Who Funds Bitcoin Core Development? How the Industry Supports Bitcoin's 'Reference Client'

Funding Bitcoin development seems to have always been problematic.

While the Bitcoin industry collectively has raised more than a billion dollars worth of investment over the past years, development of the Free and Open Source Software the industry largely relies on has always had trouble gathering sufficient funds and manpower for development. Several arrangements to raise funds have been tried over the years - but with varying degrees of success and longevity.

Bitcoin Core , considered by many to be Bitcoin's "reference client," therefore, announced a " Sponsorship Programme " earlier this week. As the latest effort to raise funds, this program is intended to be an easy access-point for companies and other Bitcoin industry players to support Bitcoin Core developers and projects. Companies that decide to take part in the sponsorship program will join a, so-far, short list of entities that do already help fund Bitcoin Core development.

These are the main sources of funding as it currently stands:

MIT Media Lab's Digital Currency Initiative

Shortly after the effective bankruptcy of the Bitcoin Foundation a year ago, the three Bitcoin Core developers funded by this foundation - lead maintainer Wladimir van der Laan, former lead Gavin Andresen and Cory Fields - were hired by the then newly established MIT Media Lab's Digital Currency Initiative .

The MIT Media Lab is an interdisciplinary research laboratory headed by tech-veteran Joi Ito , while its Digital Currency Initiative is headed by former White House adviser Brian Forde. According to Forde, the Digital Currency Initiative intends to provide a neutral academic working environment for the developers.

All three developers on Digital Currency Initiative's payroll are said to enjoy almost complete freedom; they are even allowed to work on alternative Bitcoin implementations if they wish. (Andresen works for no single implementation in particular , and mostly switched his efforts to Bitcoin XT and Bitcoin Classic over the past year.)

Neither MIT nor the Media Lab or its Digital Currency Initiative put up the money to fund the developers themselves, however. Instead, the Digital Currency Initiative relies on "unrestricted gifts" from sponsors, including mining specialists BitFury and Bitmain, wallet service Circle, API-provider Chain, the Nasdaq stock exchange, venture capitalist Fred Wilson, LinkedIn co-founder Reid Hoffman and others.


Blockstream was founded in 2014 by Bitcoin Core developers Gregory Maxwell, Dr. Pieter Wuille, Matt Corallo, Jorge Timón and Mark Friedenbach, as well as several non-Bitcoin Core developers including hashcash inventor Dr. Adam Back and venture capitalist Austin Hill. Since its launch, the Montreal-headquartered company also hired developers Gregory Sanders, Patrick Strateman and Glenn Willen to work on Bitcoin Core. Another Bitcoin Core developer, Luke Dashjr, works for Blockstream as a contractor.

Blockstream's main mission is the realization of sidechain technology, which the company has done with Elements and Liquid so far.

Blockstream developers typically work toward this goal, which they say generally aligns with their own long-term vision for Bitcoin. But developers on Blockstream's payroll - who typically co-own the company as well - are also encouraged to work on Bitcoin Core development in a more general sense.

According to Blockstream president Back, this is because "the company has an interest to see Bitcoin maintained, developed and scale." Some of Blockstream's developers, like Wuille, work on Bitcoin Core-specific development almost exclusively.

As part of their contracts, all Blockstream developers also have time-locked bitcoins to ensure they are incentivized to work toward Bitcoin's success. These contracts also include so-called "morality clauses": If Blockstream asks any of them to work against what they consider to be in Bitcoin's best interest, they can refuse to do so while still guaranteed a salary.

Since its conception, Blockstream has grown to be one of the top-funded Bitcoin companies in the space, with total investments adding up to $76 million from various (institutional) investors including Horizons Ventures, AXA Strategic Ventures, Digital Garage and, again, LinkedIn co-founder Reid Hoffman.

Chaincode Labs Inc.

Chaincode Labs Inc. is a New York-based cryptocurrency research and development company founded by Alex Morcos and Suhas Daftuar in 2014. While the two founders were not Bitcoin Core developers at that time, they set-out to research Bitcoin by getting involved with development, and have done so ever since.

The company is also self-funded by Morcos and Daftuar, meaning they essentially pay for their own development for Bitcoin Core through their company. This means that Morcos and Daftuar enjoy complete freedom to work on whichever project they like, and however they like.


Ciphrex was founded in 2014 by Bitcoin Core developer Eric Lombrozo and his father Enrique Lombrozo. The San Diego-based software company is best known for mSIGNA, an enterprise-level secure Bitcoin wallet, and CoinSocket, an application development platform.

According to Lombrozo, he contributes to Bitcoin Core because he believes in the future of this technology, and considers working with the world's top experts in the field a once-in-a-lifetime opportunity. Plus: "Someone needs to do it."

Since Lombrozo is both the Ciphrex's CEO and a Bitcoin Core developer, he can contribute to Bitcoin's reference client in whichever way he believes is most useful.

Ciphrex raised $500,000 through a Series A stock offering last year.


Founded in 2011, Shanghai-based Bitcoin exchange, mining pool and wallet service BTCC is one of the oldest and largest Bitcoin companies in the world.

To support the Bitcoin ecosystem, BTCC recently hired Peter Todd to work on Bitcoin Core for a minimum of 14 hours a month. Todd is free to work on whichever Bitcoin Core-related projects he wants, "no strings attached," on the one condition that he provides a weekly report on his development efforts. The arrangement will last for at least six months.

BTCC raised $5 million in a Series A led by institutional investors Lightspeed China Partners and Lightspeed Venture Partners in 2013.


The entities listed above are the most clear examples of companies and other Bitcoin industry players funding Bitcoin development. But it should be noted that this list is not conclusive, especially because there is significant gray area.

Some companies (such as Bitware Co. and BitPay) fund development of alternative Bitcoin implementations, of which the code can potentially be forked and included in Bitcoin Core. Other companies (including Lightning, Blockchain and, again, Blockstream) fund development of lightning networks, which is technically not Bitcoin Core, but is closely intertwined as it works toward the same vision and mission for Bitcoin.

Developers working for yet other companies (including 21 Inc. and LedgerX) provide somewhat informal support through documentation or other help. And, as mentioned, this list is not conclusive.

And, of course, the "Sponsorship Programme" might add new names to the list soon.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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