What Is the Bitcoin Foundation and What Role Did It Play in Bitcoin?

What Is the Bitcoin Foundation?

The Bitcoin Foundation was a U.S. nonprofit membership organization focused on Bitcoin. It was founded in 2012 to bring people and companies in the Bitcoin ecosystem together and work on things like software development, education, and communication with policymakers.

The Bitcoin Foundation did not own or control Bitcoin. That distinction is important, because Bitcoin has no central organization that can independently decide the network’s rules. So the Foundation could not decide how the Bitcoin protocol should work or impose changes on network users.

The organization could support developers financially, spread information about Bitcoin, and take part in discussions with companies, regulators, and governments on behalf of its own members.

In the United States, the Bitcoin Foundation fell under the so-called 501(c)(6) category. That is a tax category for things like trade associations and other membership organizations that represent shared business interests. So the Foundation was not a charity in the usual sense of the word.

The Bitcoin Foundation’s influence dropped sharply starting in 2014. Several board members became involved in controversies, members left the organization, and income from memberships and other funding declined. At the same time, there was internal debate about the organization’s direction and how money was being spent.

In 2015, the financial problems became serious. The Foundation cut a large part of its activities and laid off many employees. At the end of that year, chairman Brock Pierce warned that the organization was almost out of money. The Foundation continued to exist after that and even got a new executive director in 2016, but it no longer played the prominent role it had in Bitcoin’s early years.

The U.S. tax authority eventually revoked the organization’s tax-exempt 501(c)(6) status on May 15, 2022. The bitcoinfoundation.org website that is online today does not belong to the historical Bitcoin Foundation. The domain changed ownership and is now used as an independent editorial platform about Bitcoin and crypto.

Key Takeaways

• The Bitcoin Foundation was a U.S. membership organization centered on Bitcoin.
• The organization did not own Bitcoin and did not set the network’s rules.
• It focused on development, education, and communication with governments, among other things.
• The foundation was publicly launched in 2012.
• The current domain with this name is not connected to the historical organization.

How Did the Bitcoin Foundation Start?

The Bitcoin Foundation was publicly launched in September 2012 to support the development and growth of Bitcoin. The idea was to create an organization where developers, companies, and other people involved with Bitcoin could work together.

The founders compared the setup to organizations around other open source projects, such as the Linux Foundation and the Tor Project. Open source means the software code is public and developers from around the world can contribute to it.

At launch, several plans were central. The Foundation wanted to financially support Bitcoin Core development, help fund technical infrastructure, set best practices for companies, and answer questions from the media and businesses. The organization also wanted to host an annual Bitcoin conference.

The first board consisted of Gavin Andresen, Mark Karpelès, Jon Matonis, Patrick Murck, Charlie Shrem, and Peter Vessenes. The original bylaws also included a separate list of founding members, including Roger Ver and even Satoshi Nakamoto.

What Were the Bitcoin Foundation’s Goals?

The Bitcoin Foundation’s core mission was summed up as standardizing, protecting, and promoting Bitcoin. In simple terms, the organization wanted to help further develop the technology behind Bitcoin, explain Bitcoin better, and support its use.

That included a number of goals:

• Support Bitcoin software and technical infrastructure.
• Provide financial support to developers.
• Explain Bitcoin to the public, businesses, and the media.
• Talk with policymakers and regulators about Bitcoin.
• Develop best practices for companies that wanted to use Bitcoin.

By standardizing, the organization did not mean that it could set Bitcoin’s rules itself. Bitcoin works differently. Network participants choose for themselves which software and rules they accept. Changes only have a broad effect if participants in the network choose to use software that supports those rules.

So the Foundation had a role in support and coordination, but no control over the consensus rules. Consensus rules are the shared rules that computers in the Bitcoin network use to decide which transactions and blocks are valid.

What Activities and Projects Did the Bitcoin Foundation Carry Out?

In its early years, the Bitcoin Foundation mainly focused on technical infrastructure, funding developers, communication, policy outreach, and conferences.

Some of the money went to technical projects. For example, in 2013 the Foundation funded projects for a Bitcoin testnet and a related DNS seed. A testnet is a separate network where developers can test Bitcoin software without using real BTC. A DNS seed helps new nodes find other computers in the network when they connect for the first time.

The Foundation also funded several developers working on Bitcoin Core. Bitcoin Core is widely used software that lets you run a Bitcoin node. With such a node, you can independently check whether transactions and blocks follow Bitcoin’s rules.

The Foundation also organized conferences. Bitcoin 2014 took place from May 15 to 17, 2014, at the Passenger Terminal Amsterdam. Topics at that conference included Bitcoin development, regulation, and how businesses use Bitcoin.

The organization also actively reached out to policymakers. For example, in November 2013, Patrick Murck represented the Bitcoin Foundation during U.S. Senate hearings on Bitcoin and other virtual currencies.

When the Foundation’s financial position worsened, it could no longer keep funding Bitcoin Core developers. Gavin Andresen, Wladimir van der Laan, and Cory Fields therefore moved in 2015 to the Digital Currency Initiative at the MIT Media Lab. MIT wanted to give them a stable environment where they could continue their work on Bitcoin Core.

In 2016, MIT announced that it had also raised $900,000 for a Bitcoin Developer Fund. That further separated Bitcoin development funding from the Bitcoin Foundation.

There are no reliable current signs that the historical Bitcoin Foundation still has any active projects or a similar role within Bitcoin today.

What Role Did the Bitcoin Foundation Play Within Bitcoin?

The Bitcoin Foundation mainly had a supporting and representative role around Bitcoin. Historically, it helped with funding, education, and communication with companies and governments, but it did not run the Bitcoin network and could not change the rules on its own.

Bitcoin works differently from a company or foundation. Developers can write new software and propose changes, but users and node operators choose for themselves which software they run. So an organization can offer a new version, but no one is required to use it.

Example: Suppose an organization releases a modified version of Bitcoin software with different consensus rules. Those new rules do not automatically become part of Bitcoin. Other participants have to voluntarily accept and use the software before such a change can have a broad effect.

Bitcoin Core works the same way. The developers maintain and publish the software, but they cannot force users to install a new version. Bitcoin Core therefore does not have an automatic update feature that can simply push new rules to all users.

So the Bitcoin Foundation did not have special power over the network. Its historical value was mainly in funding Bitcoin Core developers, organizing activities, and serving as a point of contact for media, companies, and policymakers who wanted to learn more about Bitcoin and crypto.

What Is the Bitcoin Foundation’s Current Relevance?

The historical Bitcoin Foundation no longer plays a known major operational role in Bitcoin’s development, funding, or governance. The organization lost much of its influence starting in 2014 and 2015 and ran into financial problems. Its U.S. tax-exempt status was eventually revoked in 2022.

That does not mean Bitcoin development stopped. Bitcoin Core is still actively developed as an independent open source project. Developers from around the world can write code, review it, test it, and make proposals.

Bitcoin development funding is also now spread across different organizations, companies, and programs. So there is no successor to the Bitcoin Foundation that centrally decides which direction Bitcoin should take.

The Bitcoin Foundation is now mainly relevant as part of Bitcoin’s history. The organization shows how the early Bitcoin community tried to organize development, funding, education, and communication with governments better, without becoming the owner or controller of Bitcoin.

So don’t confuse the historical Bitcoin Foundation with Bitcoin Core, bitcoin.org, or other projects active around Bitcoin today. bitcoin.org is also not an official Bitcoin website, and Bitcoin Core is not an organization that centrally governs the network.

Conclusion

The Bitcoin Foundation was an early membership organization that tried to support Bitcoin’s growth through funding, technical projects, education, conferences, and communication with policymakers.

Especially in the early years, the organization played a visible role. It funded Bitcoin Core developers, among other things, and tried to be a point of contact for parties that wanted to learn more about Bitcoin. But starting in 2014 and 2015, the Foundation lost more and more influence because of internal problems, reputational damage, and financial shortages.

The Foundation was never the owner or controller of Bitcoin. Developers can propose changes to Bitcoin software, but users and node operators decide for themselves which software and rules they accept. No foundation can force that choice on the entire network.

The Bitcoin Foundation is therefore now mainly a historical part of Bitcoin’s development and not a central institution that determines the network’s direction.