Crypto industry heavyweights clash over intellectual honesty of Bitcoin maximalism

Input Output CEO Charles Hoskinson responded to a recent Cory Klippsten interview by calling the Swan Bitcoin CEO “an idiot.”

Hoskinson took exception to Klippsten calling blockchain a “marketing scam.” Specifically, Klippsten said blockchain is “a slow and expensive database,” but its only use case of merit is “as part of the system designed for Bitcoin.”

Since the Terra scandal and subsequent industry-wide deleveraging that followed, Bitcoin maxis have grown more vocal in condemning everything that isn’t Bitcoin. While some have labeled this mindset as “toxic,” On-Chain Analyst Jimmy Song said maxis “were not toxic enough,” resulting in the loss of billions over recent events.

Bitcoin Maximalists were not toxic enough. This is why people lost billions on Luna, Celsius, 3AC and more.

— Jimmy Song (송재준) (@jimmysong) July 26, 2022

Klippsten tears down blockchain

During the interview, Klippsten denied the narrative that blockchain technology is revolutionizing the internet to foster greater utility.

He dispelled the idea that blockchain is cutting-edge tech, saying it dates from the 80s and isn’t faster or cheaper than competing technologies. However, the only exception to this, insofar as offering a degree of value, is the blockchain system that underpins the Bitcoin network.

“Blockchain has been around for 40 years; any use case that people have tried to apply to it, it’s just a slow, expensive database.”

Supporting this view, the Swan Bitcoin CEO gave several examples, including an account of Fidelity’s research into blockchain technology, which ended in “50 proofs of concepts” being abandoned due to lack of utility.

Responding to Klippsten, Hoskinson countered that blockchain is “a recognized class of technology” with several real-world use cases from voting to supply chain. He then launched a personal attack on Klippsten by questioning his capacity to understand the concept.

He is an idiot. It's a recognized class of technology that solves real problems from voting to supply chain. Just because he's incapable of understanding why doesn't change reality anymore than not understanding radiation doesn't make it not exist

— Charles Hoskinson (@IOHK_Charles) July 26, 2022

Maximalism is not toxic maximalism

Recent events were a wake-up call for the entire industry. Russell Starr, the CEO of crypto Exchange Traded Products (ETP) firm Valour, wrote by email that a factor in the losses was a lack of maturity and inadequate due diligence on the part of investors.

To that end, Bitcoin maxis argue everything that is not self-custody BTC is “degen finance” and should therefore be avoided for prudence reasons. Ethereum co-founder Vitalik Buterin rationalized this view by saying, “a healthy dose of intolerance is in fact necessary” to counter the “grifter cryptocurrencies.”

However, others say discounting non-BTC protocols entirely is a narrow approach. Speaking on the Unchained Podcast recently, Shapeshift CEO Erik Voorhees said he felt embarrassed by the toxic maximalism he encountered at his first conference – the Bitcoin 2021 conference.

In setting the scene, Voorhees distinguished maximalism from toxic maximalism, saying the latter refers to people who act like “*ssholes [to those] that don’t think like we do about Bitcoin.”

During the conference, Voorhees said he witnessed numerous examples of behavior that does not represent the Bitcoin community he comes from, which he characterized as one of openness, decentralization, innovation, compassion over monetary economics, and a belief in BTC offering greater egalitarianism.

If anything, Voorhees pointed out that toxic maximalists should recognize the banking system as the enemy and not other protocols on a blanket basis.

“If there is an enemy, it is central banks and banking and fiat currency. Not the Dogecoin community, not the Ethereum community.”

Were the Bitcoin maxis right all along?

Reaching out to Max Keiser for his comments, the host of the MAX & STACY REPORT Podcast argued that “Bitcoin acts like a truth serum,” implying that those who seek truth only consider BTC.

He expanded by saying the truth effect eventually shines a light on those doing “crooked things,” giving Celsius CEO Alex Mashinsky as an example. It should be noted that Mashinsky is not under civil or criminal investigation for his part in the company filing for Chapter 11 bankruptcy.

In any case, Keiser predicted a mass SEC crackdown on the basis that all altcoins are unregistered securities. If this scenario plays out, the altcoin investment case would be severely hindered.