Dark Horse Maximalist
Written by Andrew Holz. Originally published on Medium
The blockchain and DLT space is populated by large swaths of maximalists. “There can only be one!” Chief among them are Bitcoin maximalists, but there are maximalists for other projects as well. (You know who you are.)
Fundamentally maximalists are those in favor of (or at least in agreement about the inevitability of) a bitcoin (or other) monopoly at some point in the future.
The basic idea is that bitcoin has a large lead in maturity and can solve any emerging needs or shortcomings through new features and layer two solutions. Because it can, network effects mean it is inevitable that it will. (Thank you Mr. Metcalfe.)
That assumption, however, seems flawed or at the very least premature. There is no one master fiat currency today. There is no single database today. There is not a single language that dominates all software development. There is no single market for all securities and commodities. There are network effects involved in most of these but, the maximalist might argue, not nearly as strong as there are in the blockchain/decentralized app space. This argument, although it has merit, suffers from a somewhat myopic view of what this technology can be applied to. Maximalists tend to be entirely focused on the underlying network itself. If PoW is the only way to be secure and bitcoin has the biggest mining pool, game over.
It is not that simple. For a start there are two distinct and only loosely connected networks in play. One, the network of miners securing the system and another of users deriving value from the platform. Once you move beyond “digital gold”, many other factors come into play and not all can be sacrificed on the altar of who has the biggest mining pool.
Different use-cases, especially those beyond currencies have very different needs. Some of those needs exist in direct opposition to one another. Transaction volume? Transaction speed? Transaction cost? Confidentiality? Finality? Safe environment? Expressive contract language? Anonymity? Self Sovereign Identity? Decentralized trust? Censorship resistance? Dynamic governance? These factors and many more come into play. Some of them reach down into layer one and can’t be optimized with a layer 2 combover.
Much of the maximalist argument falls into the trap of a local maximum. Once you are on a certain hill and you keep moving upwards you get to the top and declare it the highest place anywhere. (This is especially true if you have money as well as ego on the line.) But if you make different trade-offs, perhaps go down into a valley or two and then work your way up again, there is a new local maximum that might offer better solutions to at least some of the potential challenges.
The “best” solution is also deeply impacted by how you structure your understanding of what needs solving. Is it one solution space or many? Do any of those potential applications have competing needs? Can they all be solved with layer 2 solutions and do the network effects that are supposed to trump everything really unify them? That seems unlikely.
First, it seems unlikely because some of the trade-offs can be diametrically opposed. One industry or dapp may require absolute stability in governance or costs where another needs rapid adaptation to the market. A second reason one answer and one platform is unlikely to be the best for all possible applications is the weight that comes from a single chain. Signing and storing the myriad types of data and full history even when they are about unrelated entities (coins, IoT devices, cryptokitties) brings computational overhead with little benefit.
People are fond of pointing out that we are “10 years into applying blockchains”. I would argue that outside of bitcoin and “digital gold”, real applications of the many potential uses of distributed ledger technology have only been truly ramping up in the last few years. This is not because the building block technology didn’t exist, but because attention to the opportunities and the need for decentralization was not to the level it is today.
The swath of copycat projects which were nothing more than slapping a new name on existing tech during the ICO craze has given the impression that many ideas have been tried. This is simply untrue. The entire industry needs to experiment more widely and challenge some deep held assumptions so we can find some new local maximums in pursuit of bigger decentralization goals.
Are we at the end of the race? No. Is there a deep understanding across the industry of what the most relevant solution spaces even are? (Currency, securitized tokens, supply chains, smart contracts, non-fungible tokens, regulatory compliance, internet of things) No.
Therefore I am a dark horse maximalist. I believe there are projects emerging that will build on the past and push new innovations for the future. These dark horses will find new and critical local maximums making different trade-offs across a range of vectors including technology, consensus types, governance, access, compliance to regulation and more. They will be built on real traction and by meeting real needs. The successful dark horses will not only survive but also dominate in areas just beginning their transformation.
Dominating emerging territories is where several dark horses will get their maximalist on.