praveen on Nostr: While funding for open source in the bitcoin ecosystem is important, too much funding ...
While funding for open source in the bitcoin ecosystem is important, too much funding from the wrong sources can actually bad.
1. It can disrupt market dynamics and incentives
When projects receive large amounts of outside funding, it can mess with the natural market signals that guide development.
Instead of being driven to work on features and improvements that users and the market demand, developers may be swayed by the priorities and judgment of the funding sources.
2. It can lead to centralized control
Significant funding often flows through centralized organizations that then choose how to allocate the money.
This gives those organizations outsized influence over the direction of the project.
In Bitcoin, this enables organizations like OpenSats, HRF and others to act as “kingmakers” in the development space.
3. No one spends other people’s money as carefully
When spending money that was simply donated rather than earned from real customers, there is less accountability and efficiency.
Like government spending, the incentives for careful capital allocation are lacking. If developers couldn’t monetize their own work directly, maybe that work isn’t as valuable as they believe.
4. It can foster an entitled “welfare” mentality
Relying on charity from others instead of finding ways to independently earn a living can create an unhealthy dynamic.
To be clear, open source funding isn’t bad per se.
Funding that comes from those who directly benefit from the work, or from developers investing in themselves, aligns incentives well.
But when it morphs into an expectation of charity from third parties to subsidize developers as a public good, it veers into “socialist” territory.
Open source is a sacred cow in Bitcoin that deserves more scrutiny. Funding can be good, but we should be wary of over-funding or funding from sources with misaligned incentives.
In the long run, the open source projects that deliver the most value will find ways to sustain themselves through the voluntary choices of their users, not through guilt-driven handouts.
1. It can disrupt market dynamics and incentives
When projects receive large amounts of outside funding, it can mess with the natural market signals that guide development.
Instead of being driven to work on features and improvements that users and the market demand, developers may be swayed by the priorities and judgment of the funding sources.
2. It can lead to centralized control
Significant funding often flows through centralized organizations that then choose how to allocate the money.
This gives those organizations outsized influence over the direction of the project.
In Bitcoin, this enables organizations like OpenSats, HRF and others to act as “kingmakers” in the development space.
3. No one spends other people’s money as carefully
When spending money that was simply donated rather than earned from real customers, there is less accountability and efficiency.
Like government spending, the incentives for careful capital allocation are lacking. If developers couldn’t monetize their own work directly, maybe that work isn’t as valuable as they believe.
4. It can foster an entitled “welfare” mentality
Relying on charity from others instead of finding ways to independently earn a living can create an unhealthy dynamic.
To be clear, open source funding isn’t bad per se.
Funding that comes from those who directly benefit from the work, or from developers investing in themselves, aligns incentives well.
But when it morphs into an expectation of charity from third parties to subsidize developers as a public good, it veers into “socialist” territory.
Open source is a sacred cow in Bitcoin that deserves more scrutiny. Funding can be good, but we should be wary of over-funding or funding from sources with misaligned incentives.
In the long run, the open source projects that deliver the most value will find ways to sustain themselves through the voluntary choices of their users, not through guilt-driven handouts.