Giacomo Zucco on Bitcoin maximalism

In November 2014, Ethereum co-founder Vitalik Buterin has written an extensive and analytical article in order to popularize a new term: the Bitcoin dominance maximalism, or in short Bitcoin maximalism. The mastermind behind ETH has openly declared that the stance in regards to BTC’s absolute dominance isn’t just an isolated phenomenon, but an entire ideology which is based on shared valued and beliefs. His purpose, however, isn’t merely sociological or scientific: in his article, “On Bitcoin maximalism, and currency and platform network effects“, Mr. Buterin distinguishes these particular individuals and tries to argue for Proof of Work and a dual-currency model inspired by Robert Sams.

Though “Bitcoin maximalist” has mostly been used as a pejorative term and a Crypto Twitter insult, there are individuals like Giacomo Zucco who openly embrace this label and take their time to argue why it’s beneficial for the cryptocurrency industry at large. During his exclusive Crypto Insider interview, the Italian Bitcoinist has defined the layers of BTC maximalism and has taken his time to explain why the sound money and store of value model makes sense for the global markets. His argument is also based on the lengthy theoretical presentation that he’s made during the Baltic Honey Badger Conference in September 2018.

During the interview, Mr. Zucco has been more than generous with his explanations, and you can watch the video segment or read the complete transcript below:

Vlad: Hello this is Vlad and welcome to the Interview of Crypto Insider! Today I’m going to be talking with Giacomo Zucco who is a well known Bitcoin maximalist and one of the few people who embraced the label of being a maximalist despite all the bad meanings that it might have. And that’s something that we’ll be discussing today, so hello Giacomo!

Giacomo Zucco: Hi everybody! We’re not so few, I mean there are a lot of people that are self labelling maximalist but, yeah.

Vlad: It seems to me like a derogatory term on Twitter, and some people appropriate the idea and say “you know I’m also a maximalist but at the same time I also believe in Monero or in Litecoin or whatever”. And I remember the last episode of Magical Crypto Friends which is with Charlie Lee and Fluffy Pony, Whale Panda, and Samson Mow, and at some point they all said “you know we are all bitcoin maximalists in the sense that we want bitcoin to succeed and we want it to be the best coin but we don’t want it to be the only one, or not necessarily”. So do you think there are layers to being a maximalist?

Giacomo Zucco: There certainly are because the term itself was created in a derogatory form from Vitalik Buterin and others in order to represent these approaches as wrong. So it was some kind of blockchain slang and some of us adopted that in order to diffuse their rhetorical attempt. So now everybody is using the term in different ways. I tried to give a presentation about a very very scary street definition of maximalist with a lot of bad connotation in order to try to prove that even that very very scary cult like definition of maximalist is actually very very close to what a cautious approach would be to this ecosystem.

So yeah there are Fluffy Pony and Charlie Lee are people who are contributing somehow to bitcoin so in a way I would say they are defintiely bitcoiners. I tend to use the term maximalist in order to imply that I really do not think that altcoins can succeed in general. So while I’m not sure that Bitcoin will succeed, I’m kind of sure, as sure as I am as other things like that small private internet that you create in your garage is not going to  take over the internet very very soon. In that same way I’m sure that altcoins cannot be sustainable and deliver what they promise. While bitcoin could very well fail itself. From a destitute point of view, I am like a fifth morning maximalist meaning that I recognize right now that the USD unfortunately is the kind of money that people is using. It sucks because it’s manipulated and inflated and difficult to transmit over the internet without third parties and third parties can sensor you and spy on you and track you they can enforce KYC/AML mafias. So it’s a bad situation but that’s the reality.

Bitcoin could, maybe overthrow that. I hope that it will. And I think there are very very good chances it will. While altcoins by definition I think they cannot succeed.

Vlad: I remembered last week I had an interview with Jimmy Song and he had a controversial statement that it’s a good idea to spend with you credit card and then pay with bitcoin that you have. Do you think that up to this point it’s a better idea to actually use fiat for your purchases and save your bitcoin just for emergency spending?

Giacomo Zucco: Yea I completely agree. Actually in the presentation of Riga about maximalism I included also this part. So I argued these points in a satirical and sarcastic way but also serious in a way with some nuances, I argued first my position about altcoins and that they cannot succeed. Basically, altcoins are a scam in very loose definition of the term for some, and a very strict definition of the term for others. The second point was that any important change to the base rules of bitcoin is also something that we should reject and we should basically not accept. And the third point was about spending. I simplified version of what I said is that pushing people to spend bitcoin is a scam. The nuanced version would be if we think that bitcoin can be a better form of money, during the process of monetization of bitcoin, in which bitcoin chooses to just be a digital collectible and start to become a store of value and that medium of exchange, then eventually even a unit of account so it become really money, in this phase it’s reasonable to expect and appreciation of bitcoin compared to fiat money. And even if bitcoin doesn’t appreciate which is something it has to do if it’s going to succeed, fiat money is by definition always depreciating as far as purchasing power is concerned. So fiat money is always debased and deflated and depreciated over time.

So if you have two kinds of money, both kind of accepted…let’s assume first that you have two kinds of money accepted at the same rate at the market around you. And one money is going to be depreciated over time, and the other money is that some of it cannot be inflated, it’s very resistant to production, so you have hard money and easy money. And the market around you accept both at the same rate, which one would you spend first? Of course, you’d spend the easy money first. That’s called the Gresham Law, but Gresham law is actually referring more specifically to legal tender and denominations. But we could call it, maybe tier’s law which is probably more proper. Tier’s law says that the good money in store of value terms, drives off the bad money. While Grecian law simplified says that bad money in every day purchases, drives out the good money which is instead hoarded and HODLed and stored. So I agree with what Jimmy said may be tricking because we spend a lot of time in early bitcoin narrative about how we should always use bitcoin in the sense of spending bitcoin and we should hope for merchant adoption. But, actually that will kind of all fade.

Every time we celebrated merchant adoption of bitcoin, we’re actually celebrating some guy joining Bitpay in order to receive bitcoin from HODLers , from people believing in bitcoin, and immediately sell bitcoin at market price on the open market, actually depressing the price. It’s not real adoption. While using bitcoin to store your wealth, that’s adoption. That’s an actual use of bitcoin. So I was saying before, assuming that they market is accepting both forms of money. The shitty valuated money and the hard money, you should spend the former first. But, we are not even in that situation. We are in a situation in which the market usually do not even accept the hard money. So we have a strong hard money which is not even very widely accepted and fiat money which is accepted everywhere basically and it sucks by definition in storing wealth. So it’s a no brainer, you should spend first the shitty kind of money which is depreciated which everybody already accepts. Of course there are some caveats here if we want to be super pedantic. If you only receive bitcoin, if you are one of the lucky dudes who managed to be completely unbanked and post-bank, and you receive your wage in bitcoin only, and you have 100% of your wealth in bitcoin only. In that situation you will spend bitcoin only.

Or if you want to spend in one of those use cases that require by definition bitcoin because fiat money systems won’t let you spend money that way. For example, you want to donate to WikiLeaks and you cannot use a credit card. Or you want to buy certain substances on the silk road that are maybe legal in some countries but not other countries, you cannot use credit card or apple pay for that. So in that case you spend bitcoin because you don’t have anything else to spend or because that specific purchase cannot be performed using fiat money. And that’s all the point of bitcoin in the first place. So I think that the general statement by Jimmy is absolutely correct. I don’t know why it triggers so many people. I mean, I know why, because we accepted the narrative that using bitcoin is spending while using money sometimes is above spending but sometimes is about storing. And we accepted the narrative that people accepting bitcoin with payment processor dumping on the marketing is a good thing, while it isn’t. And we accepted that and we forgot the point of Gresham’s Law that says that you spend the shitty money first and the good money after.

Vlad: So you’re basically saying that you should be spending your Bitcoin Cash? *smiles*

Giacomo Zucco: (laughs) Yea, well I did take a while to split my bitcoin cash from my actual bitcoin UTXO so it’s a nightmare time. I took a while to claim my bitcoin cash airdrop from using my bitcoin UTXO, but because of privacy concerns and security concerns many people gave up their privacy completely with these airdrops. For example, constantly dating all their UTXO set into one address of an exchange with name and surname and KYC, so many people did terrible things for their privacy with these airdrops. I took a while to collect it, but when I did I spent it in order to buy bitcoin first thing so yes, if you have bitcoin cash you should use that way before bitcoin I completely agree.

Vlad: OK, I’m going to ask you to comment on another comment which I read on twitter, because you know it’s the most active place where people debate ideas which are not always profound or meaningful in any way but I think Jackson Palmer has at some point said that if you have the term maximalist in your description somewhere on twitter then you should replace it with “close minded”.

Giacomo Zucco: No I think that’s makes completely no sense. I mean the term maximalist was created in order to represent people using basic logic and common sense about Bitcoin and altcoins as some kind of close minded, childish, intolerant sect. So that was the original design of the word, and we self-ironically adopted the word. Right now people using the term in the description are mostly just signaling that they are using some kind of healthy skepticism and that they want extraordinary proofs in order to sustain extraordinary claims. Bitcoin itself was an extraordinary claim, and many people required a lot of evidence and a lot of explaining in order to accept that there was something, possibly capable of overthrowing the fiat money system worldwide.

So that was a very extraordinary claim, well, we are still should doubt this claim to a certain degree because nothing is certain. Bitcoin could still fail. But if you adopt a rational mindset and if you adopt any kind of healthy skepticism, then you know that full approach should be that something extraordinary usually too good be true is usually too good to be true. So having thousands of different coins, each one serving the market as money, is an inconsistent scenario. Because one point of money is that it is the most saleable good on the market. And the most saleable good is one. And in every kind of local market that you can imagine, there’s one form of money that usually gets to include, or gets to represent, the best money and usually cannibalizes the others.

Sometimes you don’t see that because you have external interferences, for example nation states that monopolize money and they impose political money with legal tender, so you could see one form of money in the older times which one the gold standard Gold, now you can can see different forms of money but that’s because politically imposition between nation states. But if you go to the free market, so if you also go to the black markets of many nation states, for example Venezuela, or Cuba, or the USSR before the Berlin wall crashes down, then you could find only one basically strong currency that was the USD being actually used instead of the depreciated alternatives. So maximalists in this regard is just being realistic and expecting economical typical behaviors to still be in place and to not expect extraordinary suspensions of laws of logic and economics. Also there is a point about technological revolutions. Like there is a very good essay by Andrew Poustre about altcoin, which was posted about three years ago, and was describing all the subtitle, very small mistakes that people creating the first altcoins because creating a new crypto system is not easy and it is kind of a miracle that we have one that actually works and miracles tend not to replicate very very often so I completely disagree with a statement that if you don’t want to use the label maximalist because you don’t want to basically concede this kind of “negative” depiction then don’t use that term but people using that term to describe themselves are mostly just signaling that they are logical and reasonable.

Vlad: Ok, so I will ask you one last question which revolved around commenting on somebody else’s comments. So I saw that Roger Ver was very critical of your PowerPoint presentation. And he precisely picked that slide which was the most controversial about it. I think it was the one in which you said that bitcoin is the only legit cryptocurrency everything else is a scam, don’t trust anyone who tells you to sell your bitcoin, don’t trade your bitcoin, just hodl it. And how did you feel when that went viral on twitter?

Giacomo Zucco: Actually not very happy because the narrative in my presentation was started I would say, and I’m probably overstating because I created that the night before as I do always, and I was thinking about the presentation I was going to give and there was a path in my mind. I will describe why I will talk about Bitcoin maximalist. I will put here the most possible triggering and scary and counter intuitive set of “maximalist rules” in order to trigger you, people of the audience, which by the way were people inside of the conference of Baltic Honey Badger so they were already bitcoin maximalist so it was some kind of inside joke. So I want to represent what we would believe in the most possibly triggering kind of way and then I will explain some logical assumption and I will show you that the consequences of these logical assumptions, if they are not triggering sentences that are written down, they are anyway counterintuitively paradoxically very very similar to these general prima facie heuristics.

The rules in the slide were basically ‘everything besides bitcoin is a scam’. So actually, let’s start with the title of the slide. The title of the slide was “the Four universal truths about bitcoin”. Which is itself mocking the Buddhist four universal truth. So the title itself was already an attempt at self irony in order to present maximalism as a religious thing. You would not call something the four universal truths if it was not already somehow sarcastic. The first thing was that everything which is not bitcoin is a scam. Of course that cannot be taken literally. I mean Linux is not bitcoin and it isn’t a scam. Git is not bitcoin it isn’t a scam. Bit Torrent is not bitcoin. Physical gold is not bitcoin; it isn’t a scam. My car, even if it’s not a Lambo, it’s working very well it’s not a scam. So it’s not literally everything.

But everything which pretends to be something like Bitcoin or something like the next Bitcoin using Bitcoin technology in improper ways in order to replicate the same kind of effect reaching the creators, is prima facie as general heuristic a scam until proven otherwise. That would be the nuanced definition. Of course the simple definition is that “everything that is not bitcoin’s a scam”. And the second one was every attempt to change bitcoin is a scam. Of course neither these can be taken literally. Like Segregated Witness, or Schnorr, they are changes to bitcoin but even when you implement Lightning Network even if you’re not changing Bitcoin layer one, you’re changing Bitcoin as a global experience, as a global set of protocols. So of course we will change bitcoin as a general experience for all the times being and we will probably even change some more the base consensus with I hope very very few and very very slow last modification before reaching stability. So the scope or the goal of that second point was you should think that every attempt at modifying bitcoin is itself problematic and potentially dangerous and potentially an attack vector and so that we should also always prefer to protect status quo over any change until we get proven that they change is necessary and uncontentious and safe to deploy and tested and so on and so on.

So your mindset should be until proven otherwise, every attempt to fundamentally change the bitcoin is something wrong. Even because if bitcoin can change too much, then the sound money characteristic is gone. Because if you change the total supply, you don’t have harmony anymore. If you can change or maybe enforce a black list, a white list, or KYC, the permissionless side of bitcoin is gone. So there are some changes that will destroy bitcoins value proposition completely.

Then there was the third truth which was the one we discussed before about Jimmy Song’s triggering tweet which was everybody’s trying to push you to spend bitcoin is scamming you. There was a very good article by  Michael Goldstein “everyone is a scammer”.  This is a great article on the Nakamoto Institute about the fact that when you have something like harmony, everybody wants you to spend and they want to hold. It’s a normal thing to try to trick others into spending a very valuable asset and of course that’s a usual “scam” which is the worst scam if you lose improperly.

And the last truth is that we should not be nice with scammers. Even this can not be taken literally. I’m personally kind of nice with people who I consider doing very very scammy things. For example, I meet Zooko at a conference and he’s a very nice guy and I tend to be nice with him but I think that Zcash is very very unethical on different points of view and it’s very scammy in a way that it has been promoted for many many reasons. So that’s not literally either, but what I try to convey with the last sentence was that we should append some social costs into social attacks on bitcoin. Because otherwise social attacks on bitcoin, they carry zero technical cost. So there should be some kind of social protocol that makes it expensive for the attacker to try to manipulate or distort or corrupt bitcoin somehow. And especially because sometimes people think that if I call something scam it means that I want the government to step in banning that thing. It’s the other way around.

It’s precisely because we don’t want the government to step in whatsoever, that we need to create a self-regulating culture and attitude in which we enforce a very very strict set of rules and we keep ourselves to very high standard of ethics and technical precision and we basically bash and mock and ridicule most of the scammy marketing which is so common in other sectors so in any sector which is not bitcoin, I don’t care very much if some marketing or advertising is pushing some forced narrative. But if bitcoin, it’s very very important, it’s more important, to bash and mock and expose and debunk fake narratives exactly because we don’t want a regulator or a consumer protection or any kind of legal restriction of liability. So the last sentence was basically in the cypherpunk crypto-anarchy model you don’t want a state to regulate stuff. But you do want people calling out lies or misconception or dishonest marketing. So to answer, I spoke a lot, your question was simple, how did I feel about that slide. That slide was not intended to go viral on twitter as it was a completely serious slide. That said, I think it’s kind of like this. It’s kind of like a filter, people incapable of looking for the context of the slide and incapable to understand the irony of the title itself, and incapable to understand that these sentences even if clearly exaggerate and hyperbolic, they are actually very very close to a good prima facie in order to navigate this world. They are basically filtering themselves out of the conversation. So if you feel so much trigger by this slide, then it’s a good signal from me that I should probably not engage with you in conversation. So it’s a timesaving anti-spam mechanism so, thank you Roger, I am ok with it! (thumbs up)

Vlad: That’s a good answer! I actually wrote and article about this that a few weeks ago, the Bitcoin community was consisting of some of the smartest people who are actually aware of the financial system and they saw what happened in 2008 / 2009 when the banks collapsed and they had all of these ideals of turning bitcoin into the next big financial instrument of the world. But we have seen in the last two or three years how all of this spirit has vanished and we have people who actually expect the SEC to give an approval to the ETF for bitcoin and open trading desks and that’s so much against the spirit and ethos of the early bitcoin adopters who actually wanted to distance themselves from the banks. So what do you think happened in the process? Do we have too many greedy investors like the Forex guys who just stepped in and wanted to make as much money as they could and they ended up holding bags?

Giacomo Zucco: So first of all I don’t completely agree with you that the original narrative was especially was against banks. It was especially against bailouts to banks like the genesis block newspaper title was about the chancellor Darling of the second bailout of banks. So the problem was not that we have this business called bank which is a business consisting of people on the market proposing to other people to store their value for them or to invest their wealth giving out loans so managing credit and debit and matching the demand and supply of credit. So that’s not the evil thing itself. The problem with banks, just like many other fields of the market like the military the self defense or in many cases the healthcare, it has been completely hijacked by government monopolies that started to use this monopoly in order to promote exclusions and control, Orwellian surveillance, and of course taxation in the form of inflation. And manipulation in the form of management of interest rates.

So I think that the regional narrative, even if probably we intercepted as a Bitcoin community, we did intercept some kind of anti-banks meaning, anti-rich rhetoric. So like some kind of Occupy Wall Street rhetoric, like „You are a banker, you are rich, so you are evil”. But the point was never actually that you cannot not have a guy managing credit. The point was that the sector of credit and money and banking in general has been completely hijacked by the government, so there are now rules that, for example, if you try to donate to WikiLeaks the government convinced or forced the banks to shut down your payment to WikiLeaks, or if you tried to save your wealth from inflation, the banks will help the government to inflate using fractional reserve, or if you are trying to compete with the government like with e-gold, the banks will have the government to shut you down. If you purchase goods and services, the banks will have the government to track you down, spy on you, and eventually punish you for your preferences. So especially the banks are betting financially – if they win, they get the profits; if they lose, the government will take money from other people in order to bail out the losers so they can never so that generates a lot of moral hazard. And so the banks and the financial sector in general, are getting even more and more risky and unsustainable over time because of moral hazard created by bailouts.

So Bitcoin wasn’t thought as a way to do that, but was intended to disintermediate banks directly because they were corrupted by the violence of the state. The fact that some bank could maybe serve some Bitcoin investor and not become user, but Bitcoin investor is actually not so bad. I don’t think that the SEC allowing a Bitcoin ETF or the Bitcoin future markets… they are not bad things per se because Bitcoin users, people that want to use Bitcoin to store wealth in an unconfiscatable way, they don’t care about ETF. They will get Bitcoin because an ETF can be confiscated, while real Bitcoin cannot be confiscate. People want to donate to WikiLeaks or move money out of China, they don’t need a Bitcoin EWF because you cannot move a BTC ETF out of China, and you cannot use a BTC ETF to donate to WIkiLeaks. People who really need Bitcoin as a tool will use Bitcoin, but if somebody just wants to bet on the price of Bitcoin, I think that’s good for us because more demand for synthetic Bitcoin can anyway bring up the price and I don’t expect an old legacy investor, a guy who is used to pick up the phone, call his banks and say „Let’s buy two Apple shares, three barrels of oil, and three bitcoins”. This guy will never become a cypherpunk managing his own full node and his own private keys. It doesn’t need it, this guy does not need persmisionless finance. He is okay with permissioned finance, he just wants to speculate on the price.

So I think there is nothing bad in permissioned finance allowing people to speculate on Bitcoin price. I think that’s okay. The problem is that people are expecting the SEC or other regulators to actually give a pass to all these ICO centralized and super easy to censor initiatives. So the government is telling you that you cannot issue securities without following some kind of stupid regulations, which is very bad for financial exclusion and everything. But the government is forcing you to follow these regulations. Now you create your centralized ICO or altcoin, and suddenly you hope that the government is not going to enforce the same regulations on your only because you pretend to use buzzwords like “blockchain” and “Bitcoin”. But you’re still completely centralized, completely censorable, but you hope that the government will not crack you down.

And I don’t know if think that this fairy tale exists in every culture, but in Italy we have it. It’s called the three little pigs: so you have one pig that’s building his home with straws, the second one uses wood, and the third one uses bricks. So the third one takes a lot of time, it’s like he’s the boring pig who will have to study architecture, spend a lot of energy and money and time slowly building the brick house. The straw house pig will just do something quick, dirty, super effective, and then dance all the time mocking the brick house pig because he was faster and more effective. Altcoins and ICO tokens are like that.

Bitcoin has been built in order to resist the regulator wolf when it comes. So Bitcoin has been created in a way that when the wolf comes, he cannot bring the house down. While altcoins are just like the straw house, they have been built very quickly, very easily, and you don’t have all the hard things that you can find in Bitcoin so you can profit more and buy your Lamborghini. But when the wolf comes, just like Ethereum, they are trying to keep the wolf calm using lobbyism or asking “Please, do not censor us!”, which is completely nonsense.

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