The crypto market crashed, but they are still buying Bitcoin

(NYTIMES) – Cory Klippsten started issuing warnings about the cryptocurrency market in March.

The digital coin Luna, Mr Klippsten tweeted, was a scam, run by an entrepreneur with “major Elizabeth Holmes vibes”. The newfangled crypto bank Celsius Network was a “massive blow-up risk”, he said.

When those crypto projects collapsed a few weeks later, causing a crash that has wiped out about US$1 trillion (S$1.38 trillion) in value, Mr Klippsten became a fixture on news shows, where he cast the industry as a morass of hucksters and hypocrites.

“Crypto is a scam,” he declared last month.

But Mr Klippsten differs from most crypto haters in one crucial respect – he runs a Bitcoin company.

In the crypto world, Mr Klippsten is known as a Bitcoin maximalist, or “maxi” – a hardcore evangelist who believes Bitcoin will transform the financial system even as fraud pervades the rest of the crypto ecosystem. The maxis are just a subset of the crypto industry, but their ranks include influential figures like Mr Jack Dorsey, a founder of Twitter and an early Bitcoin proponent.

The maxis continued buying Bitcoin even after its price plummeted to an 18-month low of about US$20,000 in June. And, as the market has melted, they have embarked on a public relations offensive, aiming to persuade investors and lawmakers that Bitcoin is different from the thousands of other digital currencies that proliferated in the last few years before tanking this spring.

“The only future for non-Bitcoin crypto is to seek to be co-opted by banks and governments and become part of the existing system,” Mr Klippsten, 44, said.

The debate being fuelled by the maxis has become a battle for crypto’s future.

The maxis say they are trying to steer crypto back to some of its original ideals at a pivotal moment, as new regulatory scrutiny and mounting consumer distrust pose an existential threat to the industry.

They also see an opportunity to profit from the downturn. As Celsius imploded in June, Mr Klippsten trumpeted a promotion giving its former customers a membership to his financial services firm, Swan Bitcoin, which provides financial planning for Bitcoin investors.

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 Mr 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.”