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The Math of Maximalism by demotruk

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cryptocurrency · @demotruk ·
$21.03
The Math of Maximalism
This is a quick late night post in response to a tweet by @acidyo.

https://twitter.com/oAcido/status/1554191593753968640

I just want to explain some of the ideas that informed early Bitcoin maximalism, which seem to have disappeared in the mists of time. Although I am sure you can find this discussed on old Bitcointalk and Reddit posts.

![image.png](https://files.peakd.com/file/peakd-hive/demotruk/23vi1x1fQ68aSEBBgrW7kY26UZ6kyYQHbRCaCmgSxYjsSWvQyP8WbmYgjV4ZiUGTGuZiD.png)

### Assumption 1 - Cryptocurrencies are fundamentally separate networks
Because each network is self governing, they are each effectively domains of sovereignty with separate units of account and fundamental limitations on the degree of potential interoperability (merging networks).

### Assumption 2 - Metcalfe's Law
We shall take it for granted that [Metcalfe's Law](https://en.wikipedia.org/wiki/Metcalfe%27s_law) is true, the value of a network is directly proportional to the number of potentially connected users.

### Assumption 3 - Our investment of time, energy and capital into a project has the net effect of bringing in a fixed number of users.

In the first scenario, suppose there are 10 projects, each with 10 users. The network value of each project is 45 (the number of network connections).

Also, our total investment would bring in 10 users, divided as we choose among the networks.

Pluralist/diversification approach: +1 user to each network. The network value of each project goes from 45 to 55. With 10 projects, the total increase in network value is 100.

Maximalist approach: +10 user to 1 network. The network value of 9 projects remains unchanged, while a single project goes from 45 to 190. The total increase in network value across all projects is 145.

This is the simplified basis of crypto maximalism. If everyone is investing their time, energy and capital into a single project, the power of building one large network effect is eventually vastly more than when people divide their efforts across a number of smaller network projects. In fact I would argue that this is the primary reason why Bitcoin (and the US Dollar) is so hard to dislodge from the #1 spot on coinmarketcap.com, the simple math of having the largest network makes its overall value much higher than smaller networks, despite anything else - including technical superiority/inferiority.
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vote details (111)
@bhoa ·
$0.30
The cryptocurrency space is deeper than I thought.


> In fact I would argue that this is the primary reason why Bitcoin (and the US Dollar) is so hard to dislodge from the #1 spot on coinmarketcap.com, 


I totally agree
👍  ,
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@chillyanca ·
$0.34
The more people engage and hold particular token,the more  valuable the token is,bitcoin will continue to be in number one at coinmarketcap because enter single day new people are invest on it and it market cap continue to increase.
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@youngkedar98 ·
$0.36
The thinking makes sense, the more people that engage with a network the more valuable it becomes. If you think about it, that's how nature operates so it's like applying a fundamental law of life.
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@demotruk · (edited)
Still, in retrospect I think the downsides of maximalism have been shown to be potentially pretty bad. And the last thing we want to do is build a project with a massive network effect that then gets its governance hijacked, and it's impossible to beat it with a competitor because its network effect is so much greater.
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@youngkedar98 · 
Yes, that will be a terrible nightmare. After all the hardwork to achieve that network effect having to lose it over some vulnerability is a tough pill to swallow especially if you've given it your all. But that's the reality, this things do happen no matter how much you try to prevent it. Getting everyone on the same page for a long time is an impossible task.
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