- The Bitcoin Foundation launched in 2012, with the aim of driving the adoption of the cryptocurrency
- The Foundation enjoyed initial support but issues between its members led to it falling into obscurity
- Where is the Bitcoin Foundation now and what is its legacy?
The Bitcoin Foundation was established in 2012 with the mission to promote and protect Bitcoin development, education, and adoption worldwide. It aimed to act as a centralized advocacy group for the decentralized Bitcoin community at a time when Bitcoin’s reputation was sinking. However, 12 years later, the foundation has almost no influence following a string of scandals and internal rifts, leading us to ask what happened along the way.
Founding Members and Early Vision
The Bitcoin Foundation was co-founded by several prominent figures in the Bitcoin space in September 2012. Gavin Andresen, the lead developer of Bitcoin after Satoshi Nakamoto stepped away, was a key figure in establishing the foundation, becoming the face of Bitcoin development and focused on continuing Nakamoto’s work to ensure the software remained robust and decentralized.
Another notable co-founder was Charlie Shrem, an early Bitcoin entrepreneur. Shrem was the CEO of BitInstant, a company that provided services to make Bitcoin more accessible for the public. His involvement lent credibility and a sense of entrepreneurial spirit to the foundation. Shrem became a well-known advocate for Bitcoin adoption, often speaking at conferences and engaging with regulators.
Mark Karpelès, the CEO of MtGox, the largest Bitcoin exchange at the time, was also a founding member. MtGox handled over 70% of all Bitcoin transactions during its peak, making Karpelès an influential figure in the community.
Peter Vessenes, an early Bitcoin investor and entrepreneur, served as the foundation’s first chairman. He played a key role in setting up the foundation’s legal structure and initial fundraising efforts. The foundation raised funds through membership fees and donations, primarily from Bitcoin enthusiasts and businesses.
While the names of the founders were all known and respected at the time of the Fouondation’s creation, time and a variety of experiences would see their reputations tarnished.
Challenges and Controversies
Despite its initial promise, the Bitcoin Foundation faced numerous challenges, both internal and external. One of the first major issues arose when Charlie Shrem was arrested in early 2014 for his involvement in facilitating money laundering through his company BitInstant. Shrem was eventually sentenced to two years in prison for his role in transmitting nearly $1 million in Bitcoins intended to facilitate drug trafficking on Silk Road. Shrem’s arrest cast a shadow on the foundation’s credibility, as he was one of its most prominent members.
Just one month later, Mark Karpelès’ name was dragged through the mud when MtGox imploded following the realisation that it had lost half a billion dollars’ worth of bitcoins in the past two and a half years. The collapse of MtGox eroded trust in both the foundation and the broader Bitcoin ecosystem. The loss of confidence also highlighted the risks associated with Bitcoin’s still-maturing infrastructure and governance.
Shrem and Karpeles’ posts on the board were taken by BTC China (now BTCC) CEO Bobby Lee and venture capitalist Brock Pierce, with the appointment of the latter causing a huge internal schism; ten foundation members resigned in protest due to allegations dating from 2000 that Pierce had pressured minors into sex at a company he had founded.
Policy Push
The Bitcoin Fondation board tried to put its issues behind it and work on policy, hiring Jim Harper of the Cato Institute as Global Policy Counsel to help it deal with policy issues and the government. It also hired Amy Weiss of Weiss Public Affairs as a media consultant and retained lobbying firm Thorsen French Advocacy to work for a favorable regulatory environment in the United States for Bitcoin.
By 2015, however, the Bitcoin Foundation was already in trouble. Significant disagreements began to blow up within the leadership, particularly regarding the foundation’s direction, priorities, and transparency. Some members of the Bitcoin community felt the organization was not representing the decentralized ethos of Bitcoin properly and didn’t appreciate its work trying to curry favour with the government.
The foundation was reportedly facing financial trouble a this time, too. Early enthusiasm had waned, leading to a drop in membership dues and donations, while the fluctuation in the Bitcoin price had impacted its cash holdings.
Large donors also withdrew their support over the apparent lack of influence and concerns over internal strife; a leaked email from executive director Patrick Murck in 2015 revealed that the foundation was “effectively bankrupt,” further eroding confidence.
Several influential members also left in 2015, including Gavin Andresen, which further weakened the foundation’s position. The following year, Andresen would be pilloried for publicly supporting Craig Wright’s fraudulent claim to be Satoshi Nakamoto.
The Bitcoin Foundation Today
In the past nine years, the Bitcoin Foundation has shifted its focus to decentralized groups and independent developers. The foundation remains operational, but its primary focus is now on educational efforts and occasional lobbying initiatives. Any sway it once had over the Bitcoin community has vanished, with many newcomers having not even heard of it.
One of the core reasons for its reduced influence is Bitcoin’s inherent decentralized nature. The rise of competing organizations, both formal and informal, means that Bitcoin’s development and advocacy are now spread across a much broader ecosystem. In particular, the Bitcoin Core development team and other independent contributors now lead the charge on technical advancements and governance without centralized oversight.
The Bitcoin Foundation played an important early role in Bitcoin’s development and adoption, but internal controversies, external challenges, and Bitcoin’s decentralized ethos led to its reduced prominence today. While it rightly calls itself the “longest established Bitcoin advocacy organization in the world,” it has not realized its promise by any stretch of the imagination and has become a minor player in the evolving cryptocurrency landscape.
