If you thought that the drama surrounding the hot and yet controversial cryptocurrency is over, think again. As one of his first acts as a newly elected Bitcoin Foundation board member, Olivier Janssens revealed the rather dismal financial situation the foundation is in, which has been kept secret from is members. While it doesn’t technically affect Bitcoin itself, being the primary public face of the currency, it could still cause loss of confidence in the entire system. Especially when the previous founders of the foundation have all but disappeared or are equally mired in controversy.
Just to be perfectly clear, the Bitcoin Foundation doesn’t, and in theory shouldn’t, have any direct control over Bitcoin. It is more of a public face, a caretaker, and a promoter of the currency. It’s downfall should not affect Bitcoin at all. In theory. In practice, human nature will inevitably associate the two and the Foundation’s failures will undoubtedly cast some doubt over Bitcoin. Or at least a media frenzy over it. Especially when one considers the revelation that the Foundation, at one point, wanted to hire core developers and create a standards body, which would give the Foundation a lot of control over Bitcoin itself.
As a non-profit, the Bitcoin Foundation relies on membership fees to fund its activities, $25 per annum for regular members and $1,000 minimum per year for corporate members. Their 2013 tax filings would reveal that the Foundation was able to amass over $4.7 million in assets by that time. And according to Janssens, that has almost all dried up by November last year, something that, until today, members had no idea about.
That a foundation would overspend and go bankrupt is nothing new. It happens a lot. But Janssens’ beef is how the Foundation is mishanding the situation. He believes that the membership, given their investment and interest in the Foundation, have a right to know about it. The Foundation, however, seems to still be under the impression that they can magically turn things around before things go public. They’ve been trying to do that since November with very little success. It seems that prioritizing saving face over public disclosure is a common tactic among Bitcoin organizations, which is quite ironic considering that Bitcoin is partially built on a foundation of trust.
Again, the Foundation’s situation should in theory have no bearing Bitcoin itself, but it will be hard not to have even stronger mixed feelings about the whole ecosystem after this. Unlike a centrally controlled currency like physical, real world money, Bitcoin relies more on the action of people. And if the people who are supposed to be its caretakers can’t easily be trusted, it might be hard to put confidence in the currency as well.