Bitcoin Foundation Spring Follies

The Bitcoin Foundation (BF) is experiencing significant turmoil this year. (E.g., see recent reports from Pete Rizzo at Coindesk. Here. Here. Here.)

The board elections were comically inept, though the results appear to correctly reflect the divergent interests of “the” Bitcoin community. At least one of the candidates campaigned on the platform of dissolving the foundation. And after the election, deep dissention is quite visible, along with questions about finances and transparency. Another leadership shakeup is accompanied by another 180 degree “pivot”, along with concerns about the financial solvency of the foundation.

At base, the BF is suffering from multiple missions. The two most important functions of the BF have been to host technical development (in an open source style) and to promote Bitcoin (in the fashion of a trade association). From the beginning these missions have been tangled with each other: the Nakamoto document itself is a messy combination of technology and policy.

Much of the conflict today arises because the BF, in its role as de facto representative of “the whole community”, as sought to engage with media, conventional finance, and, controversially, governments. Unfortunately, the “whole community” has diverse interests, some of which are mutually conflicting.

The noisiest arguments come from the segment that wants Bitcoin to be unregulated and outside conventional financial systems. For people who want to create off-shore “dark net” systems, even “educating” governments is unacceptable and illegitimate. Hence the desire to shut down the foundation, which is implicitly collaborating with the powers that be.

The conflict is compounded by the peculiar formal structure of the foundation, in which people and corporations purchase their voting rights, while the hoi polio can natter as much as they want in the discussion boards. Who is in charge? What interests are represented? How are decisions made? Who is paying? Where does the money come from and go to?

No one knows.

This is ironic, considering that one of the virtues of Bitcoin is supposed to be “transparency”.

The dissent is not only about the lobbying and propaganda efforts (which obviously have difficulty representing the incoherent foam of “the community”), but even the supposedly “technical” realm of the software itself, where the software is supposed to be “open source” and decisions made by consensus. However, many technical choices have profound policy implications, and whatever choice is made will displease one or another interest group. Splitting off the “core development” will not in any way solve this problem for the developers, though it may end up killing the rump BF.

Some are advocating moving the BF to a less “centralized”, Distributed Autonomous Organization. Given the its advocacy for such DAOs, this move would be “eating your own dog food”, one would think. I can’t see that it will solve the underlying conflicts, though it might be a very interesting test case for how a DAO resolves conflicts. (I would expect a DAO to be a disaster in this situation, but who knows?)

I don’t have any special knowledge about these heated arguments and much of it makes no sense to me. But one thing seems very clear to me: “Bitcoin” does not mean the same thing to everyone, not even to everyone who is totally “committed” to it.

In this, cryptocurrency is a sort of technological Rorschach Ink Blot: an ambiguous sociotechnical system upon which each of us can project our own dreams and fears. Unfortunately, the BF is discovering that it is not possible for real world entities to be everything to everyone.

More on my “Cryptocurrency as Rorschach” thesis coming in the future. Stay tuned.


Cryptocurrency Thursday

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