[Update: The Bitcoin Foundation has issued an official statement, which can be found here. In the statement they deny being bankrupt and firing 90% of their staff. They don’t mention Olivier Janssens or his status with the Foundation.]

Olivier Janssens, one of two newly elected Bitcoin Foundation Board Members made huge headlines when he wrote a Reddit post revealing the dire financial straits the Foundation seem to be experience. Janssens also stated that Executive Director Patrick Murck was about to be replaced.

Since that time, the Foundation has remained silent. In responding to inquiries from us, as well as on Twitter and its official blog. So far, there hasn’t been a much noise from anyone, outside of Janssens, Core developers Gavin Andresen and fellow recent addition to the Bitcoin Foundation Board Jim Harper, things have been nearly silent from the Bitcoin Foundation. Executive Director Patrick Murck took some time to respond on the Bitcoin Foundation’s forum, but left quickly and has otherwise remained silent.

Janssens sat down with us in his first interview with the media since his Reddit post. We talked about why he decided to make the post, just how bad he thinks the situation is, and what the community needs to do to keep core development funded.

Janssens has a long and contentious history with the Bitcoin Foundation. He made headlines last summer by funding a project with the intention of replacing the Bitcoin Foundation as the prime funding mechanism for Bitcoin Core Development.

The project became Lighthouse, a distributed crowdfunding application. Janssens paid USD $100k of his own money to fund that project. Janssens made his money in bitcoin and he has shown a clear desire to help it succeed. Think whatever else you want about the man, but he hasn’t been shy about putting his own money towards solving problems, and he is continuing to do that now.

After Lighthouse morphed from a Bitcoin Foundation quasi-replacement to a distributed Kickstarter competitor, Janssens decided to attempt change from the inside. He ran for two open spots on the Foundation’s board. After a run-off election and a few mishaps during the voting process, Janssens and the aforementioned Harper won the two open seats.

Harper was a little more moderate in his views, but also felt that the Foundation’s new, singular focus on Core Development was harmful. He titled his candidacy announcement post A Foundation that can Walk and Chew Gum at the Same Time and later posted on his blog that a reboot of the foundation should be kept on the table.

Janssens says that from the very beginning, both he and Harper were blackballed whenever they attempted to bring up any reforms.

“I had one board meeting, and one board meeting that Jim and myself called to discuss new potential plans, [that second meeting] was hijacked to fire most of the staff instead. Whenever Jim or me would bring a topic up during the board meeting, people refused to vote on it.”

Janssens says it quickly became clear that things were far worse than he imagined.

“[The] first thought I had when I joined the board and learned the truth was ‘I didn’t sign up for this[.]’”

The Foundation is supported almost entirely by donations, from both individuals and corporate sponsors. There is a moral obligation for organizations that operate in that way to be as open as possible, something that doesn’t seem lost on Janssens.

“You get entrapped, and the longer you go along [with the organization,] the more complicit you are.”

What happened, exactly, to cause the Bitcoin Foundation to become insolvent, is the manner of some debate. The dropping bitcoin price certainly has something to do with it. Several scandals and misstatements have also made them more unpopular in the past year, likely leading to a decrease in donations. One theory is that they spread themselves too thin in 2013 and 2014, and then a refocus on core development did not result in a re-energizing of the community and sponsors as expected.

It does appear that the Foundation is broke. No one has come out to deny that, although Patrick Murck stated that the Foundation has at least another month of funding remaining, some doubt his claims and Janssens says that Core developers have already seen their paychecks stopped (we are still working to independently confirm that, and will update this space when we get word).

Even taking the apparently optimistic view of a month, that is hardly a healthy operating budget for an organization, especially one that is soliciting donations and funds development. How many people want to fund an organization that may not exist in a month or two? This seems to be confirmed by Murck’s own statement on the Bitcoin Foundation forum, that seems to indicate he is hesitant to cash checks recently given to the Foundation.

“We have over $100,000 USD in commitments including $75,000 worth of checks that I told [Janssens] I would not cash because I didn’t feel it was ethical given the restructuring and the posture of the new board members.”

What Murck seems to be implying is that they their debts only amount to US $25,000 if they cash the checks he holds, but he feels it is unethical to cash those checks with the Foundation’s status up in the air. But how many individuals knew that the Foundation’s status is up in the air?

The 2013 tax return for the Foundation is publicly available, and it provides some clues to the Foundation’s stability at that point, when the Bitcoin price was rising. Judging by the tax return, it appears they had less revenue than expenses in 2013, but their net value sky rocketed with the Bitcoin price. Depending on a rising bitcoin price to keep an organization running is a bad idea, for all sorts of reasons. The past year’s tax return has yet to be posted publicly. As a non-profit organization, that was likely coming soon, but there was no official indication of when it would happen other than a vague “Spring 2015”. With core developers and a significant part (Janssens says 90% Murck says 50%) of the staff let go, Janssens realized the turth couldn’t wait.

With the Bitcoin Foundation apparently insolvent, or close to it, there comes the issue of Core Development. Someone needs to fund it and the Bitcoin foundation has traditionally filled that role. Janssens doesn’t see them coming back from this in their original form.

“[I]f the Foundation would start doing something which is only benevolent (for example, engaging their members to go door to door to every store and explain to them the benefits of Bitcoin – or to help organize mass Changetip events (one of my proposals). Then yes, the community might accept that.
But, as long as they try to put themselves in positions of power (i.e. hiring the two most important core devs and leveraging that to do X), then no, [and that] has been proven.”

Some would argue that Core Development is a benevolent goal. That was the idea behind the Bitcoin Foundation switching its focus to Core Development. Janssens has been very public about his concerns over the Bitcoin Foundation’s potential control over funding. Gavin Andresen took to Twitter after Janssens’ Reddit post to stress that he felt the Bitcoin Foundation has not been influencing his development decisions. Janssens, however, remains unconvinced.

“Even if Gavin is incorruptible, it’s not a healthy spot to be in. I think core devs can only be truly ‘free’ if they are paid by the community, because the community trusts them and supports their vision.”

Janssens also felt that the Foundation used Gavin Andresen’s name to keep itself afloat but stressed that he believes Andresen to be an innocent bystander.

“I also feel that the Bitcoin Foundation has been able to sustain itself by “using” Gavin’s name being part of it. I have a lot of respect for Gavin and I think he just wants to do his job, and he got dragged along.”

Gavin Andresen is the most visible and popular member of the Foundation, especially after Andreas Antanopolus resigned late last year, also citing transparency issues.

The Foundation, for good or ill, has also served as the public face for Bitcoin to the outside world not used to the idea of decentralization. They have taken the lead in speaking to regulators, the mainstream media and helping set the general tone for Bitcoin, in addition to funding Core Development. Janssens doesn’t feel like focusing on those issues is the way forward for the Foundation either.

“[A] ‘face’ will always come with a huge arrow on it’s back, so no, I don’t think it’s good to have one face. It’s great to have many faces, all playing their part. Decentralized faces so to speak. As you saw, there are many Bitcoin conferences being organized now, and there are many other orgs popping up which will do lobbying etc.

I think that we can still use a proper EFF [Electronic Frontier Foundation] for Bitcoin or actually have the EFF take on Bitcoin. One that protects us from oppressive governments and is great at it. Even better, multiple EFF’s.”

Which is true. In the past year or so, multiple organizations have popped up to do the jobs that the Bitcoin Foundation originally put on itself to do, The Chamber of Digital Commerce lobbies on behalf of bitcoin for an example. Conferences certainly aren’t the exclusive realm of the Foundation and the Mainstream Media is slowly becoming more knowledgeable about bitcoin and can depend on organizations like the Foundation less.

It seems the ancillary jobs that the Foundation was originally charged with, are now being done by organizations with those specific goals in mind. Few seem to want them to handle the one job left to them, Core Development.

Replacing that, however, is easier said than done. Janssens is willing to fund development, starting with this year, but would like to see a real solution proposed by the community. His stop gap solution, using his own wealth the fund development, would be opposed to his ultimate goal of democratizing development. To help offset that, he is willing to give control of the funds over to the developers and stresses that he desires no control of the funds or development.

Still, the situation is not ideal, and Janssens knows that. He originally funded Lighthouse to replace the Bitcoin Foundation role in Core Development, but it too, isn’t ideal, something Janssens points out.

“The problem is that it has several limitations which are still “dealbreakers” (for example the fact that you can only have XX donations per project, makes the minimum amount too large, or you have to create too many projects). While that can be resolved in the future, it’s still an issue to use it today.”

Janssens also indicated that Gavin would have concerns about that funding method and how he would report it on his taxes. Whatever solution is found, Janssens stressed that he doesn’t want the final say.

“So I thought about setting up a trust fund that does something like that.. there was a concern about who gets voting power in it to add/remove developers from that trust fund. If you give it to the devs themselves, then they have to play politics again. If you give it to the people, then they can play politics.

What someone on Reddit suggested was to structure it in a way that you can give directly to the dev of choice. If we can find a way to do that, and the trust fund manager would take care of IRS/checks [then] devs don’t have to worry about anything, and there’s no voting power, that might be the best route, I don’t know.
I don’t want to be the one to have the final say in that, so I think it’s best to discuss with the core devs and the community[.]”

It is important to remember that the Bitcoin Foundation exists to serve the Bitcoin, not the other way around. If the Bitcoin Foundation can’t survive in the current Bitcoin environment, maybe it would be better going the way of the IP address send. Blockchain technologies provides non-profits and charities with an incredible opportunity to be as transparent as possible. Business models are opening up with the entire point being transparency. Yet, The Bitcoin Foundation, the most visible and powerful non-profit in the Bitcoin community, seems to have ignored that almost completely.

If the Bitcoin Foundation wants to rebuild its reputation and become a positive force in the world of Bitcoin again, it may want to consider leading by example. Before attempting to pivot yet again, maybe they should open up not only to their members, but to the public at large as well. Show the world that a non-profit done on the Blockchain is infinitely more transparent than one done in the fiat world.

The Bitcoin Foundation hasn’t showcased that yet. Since I started covering bitcoin, they have been nothing but a series of controversies and embarrassments for the community at large. Janssens could not sit by silent, Andreas Antanopolus left citing similar concerns. The question the Bitcoin Foundation should be asking isn’t if it can survive, but should it survive?

I’m finding it more difficult everyday to come up with a reason for it to.

1 COMMENT

  1. Noise is correct. If people knew this guy was a blowhard, he never would have got elected. Hopefully now that he got his 15 minutes of fame, he will be able to add value to the foundation and provide some positive contributions.

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