analogy here, if a community is involved in saving migrants trying to reach Europe via the Mediterranean and bringing them to points where they can seek asylum, it will probably not help matters if its members spend a lot of time discussing what is the most philosophically correct way to operate the relevant ships. The results will be even worse if many rescue ship-operating teams decide that there is only one port where it would be justified to try to bring the rescued.
Historically, it is unusual, to say the least, even for the first serious implementation of a technology to be last one standing. The first mass-produced automobile (Ford T), for instance, does not remain the one used by drivers today. Nor am I typing this article on a Commodore 64.
But, perhaps, Bitcoin maximalists may argue, Bitcoin is not so much like Ford T and Commodore 64 as it is like TCP/IP or HTTP, the protocols that still remain fundamental to the workings of the Internet, despite having been introduced relatively long ago by the digital technology standards. Then, it may be justified for them to maintain that Bitcoin should at least play a very important role in the ultimate mature blockchain and cryptocurrency space.
The right response to this is twofold. Like Bitcoin’s continuing market dominance, the fact that HTTP and TCP/IP are still fundamental to the Internet does not in itself prove that they will not be replaced by some other protocols in the future. However, unlike with Bitcoin, the costs from moving the Internet away from those protocols is far higher than moving transacting from Bitcoin to another blockchain since in the former case the scopes of software and probably hardware that need to be modified are enormously larger. Secondly, one cannot just postulate that Bitcoin is like HTTP and TCP/IP in terms of indispensability, one needs to actually show that both of them are actually indispensable.
***
I hope that I managed to convince you in this essay that Bitcoin maximalism is incongruent with libertarianism and probably worth caring about. If you are a libertarian supporting Bitcoin maximalism because you think that it is the right thing for a libertarian, I hope that you will reconsider this belief. If you are not a libertarian but interested in blockchain, I still hope that I made you think about whether Bitcoin maximalism is a good idea, and if you already believe that it is not, my intention is to show that libertarianism is more sophisticated than the narrative equating it with Bitcoin maximalism would make you believe.
P. S. If you appreciated this essay and would like to motivate me to write more in-depth texts like this, you may consider tipping me with a bit of cryptocurrency on the following addresses:
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