Bitcoin Core Unveils New Sponsorship Program, Interview with Eric Lombrozo

Bitcoin CoreThis week, Bitcoin Core announced their new Bitcoin Core Sponsorship Programme. The program gives larger organizations a more formalized way to support and donate services to Bitcoin Core by matching Core developers & volunteers with sponsors and appropriate projects.

The program details a number of needs beyond Bitcoin Core development projects, including internship programs, documentation, infrastructure and various communication necessities.

Eric Lombrozo, Bitcoin Core Contributor, took the time to answer some of my questions about this new program. You can also find more at the Sponsorship Programme FAQ.

The new program sounds like a great step for Bitcoin Core. How is it possible to offer a sponsorship program without being formalized organization?

“Bitcoin Core is an amorphous software project, not a formal organization. Companies have been wanting to make greater contributions and have greater participation, but until now there hasn’t really been an effective way for them to do so. This program opens that door for them.”

I can see how it might be difficult to interface with a “non-entity”. You’ve got this cooperative effort from the developers, and then the rest of the world that wants to help but doesn’t know how.

“That’s why we created the website and a Slack in addition to our regular IRC channels and mailing list. It gives the general public something that’s more easily accessible. It provides a path for new sponsors and contributors by directly inviting them to participate.  

Open-source software projects always have a nucleus of developers, the main contributors. Then, you normally get a community of users around a project that do the things these developers are usually not as interested in doing, like communications, media, websites, and documentation.

Bitcoin Core never really had that before, so our new Slack chat rooms and website are there to help interface with the greater community and to invite it to form around the Bitcoin Core software project. You see this with a lot of other open source projects.”

Does Core see this as a way to help decentralize itself, by breaking off autonomous project managers into groups with sponsors, allowing any outside team to interface with Core?

“The Sponsorship Programme allows contributors to get resources for projects. Sponsors can propose potential projects to see if they make sense conceptually and are aligned with the general goals of Bitcoin Core. Alternatively, sponsors can choose among existing proposals made by contributors seeking sponsorship.

Project managers directly allocate resources and are responsible for recruiting and building their own teams. Existing companies and organizations can also get sponsored to do projects.

For coding projects, if a project does decent R&D, the code is well-written, and the pull request holds up to rigorous code review, then it will likely get merged.”  

The program seems to offer a lot of different ways that people can help, are there any needs that are more pressing for Core currently?

“The most pressing need for Core is more help with testing and code review. The biggest development bottleneck is code review. We need more qualified experts familiar with the codebase.”

So something like the developer internship program mentioned on your Sponsorship page would be a great and timely way to help Core?

“Yes. We also really need help with documentation, communications, and infrastructure.”

It’s great that you’ve opened the door to new categories of sponsors. You’re looking for help with things like education materials, graphic design, and project management. Do you think we’ll see new types of sponsors step in to fill those needs?

“Yes. Core already has a number of companies that want to participate, but we’re always looking for more help with the education and outreach. We’d like the website to feature better developer and company bios, video, and audio clips. These really help people connect and put a face to the developers.”

Counterparty Eats Ethereum’s Lunch – XCP Moons, ETH Goes Bearish

Earlier today, NewsBTC.com published an article 1 announcing Counterparty’s intention to bring Ethereum smart contracts to Bitcoin by leveraging the Ethereum Virtual Machine. Counterparty noted that it spent the past year polishing this software on a test network, but that they are now ready to go live with Ethereum-style smart contract support on the main Bitcoin network.

The news immediately caused a sharp spike in the price of XCP, the token used within Counterparty’s system, seeing it rally more than 370% at its peak of 0.0095 BTC per token.

This news comes at a bad time for Ethereum and the ETH market value. The ETH bubble seems to have finally popped, forming a “diamond top” pattern, and this news of Counterparty eating Ethereum’s lunch could bring further capitulation.

However, the following tweet caused some to doubt as to whether the Counterparty announcement was genuine:

The screenshot 2 within the tweet shows a chat conversation with Robby Dermody, Co-Founder of Counterparty, denying the information in the article. The article has since been removed from NewsBTC.com, but you can view a cached version here, and a screenshot here.

In another twist, my own source, Chris DeRose, also of Counterparty, indicated that the news is, in fact, true.

Quote from Chris DeRose, used with permission.

While we don’t know exactly when these new Counterparty features will drop onto the main Bitcoin network, it sounds like the bulk of the work is done, and Bitcoin smart contracts are ready for production.

This development in the blockchain ecosystem brings an important reminder to light:

You can try to privatize your projects, centralize parts and develop toward your own agenda, but once you meet the responsibility of having your code open-sourced and subject to the approval and scrutiny of the public, you also present your code to be re-purposed for Bitcoin. That’s why I love the altcoin ecosystem & the “blockchain” movement! The industry is trying as hard as it can to find the edges of this new paradigm, all at the expense of centralized interests.

UPDATE: The freelance writer involved with the premature news release provided the following clarification:

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CoinDesk Promotes London Bitcoin Forum Scam, Sweeps Under Rug

London Bitcoin Forum is probably a big scam...

A little over a week ago, CoinDesk posted a press release 1 for The London Bitcoin Forum 2, a previously unheard of gathering of “more than 60 expert speakers and 20+ media partners for a prestigious two-day event featuring powerful keynote talks, plenty of networking opportunities, demos and panels”.

It seemed odd to me that a conference would only announce itself one month in advance of the event. I wondered if maybe they had already secured speakers and content in private, and this was merely the first promotion to sell tickets. However, the website did not list any speakers at all and the sponsors seemed to be a mix of heavy hitters and bitcoin gambling website links.

ayyyyyyyyyyyyyy

Very suspicious! So I contacted CoinDesk:

They did not respond, but I noticed the next day that they had removed the press release and deleted their original tweet promoting it. 3

The original press release content is still available as posted by some other Bitcoin news websites, like The Merkle, here. 4

A representative from the QEII Centre said the event does not exist, and that the London Bitcoin Forum website is “very convincing.” They are trying to contact the company responsible. The scam at hand appears to be to sell tickets online via CoinKite’s 5 checkout service, and presumably have people show up to be told there is no Bitcoin event at all that day.

CoinDesk has not made any effort to warn its readers as a public service. Alistair Milne, of Altana Digital Currency Fund, was duped into signing on as a speaker, and now has his name is unwittingly attached to what is most likely a scam.

“We bought tickets after viewing the conference on Coin Desk. We paid 230 GBP for 2 tickets. This is messed up. How could Coin Desk not even retract their press article???” 6

“We were approached and had sponsored the conference after the conference after the Coin Desk article. I do not want to state our company. We paid 600 GBP to post our logo on the website and be be part of the gift package.” 7

“I totally bought tickets for this event. Fuck!!! It really was a convincing site!” 8

“coindesk article proved the authenticity of the event from our point of view, and we got sucked in for a sponsorship… 3btc down the drain :(” 9

According to their Submit a Press Release page, anyone can “Post your news on CoinDesk for only $99”, and “appear in our daily email which is sent to 21,000+ subscribers.”

Will CoinDesk publicly address its poor oversight of its pay-to-play services?

Will they change policy in how they inform on potential scams?

We’ll see…

UPDATES: CoinDesk has just published following tweet:

CORRECTIONS: This article was updated at the request of CoinDesk, to remove insinuations that they may be selling email lists to advertisers as part of their Press Release service. CoinDesk said that it does not offer such service.

Bitcoin Politics & Creative Legal Interpretations (Open Response to Friedberg, Riddell Williams)

This morning, I came across a blog post by Daniel Friedberg from the law firm, Riddell Williams. In the post, he attempts to show how certain laws and regulations could be applied to various actors within the industry, were they to create or facilitate the adoption of a hard fork of the Bitcoin blockchain and software.

I would be interested to know whether Friedberg developed these interpretations while pursuing client work, or if he and his firm are just really into Bitcoin. I have to assume the former, since I am hearing rumors that some of the competing Bitcoin development teams are attempting to use lawyers to stop, or at least chill, the actions of others.

Let me start by saying how horrible of an approach this is. Lawyers are not going to solve Bitcoin consensus issues, they will only make them more expensive. For as long as Bitcoin remains truly decentralized, no one party can be held responsible for anything related to adoption or implementation of new Bitcoin software or forks. That said, I do think there could be liabilities for certain actors, like exchanges, who may fumble the transition to a new Bitcoin, but not in the context Friedberg is concerned with.

I’ll do this in footnote style. Friedberg’s original post is in italics below. All of my responses are in the superscript footnotes throughout. They are also listed in full at the bottom of this post.

~~~
Requirement for Creators to Register with FinCEN

The Financial Crimes Enforcement Network (“FinCEN”) … has issued numerous guidance and interpretations of the applicability of regulations implementing the Bank Secrecy Act (“BSA”) to persons creating virtual currencies. 1

Bitcoin Classic and BitcoinXT (meaning in this case the new resulting currency itself rather than the software 2) would likely be considered by FinCEN to be a new convertible virtual currency. FinCEN has made it clear that a creator of such convertible virtual currency, who issues such currency in order to sell those units for either real currency or its equivalent (including presumably an exchange with current bitcoin 3), is deemed to be a money transmitter. 4 … The Bitcoin Classic development team is also publicly named. Under this approach, the creators of Bitcoin Classic or BitcoinXT would need to register with FinCEN as a Money Service Business (“MSB”). 5

Requirement to Include AML Protocols in Bitcoin Classic or BitcoinXT 6

In addition to the registration requirements, an MSB is required to maintain effective anti-money laundering (AML) programs …

These requirements will require the replacement Bitcoin protocol to maintain the personal identifying information of its users. 7 This can presumably be done through the software code … 8

The adherence to such requirements will be a large deviation from the current Bitcoin protocol which does not maintain personally identifiable information about its users. The inclusion of such information would make Bitcoin Classic and BitcoinXT much more accepted by financial institutions 9, but runs counter to the essence of bitcoin. Bitcoin’s creator designed bitcoin to allow peer-to-peer financial exchange without the use of financial intermediaries and all the complexities involved with such intermediaries, such as identifying the users. 10

Issues for Exchanges and Wallets

… The implementation of a “hard fork” would require exchanges to differentiate between bitcoin and “Bitcoin Classic” or “BitcoinXT” bitcoin, as its customers would inherently have rights to either one or the other. 11 Exchanges could not mix or intermingle the two, as each has its own rights. 12

The “hard fork” would hurt the liquidity of bitcoin, and impair exchanges ability to legally operate. 13

Potential Liability for Miners who Adopt New Protocol

Miners who unilaterally adopt the new replacement software could face liability under either tortious or statutory claims. A tort is a wrongful act or an infringement of a right leading to civil legal liability.14 A trespass to chattels is a tort whereby a party intentionally interferes with another person’s personal property. To the extent that a recipient of bitcoin expects normal bitcoin but instead receives “Bitcoin Classic” or “BitcoinXT” virtual currency due to the actions of a miner, that recipient could argue that the actions of the miner resulted in a dispossession. 15 To the extent that the market value of the two types of virtual currency differ, damages would be easy to prove. 16

There are also numerous state statutes prohibiting computer crimes which could be applied to miners who unilaterally convert bitcoin into a new type of virtual currency. 17 Bitcoin users have a business expectation that their Bitcoin transactions will be processed by miners using the established Bitcoin protocol, and miners should be cautious about interfering with this expectation. 18

Conclusion

The current proposed “hard fork” replacement software seems at first blush to be a reasonable way to solve Bitcoin’s growth issues. However, due to the lack of consensus of applicable Bitcoin network participants, the enactment would create serious legal consequences for the creators of the new replacement software 19, unless the creators 20 adhere to the rules of MSB registration and compliance. In addition, the “hard fork” would create serious operational issues for exchanges and wallet operators 21, the risk of liability for participating miners, and unnecessary confusion in the marketplace.

~~~

In summary, I believe I have fully refuted all of Friedberg’s perspectives on these matters. It’s sad that the legal world is so behind when it comes to Bitcoin. I have experienced this first hand, and I was reminded again today by Mr. Friedberg.

UPDATE: Someone shared this post with me, from Dan Friedberg three years ago, on behalf of the Bitcoin Foundation. Interesting to see what has and has not changed in today’s version. Also interesting to note the connection to Jon Matonis’ organization. I am putting the full original article in this last footnote for posterity, since I have no faith in their website being up for more than a year from now. 22

Interview with Bitcoin Core Developer, Jonas Schnelli

The folks over at Stakepool invited me to co-host1 a live interview with Jonas Schnelli, a Bitcoin Core Developer.

It was great to hear his perspectives on things like block size, segregated witness, forks, and some of the politics involved. It was also reassuring to speak with a developer that’s sober and down-to-earth about these issues.

Have a listen!

What it Means to Be a Bitcoin Conservative

As Bitcoin grows into the world, we see an increasing quantity of people and organizations attempt to define how Bitcoin should work and what its role in our society should/will be. The common thread among them is that they have designs for Bitcoin and how it might make money for them or the people they represent. That, or they fear how it might make them lose money as a competitor.

Thankfully, we have enough sensible developers, miners, purists, and pundits to make things really difficult for those people.

In my eyes, all attempts to manipulate Bitcoin in any way, however direct or abstract they may be, are best considered as attacks by an enemy actor. This abstract concept is what defines what I’ll call “Bitcoin Conservatism”. Bitcoin is our decentralized solution to the faults of our current money as a tool. It is a black hole born to absorb the Ponzi ways of inflationary currency and protect us from ourselves and our inclinations to place our trust in centralized powers that inevitably fail us.

To me, this means that the primary role of a Bitcoin “Core” Developer is to protect it when attacked, and fix it when it is broken. The moment you decide that you want to add a feature to Bitcoin Core, or even tweak a parameter, you have essentially challenged Bitcoin to battle. When you lose this battle, it is not a failing of Bitcoin to adapt, it is you failing to bend it to your will.

Bitcoin Conservatives see its resilience as a feature, not a failure. We place long-term value in Bitcoin, both figuratively and financially, and we don’t want anyone fucking it up unless they can invoke the powers required to make Bitcoin and all of its guardians submit.

It is no one’s calling to change Bitcoin or add features to it. It will tell you what to do when it is time.