In the busy world of bitcoin, commercial development is increasing at an incredible pace. It’s inspiring and encouraging to watch, but something is missing.
As more companies build business on top of this amazing technology, hardly any of them are giving back, or helping to develop the core technology underpinning bitcoin itself.
Right now, we’re in the second stage of bitcoin’s development. The first was the creation of the core protocol, and the technical infrastructure that runs it. Satoshi Nakamoto delivered the core principles underlying bitcoin, and then the core developers honed and refined it. As we speak, they’re rewriting large swathes of it, to make it more robust and reliable.
While they work on that, we’re seeing unprecedented levels of innovation from businesses that are basing services on the bitcoin protocol. We’re seeing everything from basic payroll and bill payment services, through to coloured coins, crowdsale platforms, and even services designed to let you sign documents directly on the block chain.
Building services like these on top of the protocol and network is crucial for the development of a healthy ecosystem. These services are what will make bitcoin a relevant and powerful part of the economy. They increase liquidity, and usability. Without them, it would be little more than an intellectual exercise.
Making a buck from the block chain
These companies may be furthering the crypto currency concept, but nothing happens for free. Cryptocurrency services companies aren’t altruists. They want to make a buck from the block chain, and so do their investors. The bitcoin community is getting richer, as business models and investment opportunities begin to mature. CoinDesk’s latest State of Bitcoin report reveals that the bitcoin market received $200m in venture capital investment in the 12 months to June this year. That compares to just $17.1m in the year before that, meaning that investment has increased 12-fold.
The number of VC-backed start-ups in the bitcoin space stood at 48 in June, up from just seven the year before. Clearly, companies and investors are waking up to the potential for this exciting technology.
Time to give back?
There’s nothing wrong with free enterprise, but what about the team of developers that continue to refine and hone that protocol? For the most part, the core developers are doing this without any help from those companies, even as they use the protocol and the block chain for their own gain. Only a couple of these developers are paid for what they do. Most of them volunteer their spare time, while maintaining other jobs.
Shouldn’t these companies, with their combined millions of dollars in funding, be getting more involved in core protocol development? If each of them gave just a few hours a week of their developers’ valuable expertise, the open source project that lies at the heart of the network’s success would be much better for it. Payments processor BitPay is one of the few that takes on this challenge, employing a core developer on its team.
The problem is that giving back to core development in this way doesn’t create direct financial value for companies, whereas piling development resources into their own applications does. It’s a variation on the tragedy of the commons: if everyone focuses on their own interests, then the community ultimately suffers.
Currently, this may not seem like much of a problem. Sure, the core developers occasionally complain, although the protocol is resilient enough to support the growing bitcoin services sector, for now. Yet, there are already concerns that the development of core bitcoin is slowing, due to a resources bottleneck.
What kind of help is needed?
We’re not necessarily talking about new features here. The developers of the core protocol have traditionally been conservative, unwilling to make too many drastic changes to the bitcoin protocol, and core members of the team tell CoinDesk that they’d be happy in some cases for commercial developments to leapfrog projects traditionally handled by the core team. So perhaps some services are best left to others, who will add them as a layer above the protocol.
Those companies that do help with bitcoin’s development must offer the right kind of help. Simply pitching in to develop a new feature and then dropping out isn’t enough, because this just creates a larger feature base for longer-term members of the development team to support. A cute, fluffy new feature isn’t just for Christmas.
What’s needed is a longer-term commitment from bitcoin services companies as a community, to help with the mundane, difficult tasks faced by the bitcoin protocol developers: software testing and maintenance of existing features. That may not be the sexiest work, and it may not be profit-generating, but it’s good for the protocol, and therefore for the community.
That’s what should happen, in an ideal world, where dirty, real-world considerations such as staffing constraints and urgent customer feature requests don’t get in the way. The question is, do the increasing number of well-funded cryptocurrency companies have the sense of responsibility to step up?
Disclaimer: CoinDesk founder Shakil Khan is an investor in BitPay.
Disclaimer: The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, CoinDesk.
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