Bitcoin advocates have been courting new adopters ever since the digital currency was invented, in 2008, by a mysterious figure known only by the pseudonym Satoshi Nakamoto. At the time, Bitcoin backers were disillusioned with the mainstream finance system and wanted to create a form of virtual money that could be exchanged without a bank or another intermediary. With a supply limit built into its underlying code, Bitcoin was supposed to offer a hedge against inflation, since no centralised authority would be able to print more of it.

Many subsequent cryptocurrencies have lacked those features. Often, new coins are issued by a group of founders who exert significant control over distribution — a dynamic that can replicate the centralised structure of traditional finance.

“Bitcoin is decentralised, digitally scarce money. Everything else is centralised,” said Jimmy Song, a crypto podcaster and an outspoken Bitcoin maxi. “There’s a world of difference between a censorship-resistant, self-sovereign money versus a gambling vehicle.”

The maxis’ utopian vision of a stable, decentralised but universally accepted alternate currency is a far cry from reality. Bitcoin’s price swings wildly, and its investors often treat it as a kind of risky stock, no different from the shares of companies traded on the tech-heavy Nasdaq index.

Hardly anyone uses Bitcoin to conduct ordinary transactions. Last year, El Salvador introduced Bitcoin as its national currency, but that project has been a stunning failure. Verifying Bitcoin transactions — a process known as “mining” because it rewards participants with digital coins — is energy-intensive: Researchers estimate that Bitcoin mining may produce as much as 65 megatonnes of carbon dioxide per year, comparable to the annual emissions of Greece.

“You can’t use it to buy anything — it’s way too volatile and complex and laden with fees,” John Reed Stark, a former Securities and Exchange Commission official, said of Bitcoin. “There’s no intrinsic value.”

Still, the maxis have seized on the downturn to make the case that Bitcoin is the only cryptocurrency worth taking seriously. “Bitcoin Is Down, but Its Case Has Never Been More Compelling,” read a recent headline in Bitcoin Magazine.

“If you call out someone’s risks they’re taking, and they’re otherwise healthy, you can be accused of creating a run on the bank or being a troll,” said Michael Saylor, CEO of MicroStrategy, a software company that has built up a large Bitcoin reserve. “It’s kind of hard to explain this theoretically before the crash happens. But now it’s happened.”

Saylor and other maxis have sometimes complained that Bitcoin is poorly represented in Washington, where lawmakers have expressed growing concern about the cryptocurrency’s environmental impact.

Some crypto advocacy work in Washington is funded by companies that offer virtual currencies built on an alternate verification system, which requires less energy to maintain. In April, Chris Larsen, a billionaire who co-founded the cryptocurrency company Ripple, announced that he was contributing $US5 million to a marketing campaign calling on Bitcoin to abandon its energy-guzzling mining infrastructure, which proponents insist is vital to keeping the network secure and equitable.

Now, Bitcoin supporters are building their own political apparatus. This year, David Zell, a Bitcoin advocate, started the Bitcoin Policy Institute, a think tank that pushes a pro-Bitcoin agenda in Washington. The institute has argued that concerns over Bitcoin’s energy consumption are overblown.

“What we’re saying is that Bitcoin has a set of properties that make it unique,” Zell said. “Those differences are stark enough that if you’re going to have a serious policy conversation around the industry, it’s useful to draw that distinction.”

Klippsten traces his Bitcoin maximalism to a chance meeting five years ago. (He considers the term “maximalist” to be pejorative and prefers to call himself a Bitcoiner.) A former consultant at McKinsey, Klippsten became interested in crypto in 2017, when a wave of new currencies were created and prices surged. He bought some Bitcoin, but he also loaded up on newer, experimental tokens.

“I was really distracted by all this other stuff,” he said.

At a conference that October, he met Song, the Bitcoin podcaster, and was convinced by his pitch. Klippsten also came to believe that many newer currencies were unregistered securities, more akin to the stocks people trade than to the money used in those transactions. (Regulators have declared Bitcoin a commodity rather than a security.)

In 2019, Klippsten started Swan Bitcoin, which works with wealthy families, businesses and retail traders to set up Bitcoin investment plans, often through an automatic purchasing program. The firm provides customised financial advice, he said, and charges a 1 per cent fee to execute Bitcoin purchases.

The business caters to hard-core Bitcoin believers: Swan customers spent twice as much on Bitcoin in June, the month after the market crash, as they did in April, the month before it, Klippsten said. He declined to reveal the total figures but said multiple customers made Bitcoin buys of $US5 million in June, as the market fell.

Klippsten automatically invests a portion of his own savings in Bitcoin every day, a process known as dollar cost averaging. He has continued to buy at the same rate throughout the downturn.

Loading

But if he received a windfall, Klippsten said, he would “argue very vociferously with my wife to try to put the majority of it into Bitcoin.”

This article originally appeared in The New York Times.

The Market Recap newsletter is a wrap of the day’s trading. Get it each weekday afternoon.