ORIGINAL SPEECH TITLE: Why Open Source Development Matters
SPEAKERS: Mike Schmidt, Christian Keroles, Aaron Daniel & Hong Kim
CONFERENCE: Bitcoin 2024
Table of Contents
Introduction
Hong Kim:
Thank you everyone for coming. We will be talking about the importance of funding open source development. I am the CTO and co-founder of Bitwise, one of the ETF providers that launched earlier in January (2024), and in that context I’ve gotten to know Mike and CK and the organizations that fund Bitcoin development. I wanted to bring this topic to the audience.
Could all of you quickly introduce yourselves?
Mike Schmidt:
I’m Mike Schmidt, the Executive Director at Brink, we’re a 501c3 in the US that takes in donations from the community and routes those to the Bitcoin core developers working on the software underpinning the Bitcoin Network.
CK:
I’m CK, the Director of Financial Freedom at the Human Rights Foundation. We also support open source development as well as Bitcoin education and even translating Bitcoin resources into different languages to make it as accessible as possible for everyone across the globe.
Aaron Daniel:
I’m Aaron Daniel, the co-Director of the Open Source Justice Foundation, we’re also a 501c3. We’re the newest of the group up here. Our mission is to spread access to justice globally with free open-source software, so we give grants to developers working on open protocols like Bitcoin, Nostr, and Fedimint. Especially those building dispute resolution tools.
The Importance of Open-Source Funding
Hong Kim:
I think maybe a good place to start is around the question of why donations or other kinds of open-source funding are important or necessary? There’s often conversations on Twitter or Nostr these days stating that Bitcoin is supposed to be done, complete. Is it a liability for devs to be tinkering with Bitcoin? Could you make an argument for why we, as a community, should continue to fund open source development of Bitcoin?
Mike Schmidt:
From the Bitcoin software side of things, you have two things; you have a digital asset that is entirely based on code, and number two, all code requires some form of maintenance. Even if we’re not talking about something like a change to the Bitcoin protocol, the fact is that there is Bitcoin software that has codified the Bitcoin protocol in it and we want that to continue to function into the future.
We need people working on this software, and there’s no foundation or governing entity that is funding it, then it really is up to all of us to decide whether we either donate our time as a developer or somebody who can contribute, or donate money to support somebody who can contribute. That may be a highly philosophical kind of approach, but I think it makes sense.
Lately, within the Bitcoin project there’s a more tangible reason why this is valuable.
Recently, the Bitcoin core developers released a bunch of historical vulnerabilities that occurred in the code. If you look at these 10 vulnerabilities that are many years old now, what you’ll see is that the people that discovered these vulnerabilities in the code at the time were actually being funded by certain organizations to do that work. If you extrapolate that into the future, we’ll be glad that we’re funding people because there may be other bugs now that we want these people to be finding and fixing.
CK:
Mike’s organization really focuses on working on Bitcoin Core software, which is the base layer blockchain, and there’s a lot of ideas around ossification in Bitcoin, this idea of not changing Bitcoin. I think personally there are certain elements of Bitcoin that are already ossified, things like the 21 million hard cap and SHA 256 as a hashing algorithm. On the other hand, we’re still very early, and if you talk to any of these developers that are intimately aware of the code, they will be the first to tell you that this code is not good enough to continue to scale to the whole globe. They’ll tell you that this technology needs to continue to get better and it needs to continue to get more well organized and get patched up.
Even beyond the core level of the Bitcoin blockchain, all of us know that the Bitcoin wallets aren’t there yet. All of us know that the levels above Bitcoin, like the applications, are not there yet. A lot of that technology is also open source and very experimental. The technology needs people who have the time and bandwidth to explore how to push the entire ecosystem forward.
Human Rights Foundation (HRF) is mostly focused on that application layer, on the layer in which people are really engaging and interacting with Bitcoin. However, the entire stack needs to continue to get hardened and continue to get worked on. I think one of the biggest reasons is because we’re just still so darn early in this evolution, when you think of Bitcoin as being a 15 year old project. We need it to be a multi-hundred year project. How can we, at this early stage, dictate what it will be and what the software should look like in the future?
Aaron Daniel:
Bitcoin is core public infrastructure, and as such, it needs to be open-source. We saw what happened recently with CrowdStrike—proprietary software that became core public infrastructure but wasn’t open. When it failed, it shut down all our airports.
Switzerland has recognized that core public infrastructure must be open-source; they recently passed a law mandating that all public software be open-sourced. However, Bitcoin is the purest form of public infrastructure—no federal funding, no government creation—it was built by the people. Because of that, it’s up to the people to fund it. That’s why community engagement and funding are critical—to find and fix bugs and ensure long-term maintenance for generations to come.
The Need for Public Support in Bitcoin’s Ongoing Development
Hong Kim:
That’s a great point. One thing people often miss when discussing open-source funding is that software isn’t static. Even Bitcoin Core, the node that you run, needs to keep up with operating systems like Linux, Mac, and Windows, which update regularly. The same applies to compilers and programming languages and all of those incompatibilities need to be resolved and maintained. Sometimes it’s intuitive to developers, but it’s not intuitive to everyone that — everything evolves. Bitcoin did not have some ICO or pre-mine where you funded a lot of money into an organization, it’s necessarily public work, it’s necessarily open source, and didn’t have any sort of fundraising entity, and Bitcoin must adapt accordingly and it necessitates us to fund it ourselves.
CK:
Unlike other projects, Bitcoin didn’t have an ICO or pre-mine that funded an organization to maintain it. It exists as a public good, meaning it requires public support. Thankfully, we’re now seeing companies that rely on Bitcoin investing in its development. This is an incredibly healthy and bullish sign for the ecosystem.
Ensuring Decentralized Funding for Bitcoin Development
Hong Kim:
When we were launching the Bitwise Bitcoin ETF, we asked ourselves: how can we ensure that both the assets and investors of this product contribute to maintaining the network they depend on?
It’s about protecting an investment. It’s not a donation—it’s self-investment, much like the U.S. government’s security budget for national defense. Bitcoiners should think of their funding contributions in the same way. There’s a necessary budget to maintain the security and development of the network.
That brings up an important question—how do we ensure that funding sources don’t introduce bias, influence, or capture Bitcoin development? This is a concern often raised by figures like Michael Saylor, who worry that developers could be influenced by centralized funding sources. For instance, Jack Dorsey is frequently mentioned as a major funder of Bitcoin development. Some argue that a single large contributor could lead to centralization of influence. How do we prevent that?
Mike Schmidt:
At the end of the day, everything Bitcoin is open-source. We should always remain sceptical Bitcoiners regardless of what anybody says because you can look at the code, the proposed changes, and review the code ourselves. If you can’t do that, you can hire someone to audit it. Transparency is our baseline defense; it’s the floor. Beyond that, decentralization exists in funding sources. Today, at least a dozen organizations are funding Bitcoin Core development, and each has its own governance structures. At Brink, for example, our board oversees substantial donations, and a separate grant committee allocates those funds based on developer proposals. Even if a donor wanted to conditionally fund a project, there’s no way their demands could override our governance process. For example, if a donor from an exchange comes to us and says we’re going to conditionally donate to you but we want you to do XYZ, first of all that luckily hasn’t happened in the ecosystem, but if it did happen, if it wasn’t work that we were already going to do, we would not change what we are going to do based on that donor. So our board approves substantial donations that come in, we have a separate grant committee that then allocates those funds to different developers based on certain proposals that they put together and work they are already doing. So there’s no way that that would be able to trickle down, that the demand from a donor would get past the board, past myself, past the grant committee, then get to a developer, including independent board members and independent grant committee members and developers would not voice some sort of a concern. There’s the decentralization component and then there’s the governance of the organizations component and then the developers peer-review at the bottom of it.
CK:
Brink’s structure is a great model. At HRF, our grants are also no-strings-attached to us. As we give out those grants, those are also no-strings attached grants. Applicants submit proposals, and if they’re strong, we provide funding with no specific demands. We trust developers to do what they propose, and we reassess during the next grant cycle. This ensures that Bitcoin’s development isn’t dictated by any single entity. Also for HRF specifically, we’re not working at the Bitcoin core level so a lot of the emphasis is on the application level and people don’t like what applications are build they’re not going to use them. There really isn’t a ton of danger there but obviously for our reputation and process we always want things to be successful so we want to fund projects that have product market fit and are actually going to be helpful. That is part of our reflection process on the backend of delivering these grants. I think it’s really important because there’s lots of these organizations now that are trying to fund open source and one of the key principles is this no-strings attached receipt of the money and distribution of the money.
Mike Schmidt:
Some people still suspect hidden motives in Bitcoin funding and don’t believe in the no-strings attached ethos and there must be some hidden motive by donors. What I would say to that is you would be surprised how many individuals and organizations genuinely want to see Bitcoin succeed. They see funding as an investment in Bitcoin’s future rather than a donation and are willing to make them without any strings attached.
Aaron Daniel:
When it comes to centralization, we need to step back and have some perspective and see where we are in the progression of Bitcoin. Bitcoin’s funding landscape is progressing toward decentralization. Five years ago, things looked very different. Now, we have multiple organizations—OpenSats, HRF, Brink—distributing funds. This diversification will only continue to grow and progress towards decentralization.
At the Open Source Justice Foundation, we see two parallel paths for decentralization:
- Creating more nonprofits that act as funding nodes for various projects. We’re developing a Foundation Formation Kit to help open-source projects establish themselves with minimal overhead. This will create a Cambrian explosion of nonprofits in this space.
- Supporting the cypherpunk ethos by enabling peer-to-peer funding through platforms like Nostr and Fedimint. This will facilitate getting peer-to-peer payments directly from the supporters to the builders. We’re also backing a bounty board, FundSolver.com, where anyone can fund the development of specific Bitcoin features.
We need more eyes and support on these initiatives, but it’s an exciting direction and we’ve just got to have the long-term view as Bitcoiners and we’re in this for generations.
No-Strings-Attached Funding for Bitcoin Development
Hong Kim:
That’s an important historical perspective. In Bitcoin’s early days, development was entirely voluntary with people donating their time. Then, exchanges and miners started funding some developers. More recently, organizations like Brink, HRF and OpenSats formed to delegate the task and have the desire to provide evolution into this structured funding. This evolution has made it massively helpful and allowed ETF providers like Bitwise to donate without concerns of undue influence. Our contributions go to reputable organizations that distribute funds in a neutral way, maintaining Bitcoin’s integrity without us having to establish a committee and review and also having to deal with the perception that we are unduly influencing the development in some way when we really don’t want to. With these organizations, we have two degrees of no strings attached; were making a no-strings attached donation to Brink and HRF, and OpenSats, and you guys do that as well. The multitude and the layered no-strings attached makes sure that Bitcoin aligns so that even financial products like ETFs can donate even 10% of profits and credibly claim to the broader community of concerned Bitcoiners that we’re not really dictating neither the distribution or what the developers actually work on because we don’t even have a line of communication with them. Another direction I’d like to dig a little deeper on is if there are developers that actually want to obtain a grant from these funding organizations, how do they actually go about it? Can you describe that process and what it looks like for HRF?
CK:
For developers wondering how to secure a grant, the first step is to apply. At HRF, we encourage open-source developers to make their work public. Apply at hrf.org/bdfapply and engage with key people in the ecosystem. Many developers want to be “discovered,” but in reality, you need to articulate your ideas and reach out. Having an open dialogue and applying it’s going to help your project be successful and for our organizations to be able to get you funds.
Mike Schmidt:
Even if you’re not a developer or wealthy donor, it may be confusing how you can contribute. But, there are other ways to contribute. Testing projects, writing documentation, and designing interfaces all help the ecosystem. There are now foundations dedicated to routing support for these non-technical but crucial contributions.
Aaron Daniel:
At the Open Source Justice Foundation, we welcome grant applications and donations at opensourcejustice.org. We’re honored to be part of this effort, and we encourage everyone to get involved in securing Bitcoin’s future.
Hong Kim:
Thank you all for this insightful discussion!
Watch the original video: Click here
Disclaimer: Transcripts provided on bitlyrics.co represents solely the opinion of the speaker and is not by any means financial/legal advice or an opinion of the website. The content has been transcribed with maximum accuracy. Repetitions and fill words have been amended in order to enhance the reading experience. The full text may not be confirmed by the speaker. Please, refer back to the above-provided source of content for more certainty. If you are a speaker and wish to confirm/amend your speech please contact us.