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How to ensure income for Crypto-currency infrastructure development

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Avatar for TomZ
Written by   337
11 months ago (Last updated: 9 months ago)

A hot topic for some time now is the funding of infrastructure development in Bitcoin Cash. Several methods have been suggested and tried, with varying degrees of success.

A translation is available in Bengali.

When it comes to the longer term health of the coin I would like to highlight an often overlooked method of funding the ongoing infrastructure development. One that hides in the background and needs a light shone on it every now and then.

The economics of Open Source Software.

The creation of quality software for something as big as a crypto-currency that scales to world-size is very time consuming and really not an easy task. It is obvious that people won't put their time in out of the kindness of their hearts. There has to be something they get back for the weeks and months of working on this.

Yet, practically all people active in Bitcoin Cash have started doing so without anyone paying them. They joined first, putting in lots of hours for free. How do we explain this?

It turns out that there is a list of reasons, of incentives, that help people work on open source software, and Bitcoin Cash specifically. Here is what I know:

  • Open source problem solving is very rewarding to those people.

  • Bitcoin Cash ownership is like stock and working on the coin increases the share-price.

  • Holders want to fund devs.

  • Companies collaborate on shared problems to share costs.

I'll go deeper into these points below. The red line through this article is to establish that developer funding is happening today and furthermore that developer funding of open source software has evolved over decades with the culmination of Bitcoin Cash actually turning this into cold hard cash.

Building something is its own reward

The majority of open source developers that do this in their spare time do this because they like it. It is building something that lasts. Something to be proud of. I think most people can understand that. Working together on a project so big that you could not do it alone also gives you a feeling that you belong to something bigger. Especially if that bigger thing is likely to make a big impact on the world. "Making a change" is a valuable thing in the part of the world where I live.

As it turns out, it is very rewarding to work on a project with smart people, and it is the reason why people join in the first place. This is how the vast majority of Bitcoin Cash developers joined at the beginning. Nobody hired them, they selected themselves to join the efforts.
This, however, depends on devs having financial stability. More on that below.

Developing money infrastructure is about money

In many ways joining Bitcoin Cash is like joining a startup. They often don't follow 9-5 office hours or get a (big) monthly paycheck. Instead the pay is in stock or options and the harder you work to increase the value, the more valuable your stock will be.

There are a lot of parallels between BCH with startups in that most of the active Bitcoin Cash developers joined without anyone hiring them. It is well known that most of them indeed have savings in Bitcoin Cash and today are working on BCH to make their investment rise in value.

Developers that add utility to Bitcoin Cash literally create value. And the network effect of money means that this comes right back to them in the shape of their holdings rising in value.

Holders want to pay devs

We already concluded that developers that add utility to the Bitcoin Cash coin will effectively help holders get richer. It follows that there will be holders that want to make sure that this developer has the ability to put the time in. And to have the incentive by making the developer a holder too.

We have seen this in the past months with a series of successful flipstarters where each group of developers that adds value to Bitcoin Cash got fully funded. Since the platform was created 5 months ago these investments added up to the count of over 738,000 USD.

The benefits of Bitcoin Cash are apparent to a lot of people, those people realize that we should make it grow faster in order to stay ahead of competition. And a lot of people are willing to do this. If you can't code or advertise, you can pay those that can. Like an open market. And this is proven to happen today. Developers are indeed getting paid voluntarily because it benefits both parties.

Companies share costs

In technology companies the cost of the end product is only a very small part of the cost of operation. A historical example here is webserver. Other than Microsoft nobody sells a webserver. The webserver is a required part of many companies but it is not their product, they just use one.

The Apache webserver was the first that was made open source by a company that needed one and wanted to share the burden of developing it. Over the following years many others joined in and the software became very successful, eating real marketshare from the Microsoft one. Today the paid-for web-server is the minority.

Giving away software that people on companies' payroll wrote is beneficial to these companies because they share the maintenance cost. They lower their overall cost for infrastructure.

Companies can often be educated to see the benefit of sharing their developers time if this lowers the longer term cost of maintenance. 10 hours today to avoid 100 hours in the next year.

Putting a developer on your payroll for some time is equal to buying an off-the-shelf product for real money, but instead of paying some Microsoft to implement the feature you need you add it for a fraction of the cost. Remember, infrastructure is not your main product. It is just a burden on your bottom line.

Conclusion

Developers have historically been joining Bitcoin Cash, and Bitcoin before it, without there being a developer fund, without a promise of a paycheck.

A lot of people believe in Bitcoin Cash and they put time and money into this. Developers develop, holders pay developers, companies hire developers. And this goes towards more than developers, this also includes payments towards advertising, sponsoring meetups, etc.

There also are a lot of reasons for developers to actively continue developing and money has been a problem that we have ample opportunities to solve.

Referring back to an older article, any sort of funding that is not voluntary is not market driven and is a danger to Bitcoin Cash, the myth that we actually need a developer tax (IFP) is shown to be completely unfounded and indeed damaging.

Closing remarks

I personally have been a software developer for 30 years. I have done 20 of that in mostly open source companies or open source in my spare time, I have contributions in dozens of projects.

From this experience I want to share my personal observation that there is a big difference between people that join a project because they want to spent their time doing this vs people that do this work because they are on the payroll.

The passion and the drive to do the right thing for the project are much stronger with people voluntary doing open source. You become a group of friends as opposed to colleagues. Developers that join because the believe in the project are also much harder to turn away from the shared goals. They resist being hired by the competitor and generally create more value than payroll people.

The benefit of this is hard to overstate. The increase in usefulness of Bitcoin Cash is payment in itself. In more than one way.

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Avatar for TomZ
Written by   337
11 months ago (Last updated: 9 months ago)
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