Bitcoin Grant Marks Another Step Forward But Questions On Industry Funding Remain

Two major global crypto exchanges announced a joint $150,000 grant toward bitcoin development today in what represents another step forward for the industry. The equally matched grants of OKCoin and BitMEX are one of the first major private funding partnerships directly supporting bitcoin. The grant will be given in twelve monthly installments to Amiti Uttarwar, a software engineer who has a history in the bitcoin development space and is based on the open-source grant template.

Previously a software engineer at Coinbase, Amiti took time off to attend the prestigious and highly-regarded Chaincode Residency. The residency is run by Chaincode Labs, one of the premier research and development firms in crypto and has been a training ground for some of the top talent in the bitcoin development space. Fellow 2019 Chaincode Residency alumnus Fabian Jahr was the recipient of a similar previous grant by OKCoin. Amiti’s reputation for gritty technical achievement followed her post-residency to Xapo, where she worked as a bitcoin developer full-time.

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Elaine Song, who manages the grant program for OKCoin, spoke to the need for private firms that have benefited so greatly from the efforts of individual contributors to give back and create places where that investment in development is more sustainable. Stressing that it was “in everyone’s best interest for the ecosystem to grow”, Song said the program was open ended and would continue for the foreseeable future with the intention of making more grants.

Although there is no specific criteria for who gets selected for the grants, Song noted “We are moved by and look for people’s passion in the space. With decentralization and open source development you have to really believe in what you’re doing. And that’s what is really going to keep the ecosystem alive, that passion.” The grant comes with no strings attached, and there is no requirement for the work to benefit either OKCoin or BitMEX specifically. Amiti will be given essentially unilateral discretion in choosing her work.

Despite the passionate buy-in from OKCoin’s Song, the tension between for-profit firms like the exchanges and the independent, sometimes pseudonymous, cypherpunk developers doing the work from which they often benefit has been stark at times over the years. Hundreds of billions of dollars of value are transferred and stored on the bitcoin blockchain, yet there are nary more than a handful of dedicated (read: funded) bitcoin development shops in existence today. At the same time, major exchanges are doing hundreds of millions to billions of dollars in turnover a day, benefiting from demand secured by the privacy and decentralization work largely done elsewhere.

While initiatives like BitMEX and OKCoin’s should be lauded, it is important to remember how much work there is left to be done to foster a truly healthy, robust, and durable ecosystem. Other recent announcements such as the Human Rights Foundation’s Bitcoin Development Fund are easy to applaud, and don’t present any immediate conflicts of interest either inherent or implied. Although fantastic, and welcome, relying solely or mostly on a few limited sources of private funding from industry players could create a bottleneck to bitcoin development over time. For something with as many diverse and varied stakeholders as bitcoin has, the inability to solve the funding gap is becoming an increasingly glaring problem. So BitMEX and OKCoin should be applauded for stepping in, especially as it is BitMEX themselves that are even tracking this data in the first place. That’s putting your money where your mouth is. But this should be viewed as a spark to ignite other stakeholders and firms to pay attention and contribute, rather than a sign of lasting triumph.

To that end, BitMEX published a timely recent piece of research titled “Who Funds Bitcoin Development” to which they conclude:

“Although the funding situation could improve, in our view the data indicates that the ecosystem is in a reasonably strong situation with respect to developer funding, based on metrics such as the distribution of funders and transparency. Of course, progress can also be made in the distribution of funding and Chaincode Labs is now the clear leader in terms of developer funding for Bitcoin Core. On the other hand, funding is far more distributed than it has been in the past, certainly compared to the 2012 to 2014 period when there was only one significant funder, The Bitcoin Foundation.”

While true that funding is more distributed than in the past, comparing resources today to those available in 2012 to 2014 misses the mark. Bitcoin was still an experimental technology at that point and, argumentatively, had not yet been proven fully viable. Today, the importance of maintaining and securing a healthy long-term ecosystem for bitcoin matters exponentially more, yet the capital dedicated to supporting that need has not even remotely kept up with the network value captured since.

As the BitMEX report notes, grant programs like these are a crucial first step as “This brings much needed diversity to the group of donors, potentially improving the level of sustainability, in particular these exchanges are a new type of entity and are funding developers out of retained earnings, rather than using donations or venture capital funds.” As of now though funding remains a patchwork, weighing on growth in the space. Even with more private involvement, it will be some time before the industry reaches Song’s goal of “trying to make crypto developer a sustainable career path”.

For her part, Amiti seems thrilled to be here. After completing the Chaincode Residency, she had planned on going back to Coinbase. Instead, she found her way to Xapo, a Hong Kong-based crypto wallet and banking company founded by serial entrepreneur Wences Casares that has been backed by some of the largest investors in the space. While Xapo is known for its bitcoin debit card and crypto-friendly payments app, it’s also known for being an early mover in the space and giving back, most recently by sponsoring Amiti to do further development on bitcoin post her residency.

She will be sponsored for the next year now by OKCoin and BitMEX and is excited to continue the work. There’s no doubt that at least part of that work will be continuing to be a beachhead for further inclusiveness particularly of women and minority voices in the space. Although it is her unadulterated passion, drive, and technical competence that has spurred her to this point, it is notable she is one of only a handful of women developers in the space.

There have also been criticisms of the tone and demeanor of some of those in the industry, with so-called ‘bitcoin maximalism’ having a negative association at times. It takes a rugged, rag-tag bunch of personalities however to get basically anything of interest done in the world these days, and Amiti downplays any division.

Although she notes that “when I was making my first contributions, I was realizing that there were no women here. As I looked at the contributors [list], I was among the first. I found that kind of ridiculous. We’re trying to build a new financial system that’s global, how can we build a representative system if we're missing 50% of the people.” She is also quick to speak to the progress being made. Amiti goes on to talk about the positive experiences she’s had so far and looks to build on over the next year.

“I've found my interactions with people in the bitcoin community to be very warm and welcoming. Definitely Twitter can portray it one way from time to time. But in my one-on-one communications the vast, vast majority have been welcoming. I'm grateful that I see my role in the bitcoin culture is to show people that this is a welcoming and wonderful place to be challenged and supported as opposed to trying to change the culture.”

“There are only 30-40 people who contribute to Bitcoin Core full time. Contrast this with the fact that as an industry, we are trying to build a fully functional global currency. We have a long way to go,” said Amiti. “With this grant, I plan to continue my efforts to make Bitcoin core more reliable, private, and understandable.

Asked why working on bitcoin fits her, she says “on a personal level I’m just, I’m a huge nerd. I find it fun, it’s intellectual playspace. It’s deeply intricate. I’ve met some incredible, passionate people willing to share their time and mentor me.” As to what she sees herself doing in five years? There was no hesitation.

“I can't imagine working on anything but Bitcoin.”

Disclaimer: Rory is an active trader and investor holding positions in several cryptocurrencies as well as equities and other private investments at any point.