The Bitcoin Foundation: An Introduction

It’s 2018, and Bitcoin has been around for almost a decade. By now you’ve probably heard of the famous decentralized, peer-to-peer, electronic cash system — and if you haven’t, read our beginner’s guide before you go any further.

Soon after its advent, the virtual currency became the poster child for cyber-utopianism – promising freedom from the restrictions that came with government-issued money and presenting a novel and exciting way to transact online. And while the government’s reputation remains (rightfully) intact when fiat money is used to aid criminal activities, the same (logical) principle didn’t seem to apply to Bitcoin. Following controversial allegations that the online currency was used for money laundering and other illegal actions, Bitcoin became afflicted by a reputation of criminality and fraud.

In this article, we’ll take a closer look into the Bitcoin Foundation – a nonprofit (501c6) organization that was founded in 2012 to help restore Bitcoin’s good name and bring the project closer to the rest of the world.

The idea

Bitcoin has always relied on its dedicated community for growth and innovation so, naturally, the idea for a foundation came from one of its leading supporters. The topic was first brought up in October 2011 on the BitcoinTalk forum by Gavin Andresen, Bitcoin’s lead maintainer at the time. In his proposition, Gavin presented the community with an idea for a not-for-profit organization that would serve many purposes: interact with the legal system where a central entity is needed, e.g. for holding the Bitcoin trademark, ownership and control over the domain, etc; act as a central library for accurate information about Bitcoin; collect donations for developers’ get-togethers and conferences; and create a central clearinghouse for information about legal issues surrounding Bitcoin; to name a few.

The foundation would emulate existing organisations such as the Linux Foundation and the Tor Project, following principles and policies of developing and maintaining an open source project that encouraged the global use of the technology. It would also be in charge of paying salaries for selected full-time developers and any administrative or legal issues that Bitcoin could run into. All these expenses would be covered by grants made by for-profit companies, as well as membership fees.

Part of the community was opposed to the idea of prominent Bitcoin figures being the voice of the decentralized currency; they saw it as a step towards centralization, which directly opposed their libertarian views and the nature of the Bitcoin project itself. Such concerns were invalidated by the fact that – just as the Linux Foundation (which served as a model for the organisation) hadn’t controlled Linux – the Bitcoin Foundation as an entity would have no control over Bitcoin’s code. Others were excited for it, recognizing its potential and the role it could play in repairing Bitcoin’s image of “drug traffickers money” in the eyes of the wider public.

The official announcement was made almost a year after the initial proposition, in September 2012. Once again, it was Andresen who brought the good news to the BitcoinTalk community, explaining that “nothing is set in stone [and] the structure of the Foundation can be changed by a vote of its members, and exactly what the Foundation does will largely depend on who is willing to step up [and] do the work to make things happen.”

He expressed his hopes that the Bitcoin Foundation would be an open, member-driven organization that will be joined by many in pursuing its goals of standardizing, protecting, and promoting the use of Bitcoin for the benefit of users around the world.

Any independent supporter or business could join the foundation for a small fee (monthly or annual), paid in Bitcoin or with a credit card, and get perks such as participation in the annual planning process for Bitcoin Foundation advocacy and training programs; access to exclusive discounts and special offers for foundation and partner events and products; a monthly members-only financial and operational update from the Executive Director; and more. And just like that, with Peter Vessenes as Executive Director, Gavin Andresen, Roger Ver, Mark Karpelès, Charlie Shrem, and Patrick Murck as the founding board members, the Bitcoin Foundation was up and running.

The controversies

In June 2013, the California Department of Financial Institutions (DFI) sent the Bitcoin Foundation a letter asking them to “cease and desist from conducting the business of money transmission in this state.” The DFI had wrongfully considered the Bitcoin Foundation to be a money transmitter but, after a detailed response from the foundation, California’s DFI dissolved. While this was inconvenient for the foundation, it was nothing compared to the controversies that emerged around it in the following years.

In January 2014, Charlie Shrem – the vice-chairman of the Bitcoin Foundation – was accused by the US government of participating in a money laundering operation together with Robert M Faiella (aka. “BTCKing”) through BitInstant – Shrem’s bitcoin exchange. The money that was laundered came from drug sales made on the online marketplace Silk Road. Soon after the scandal, he handed his resignation and plead guilty on the charges against him.

Only a month later, in February 2014, Mark Karpelès – the CEO of Bitcoin exchange Mt. Gox – resigned from the board of the Bitcoin Foundation following Mt. Gox’s bankruptcy. The infamous Mt. Gox scandal happened due to the fact that almost 750,000 of their customers’ bitcoins, as well as 100,000 bitcoins of their own, had been stolen. Following the incident, Chief Scientist Gavin Andresen published a post on the Bitcoin Foundation blog, explaining that Bitcoin is not at fault and once again reminding the community that “Bitcoin is still young and experimental.” Despite the disclaimer, Bitcoin’s value declined by 36% in the succeeding month.

In May 2014, Shrem’s and Karpelès’ chairs on the board of directors were filled by Bobby Lee (CEO of BTC China) and Brock Pierce (venture capitalist). Ten people resigned from the foundation and many expressed their displeasement after Pierce’s election as chairman due to allegations made against him in 1999, claiming he had pressured minors into sex at a company that he co-founded called Digital Entertainment Network (DEN). Pierce was named in two civil lawsuits alleging sexual abuse of underage boys, but was never criminally charged. The foundation’s board of directors now included Peter Vessenes, Gavin Andresen, Brock Pierce, Bobby Lee, Jon Matonis, Meyer “Micky” Malka and Elizabeth Ploshay.

That same month, self-proclaimed bitcoin millionaire Olivier Janssens offered a $100,000 prize for a software platform that could replace the Bitcoin Foundation. To him, the Bitcoin foundation was “internally recreating the same archaic political system that fails to work for society” and its main representatives were a “non-transparent, political and secretive elite”.

He also mentions the foundation’s lack of success in funding its core development team. According to him, there aren’t any real initiatives for developer funding since people expect the foundation to take that responsibility. The developers are, as a result, underfunded, which brings the development to a halt. The problem is further complicated by the foundation’s lack of transparency; no one knows exactly how much money the foundation has at its disposal, or what part of that budget is set aside for developer salaries.

A month later, Janssens announced that the bounty had been awarded to Mike Hearn for his crowdfunding platform that ran on the blockchain.

In July 2014, it was Andreas Antonopoulos, Bitcoin educator and author of “Mastering Bitcoin” that announced that he had resigned from the foundation, reaffirming the issue of the lack of transparency that Janssens addressed less than a month before:

Gavin Andresen voiced his disagreement with Andreas’ decision:

At that point, the damage done to the foundation’s reputation was irreparable. Too many scandals had happened, and people lost their faith into the project as a result. The foundation was failing to adhere to its fundamental principles, transparency being the most important one. It was obvious that something had to change.

In October 2014, Jon Matonis left his position as the foundation’s Executive Director which he held since July 2013, and was replaced by Patrick Murck. On December 31, he left the board of directors all together. Before the year ended, the foundation announced that it will turn its focus to core development as opposed to education, outreach and public policy initiatives.

This decision came as a consequence of three surveys: a public survey, a survey for individual members, and a survey for business members. The results from the surveys were unequivocal; 51% of all respondents believed that core development is the foundation’s most important work, and 57% of them were most worried about scalability.

While back in the day, the foundation tried to do everything from education and outreach down to public policy, it was now time to shed some of those hats and specialize. It received a clear signal from the community that core development was at the very basis of Bitcoin’s infrastructure and should be the foundation’s main priority. As a response, the foundation announced it would prepare to bring at least one additional full-time developer in the following months, and launch at least four workshops for training and certification of developers starting 2015.

That same month, November 2014, crypto-anarchist Cody Wilson announced that he will be running for a seat at the board of directors for the sole reason of disbanding the foundation from within: “I will run on a platform of the complete dissolution of the Bitcoin Foundation and will begin and end every single one of my public statements with that message.”

Even though the foundation was set on turning a new page, old problems kept resurfacing. In March, 2015, Olivier Janssens and Jim Harper were elected to the board. As a newly elected board member, Janssens stated that his objectives were to create a direct link between the community and the core developers, so that the development process is decentralized and the community could “put money towards the features that they like and want the most.” Harper’s answer to the same question was that he would focus on “building the foundation’s stability and solidity.”

Both Jim and Oliver were in agreement over the need for more transparency which, according to them, would help the foundation connect with Bitcoin’s community. Only a month after the election, Janssens posted “the truth about the Bitcoin Foundation”, where he disclosed that the foundation is effectively bankrupt and had just fired 90% of its people.

He also said that executive director Patrick Murck would be gone in two weeks, and that the foundation is already looking for the next person to shift the blame to. A month later, financial consultant and investor Bruce Fenton was appointed as Executive Director of the foundation.

In addition to all this, Olivier revealed that both he and Jim Harper were “subtly threatened” on a regular basis for telling the truth. He finished his post by saying that “the lesson for all of us in Bitcoin is to never put any trust in a centralized [organization] again that wanted to represent Bitcoin or the Core Development of Bitcoin.”

Gavin replied to Janssens’ post:

“I had an idealistic vision of the Foundation being a member-driven organization, but that never happened. Now would be a good time for you, the membership, to make me proud and come together and figure out a vision for the Foundation moving forward.

When Gavin first envisioned the foundation, he wanted it to be a source of support for core development. In the aftermath of all these events, he tried to communicate with people who were capable of funding that vision and it became clear to him that they either didn’t trust the Foundation or they weren’t willing to risk their reputations by associating with it, considering that two of its board members had resigned in disgrace the previous year.

He went on to explain that the foundation isn’t bankrupt, but the money from membership fees isn’t enough to fund the idealistic vision he had for it.

“The Board needs to decide whether the responsible thing to do is to continue the organization with a much smaller organization and vision or to dissolve it.”

The disagreements over the future of the foundation persisted in the following months, in spite of – or maybe even as a result of – the difficult position that the board found itself in. In a board meeting that took place on October 20, 2015, Brock Pierce announced that the foundation is “close to running out of money.”

Even though cost-cutting measures were in place (the foundation was now spending about “5-10%” from the previous monthly budget of $150,000 that was in place when Jon Matonis was ED), the foundation wasn’t generating any significant revenue. Pierce concluded the meeting with a request to his fellow board members to raise $10,000 each before the next meeting which was due in a month, saying he would put $10,000 of his own money, too, if everyone else was on board with the idea.

“"We are the Foundation, we have no resources, this is us, if you don't like the foundation as it stands, you don't like yourself ... each board member should be prepared to do the work themselves, to keep the Foundation going." ”

Bobby Lee agreed to the commitment, Harper said he would “do what he could”, and Janssens was reluctant about it because he didn’t know if this would restore the foundation’s reputation towards individual members.

At the next board meeting that took place on December 15 there was, once again, talk about the foundation’s financial situation. The members discussed possible ways to stabilize and move forward in order to be of use to the Bitcoin community.

At one point in the meeting, Jim Harper said he “would recommend that [they] shutter the foundation”. He reiterated that he’s trying to carry out his obligations as a member and that he will succumb to the will of the board, but that there is a part of the Bitcoin community that questions the foundation’s viability.

Olivier Janssens agreed with Harper, saying that he, too, wouldn’t mind trying, but ultimately doesn’t believe the foundation’s reputation is restorable at this point: “If we start funding the member driven organization ourselves, the organization doesn’t make sense anymore.” In what seemed like a long overdue course of action, the board decided to vote: should they shutter the foundation?

In the infamous vote, Bobby Lee, Brock Pierce and Elizabeth Ploshay voted in favor of keeping the foundation open and organising fundraisers to get it back on its feet, and Jim Harper and Olivier Janssens voted to shutter. Following the vote, Harper handed his resignation; Janssens, on the other hand, said he would commit to help to make a plan, but wouldn’t put money in the organisation.

This viewpoint was seen as a fit and a disagreement with the planned course of action of fundraising, and Pierce seconded Lee’s previous motion to remove Janssens from the board. Along with Elizabeth’s vote, it was 3 to 1 in favor of removing Olivier Janssens from the board.

A week later, Janssens stated that the published minutiae wasn’t accurate, both in leaving out important discussions and failing to list arguments made by himself: “I could go and edit it all, and point out where the manipulations took place, but i no longer feel like putting in the energy.”

The foundation did catch one lucky break in May 2016, that it desperately needed after the intensely tumultuous period it had. In what supposedly was an errant bitcoin transaction, the BitClub mining pool was paid a fee that was half the transaction proceeds, which totaled at 146 BTC (or $65,000).

The transaction fee at the time was less than $0.01, so BitClub offered to refund the person behind the transaction if they could prove ownership of the sender address. If no one stepped up, BitClub stated it would donate the funds, with one of the possible recipients being the Bitcoin Foundation. Bitcoin Foundation ED Bruce Fenton stated that the funding would go towards existing projects such as education, public outreach and the DevCore conference series, as well as other, newer initiatives that foster bitcoin’s development.

There was, however, talk that the BitClub mining pool is a ponzi scheme and that the whole thing was just a publicity stunt which, if true, would mean that the foundation didn’t do their due diligence before accepting the donation.

In June 2016, at the blockchain training conference DevCore Toronto, the foundation announced its fifth executive director in less than four years: Llew Claasen, a venture capitalist from Cape Town, South Africa. Fenton stated that he “depart[s] with the foundation not only having paid off its debts but with more capital than when [he] started,” leaving it “in a great position and in great hands.”

In an interview for CoinTelegraph, Claasen acknowledged the fact that the Bitcoin Foundation is a previously unprecedented organizational structure, and that “running a non-profit foundation for an open source project that was founded on a philosophy of privacy, decentralized trust and distributed effort is certainly going to be a challenge.”

He also shared his belief that any exertion of control over the Bitcoin community would be a failure and that, instead, the foundation should use its ability to influence positive change and serve as a tool for coordination.

In August 2017, Claasen wrote a letter to the United States Senate Judiciary Committee asking them to investigate the Department of Justice for going after vendors and merchants on account of them selling bitcoin as “illegal money transmitters.” The foundation argued that bitcoin is not, in fact, money — at least not in the sense contemplated in the bill in question (Senate Bill 1241 a.k.a. the “Combating Money Laundering, Terrorist Financing and Counterfeiting Act of 2017”, originally introduced by Dianne Feinstein (D-CA), Chuck Grassley (R-IA), John Cornyn (R-TX) and Sheldon Whitehouse (D-RI)).

“Bitcoin lacks the characteristic of monetary instruments or financial products which S 1241’s Section 13 attempts to regulate.”

Claasen insisted that different government institutions have different definitions for what constitutes a cryptocurrency and, until these conflicting definitions are sorted out and the government as a whole reaches consensus on cryptocurrencies, Congress should refrain from passing laws that can seriously affect Bitcoin’s future.

The foundation also took on another issue: the DOJ’s claim that bitcoin is used by terrorists to finance their illegal activities.

“Contrary to this assertion, there is little to no systemic evidence that terrorist organizations use virtual currencies. In fact, the use of cash or other assets, such as art trafficking, represents a much greater risk for the law enforcement community. Further, by no means will a change in U.S. law prevent these terrorist organizations from still using unregulated overseas platforms.”


In its manifesto, the Bitcoin Foundation lists the following core values: privacy, guaranteed financial access, decentralization, autonomy, stable money supplies, and financial inclusion. Although it had Bitcoin’s best interest in mind, it isn’t exactly clear that the foundation managed to adhere to these values throughout time; a combination of poor staff choices and unfortunate turmoils in the crypto scene made an already hard job much harder.

While we, as spectators, could butt our heads into infinity listing the successes and failures of the foundation, trying to figure out whether instituting it was ultimately a good move or a bad one, one thing remains indisputably true: the foundation has managed to keep its head above water for years, tirelessly trying to achieve equilibrium in an ever so changing environment; its relentless efforts to balance itself and provide structure for the Bitcoin community might as well be a poetic depiction of Bitcoin itself.

Moving forward, it’s unclear what the Bitcoin Foundation’s future will look like. Maybe it will finally leave all the sidetracking contentions and differences of opinion in the past, and focus on bringing the community closer together in order to promote Bitcoin in its best light. Or, maybe, it will prove to be an inadequate format of advocacy and, as such, won’t stand the test of time.

In a diverse and dynamic community such as Bitcoin’s, where individuals of different backgrounds and beliefs come together to support a single cause, the disagreements that naturally emerge have a way of sorting themselves out with time. It seems that, when it comes to the future of the Bitcoin Foundation, we’ll just have to do what we’ve been doing since Bitcoin first came out: wait it out and see what happens.