Bitcoin ‘Maximalists’ don’t care where price settles

Bitcoin is up 30 percent. Ethereum is moving smoothly towards its next major update. The run of soap opera tragedies, from Terra to Voyager to FTX, appears to have run dry. Cathie Wood, CEO of the hot crypto hedge fund ARK Invest, is strutting from one interview to the next, like a crypto CEO of old. In crypto parlance, the winter is beginning to thaw.

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Of course, we are only a couple months out from the collapse of FTX, the biggest bankruptcy in crypto history, and ARK Invest is down 70 percent from its peak. And Bitcoin, being a genuine, bona fide decentralized cryptocurrency, hasn’t changed its protocol in years.

So, what changed?

Functionally, Bitcoin is the same as it was five years ago. Yet during that time it’s doubled, tripled, quadrupled, and halved, in defiance of any kind of predictive model. Wood famously attributes the success of her fund to her Christian faith, and her comparison between the crypto market and the mind of God certainly seems like a fair one to someone trying to find a pattern in Bitcoin’s weekly swerves.

For years, the SEC has been waging a legal war to classify cryptocurrencies as stocks when users and designers on every level treat it as the opposite: a fact of nature, something seasonal; a commodity, like wheat. But the price of wheat doesn’t move like the price of Bitcoin; in fact, almost nothing does.

A primary worry for hardcore Bitcoin “Maximalists” is therefore that this mysterious yet seemingly inherent volatility will never cease. As evidenced by the massive increase in Russian holdings of stablecoins during the invasion of Ukraine, part of the allure of a currency not tied to knee-jerk policy reversals is that it has the potential for incredible predictability. Yet in practice, Bitcoin is anything but predictable. The currency’s notorious volatility has driven away both institutional and small-time investors looking for secure stores of value.

Ultimately, Bitcoin Maximalists don’t really care where the price settles, because the price of a single Bitcoin is an arbitrary number—a “white picket fence.” No one questions the usefulness of the dollar to the global economy, but who’s to say that a dollar should equal a pack of gum, rather than a car? Inflation, spread uniformly across different sectors and moving predictably over the course of several decades, is inconsequential to the success of a national economy. With the scale of what Bitcoin is trying to accomplish, price is not much more than a marker of volatility. True Bitcoin holders—who are not investors in the traditional sense—don’t quite care where the price settles, as long as it settles somewhere.

So those for whom the past few months were unnerving may be reassured by upward momentum. But these tend to be the same people as those that treat the industry as a sexier version of the NASDAQ, looking primarily for cryptocurrencies which can replicate the leadership models of Silicon Valley tech companies while being marketed as more daring and disruptive. The best, most creative minds in the industry are as unfazed by this recent surge as they were by last year’s plunge. They have their eye on Nigeria, for example, where the recent government crackdown has driven people to crypto in droves; or Lebanon, where wine prices are now quoted in Bitcoin.

As with any commodity, what matters is not innovation but adoption. And the criteria for blockchain adoption have always been clear: mistrust of the government and mistrust of banks. With these two satisfied, the blockchain project is strong—when they are not, the project is weak. The rise and fall of various cryptocurrencies, though exciting to watch and pertinent for investors, is ultimately immaterial to the values—decentralization, radical individualism, faith in the popular imagination—which motivated crypto’s creation and spur its continued existence.

Benjamin Samuels writes about tech and blockchain technology. He attends Deep Springs College in California.

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