Looking Back: One Year of Funding Bitcoin Development

OKCoin Bitcoin Development retrospective Bitcoin Core development funding

Looking Back: One Year of Funding Bitcoin Development

A retrospective of our initiative to support independent Bitcoin Core developers; our learnings and the future of Bitcoin funding

It’s been just over a year since we launched our Open-Source Developer Grant program, an initiative created to support development of the Bitcoin network. Our Open-Source Developer Grant program is in recognition of the important work that needs to be done in order for the Bitcoin network to grow. It also reflects the need for development to remain independent; organization-driven bias may only support development of certain aspects of network growth. 

The crypto ecosystem is scaling at a rapid pace. A wave of institutional money is bringing many new investors into bitcoin, which presents the bitcoin network with an exciting future but also an enormous challenge. Bitcoin underpins the entire crypto industry and ecosystem; its rails support the majority of crypto transactions, while the market cap and trading volume of BTC largely determines industry activity. It’s critical that this network be well developed and well supported. 

Bitcoin has experienced exciting strides over the past several years as application development and adoption have increased significantly. But today, as the industry expands, the Bitcoin ecosystem feels under appreciated, which is something we are awakening to. Developers bear much of the weight in sustaining and securing this growing network, and they carry this burden while upholding the decentralized nature of open-source development. Use of Bitcoin far outweighs efforts from contributors, who are still small in number. Scaling Bitcoin means we need more contributors and more dedicated funding that allows valuable developers to focus their attention fully on the issues that the network faces.

Supporting Bitcoin development, a year in review

Over the course of the year, we have provided four Open-Source Developer Grants and extended one of our recipients a second grant. Our recipients include Fabian Jahr, BTCPay Server, Amiti Uttarwar, and Marco Falke. Collectively, our grants have totaled over US $500,000, supporting these developers’ meaningful contributions to Bitcoin Core and the Bitcoin ecosystem. 

Each of our grant recipients have identified concerns within the protocol, and have begun implementing innovative solutions that benefit Bitcoin’s global user base: 

  • Fabian Jahr recognized limitations of the UTXO set, and focused on supporting and securing the disinflationary design of the Bitcoin network. His recent project, Coinstats, focuses on examining the supply of Bitcoin and auditing for errors within the supply, like coins that may be unaccounted for. 
  • BTCPay Server, a group dedicated to making Bitcoin available to anybody, has developed a self-hosted, open-source payment processor that makes it easy for merchants to offer Bitcoin and crypto-purchasing options. Recently, the BTCPay team launched a Shopify integration, significantly broadening opportunities for crypto adoption within e-commerce. 
  • Amiti Uttarwar’s contributions have improved the network and continue to strengthen the cryptocurrency. Specifically, Amiti’s work on the peer-to-peer (P2P) layer has improved the trust model by identifying how nodes were revealing sensitive information. She has also increased test coverage for the P2P layer to ensure a robust codebase. 
  • Marco Falke, our most recent grant recipient, is a Bitcoin maintainer and has been the most active contributor to the Bitcoin Core code base since 2017. He is presently focused on the improvement of Bitcoin Core’s test infrastructure, which ensures the reliability and security of the decentralized network. 

What we’ve learned over the course of the year

As we have become closer to the Bitcoin community through our funding opportunities, four key learnings have emerged: 

1. Independent developer grants are critical but are not enough and are not scalable 

Providing grants to single developers supports the development of specific features that the funded developer is focused on, potentially leading to fragility. While this directs devoted attention to critical aspects of the code base, it can create single points of weakness within the Bitcoin developer ecosystem. Single developers become critical to sustaining the infrastructure, which is not sustainable for the developer, or for the community. Here, we have to ask, how does burnout affect a decentralized development ecosystem today? 

2. Bitcoin development ultimately depends on passion 

While we’ve seen a few more organizations announce that they will be funding Bitcoin Core development, the supply of funding does not meet the demand. It is still in very limited supply in contrast to the needs of dedicated developers. Because there is no centralized funding model, participants have to be passion driven — there is no guaranteed pay. This model presents a filter for contributors that only the truly passionate are worthy, which may raise the barrier, justifiably, within the community. 

This reliance on passion is not necessarily a challenge or problem per se. But it does feel like a source of inequity. Passion should be rewarded and nurtured but in the current form, is demanded with no alternative. How can we provide access and create opportunities for people to find financially viable ways to contribute to Bitcoin?

3. Decentralized and open-source development is challenging but rewarding 

Decentralization extends to how developers work. Because there is no central point of authority for decision making, work moves forward only after it has been reviewed, tested, and accepted by peers. Amiti does a good job of visualizing these different “consensus dances.” This also means that individual developers tend to choose what to devote their time and energy towards. From an outsider’s perspective, it almost looks like progress is all over the place.  But through the decentralized decision-making process, important PRs continue to get merged. And with each release, the developers make critical improvements to the network’s security and scalability.  As the ecosystem grows, can we protect decentralized decision making from the pressure to scale?

4. The organizational landscape of Bitcoin Core development is still young

The realizations in points two and three manifest in an unanticipated organizational logistical challenge. When funding is insufficient, but passion and decentralization are the driving forces, diversifying how people contribute is difficult. 

In industries that are more organizationally mature, we see a natural balance between the various forms of work; full-time, part-time, contracting, freelance, etc. This balance has not yet been achieved within Bitcoin Core’s decentralized development ecosystem as the work is not financially motivated and is largely voluntary, meaning that it does not follow a linear productivity-based compensation model. This leaves few methods for organizations to provide financial support. 

In the last year, we have found it easier to fund full-time developers who are dedicated to Bitcoin’s speed and security. But we are very cognizant of maintaining the autonomy and independence of the developers we support so that they determine where their time and attention are focused. As part of this effort to support decentralization, we’ve been cautious about funding project-based work at the protocol layer that might normally lend itself to contracting or freelance work. Additionally, the immaturity of a pricing or salary model for Bitcoin Core work makes it challenging to support this kind of part-time work.

This organizational challenge is of course, just a symptom of the situation – it will change as funding increases and matures and exchanges like ourselves settle into our roles within the ecosystem. Nonetheless, we’re left wondering how we can expand our support beyond developer grants? 

That being said, in 2020 we saw a number of new participants in the Bitcoin development funding space, from exchanges like OKCoin to the Human Rights Foundation and Brink. It does seem like we’re about to hit a growth spurt, and we’ll take these four learnings with us into our second year. 

Looking forward 

As we reflect on how Bitcoin developer grants have benefited the ecosystem and industry, we look at what matters most moving forward. Supporting developers in their work and providing funded opportunities to contribute to Bitcoin are key to the future of open-source development.

“I am especially looking forward to all the innovation that can develop out of Schnorr and Taproot. Among the many exciting developments of the last months, it has the biggest potential to take bitcoin onto new levels once it has activated,” said Bitcoin Core developer Fabian Jahr. “It can spark a whole new world of projects and research by itself and it will be a big topic for many existing projects for a long time.”

Pavlenex, contributor at BTCPay Server, said, “we’re looking forward to continuing to extend BTCPay Server as the modular Bitcoin payment platform allowing both newcomers or experienced developers to tailor the software to their own needs with our new plugin system and API. We’re happy with what we achieved this year thanks to our community and the supporters, and we’re excited for what’s coming in 2021.”

Bitcoin is becoming more widely accepted as the mainstream financial industry looks to bitcoin as a hedge against inflation. This is bringing more attention to the currency, and more money to the development ecosystem. Multiple organizations who rely on Bitcoin’s payment rails have publicly announced their plans for developer funding, a great step forward for the development community. 

These are our resolutions for the next year:

  1. We will continue to contribute financially to Bitcoin development. 
  2. We will continue to partner with peer exchanges and institutions looking to support Bitcoin development.
  3. We will explore new funding models and opportunities to bring both direct and scalable support.
  4. We will continue to amplify the work, passion, and achievements of developers.

This means that we will continue providing more individual open source grants in the new year, in addition to continuing the support of our existing grant recipients. In addition, we want to focus part of our funding on achieving small scale growth of active contributors. We’re not quite sure what this looks like yet, but we are in the midst of pressure testing ideas and working with different partners in the space to make this a reality.

We’re very pleased to have been able to support our grant recipients whose work has impacted Bitcoin significantly. These developers have provided the network with critical security and scalability updates. 

We need diversity in funding models and frameworks. Bitcoin is exceptional, but it doesn’t mean that the way the ecosystem is supported needs to be unique. If Bitcoin Core development is to be a sustainable career, we need easier and clearer ways to onboard, more hands on mentorship and personal guidance, and better aligned incentives. We are committed to further focusing our efforts here to be a better partner to Bitcoin developers currently building our vibrant ecosystem.

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