Why a Startup You’ve Never Heard of Is Now Sponsoring a Bitcoin Core Developer

There are roughly 15 known entities sponsoring Bitcoin Core developers in 2020, and the Wyoming-based startup CardCoins just became one of the smallest industry players to join the pack. 

CardCoins has helped “over 10,000 unique users” convert gift cards into bitcoin, according to a spokesperson, with “millions of dollars of volume” last year. That healthy-yet-modest traction, which increased slightly since the recession hit, is dwarfed by incumbent crypto exchanges and custody providers. 

Out of the most well-capitalized crypto companies, BitMEX, Bitfinex, OKCoin and Xapo are the few that help support developers working full-time on bitcoin’s fundamental software. This is the trunk and roots of the crypto industry.

The nonprofit hub sponsoring the most Bitcoin Core contributors to date, Chaincode Labs, was forced to postpone its annual summer residency due to the coronavirus crisis. Adam Jonas, head of special projects at Chaincode Labs, said the nonprofit currently sponsors seven developers and intends to continue educational residency programs later this year.

Bitcoin advocates have historically criticized exchanges like Coinbase for not contributing more to these independent, open source developers.

Sometimes it can be easy to lose sight of the fact this multibillion-dollar industry, with companies like Binance that employ hundreds of people, relies on software maintained by just a few dozen people and occasional volunteers. The CardCoins spokesperson said there “aren’t many people to pick from,” with regards to prolific contributors who aren’t already on the above-mentioned payrolls. 

So in March, as the Great Lockdown derailed summer plans to train more developers, CardCoins partnered with the fintech company Payvant to split a one-year grant for the Ukrainian contributor Hennadii Stepanov, who goes by Hebasto. 

“As business owners and bitcoiners ourselves, we’re grateful to the folks that work on the low-level, nitty-gritty stuff,” CardCoins said in a statement. “We don’t see a world in which we work with a successful bitcoin company and that company doesn’t also give back to the community.”

Focusing on Bitcoin

Thanks to this grant, Stepanov said, he quit his job at a local university and can now focus on bitcoin full-time. He quickly went from discovering bitcoin in 2017 to making a small contribution in 2018, an issue he found when setting up his own node. Now he’s among the world’s most prolific contributors. 

“Decentralizing should be on all levels, including contributions,” Hebasto said. “I saw how the bitcoin developer community embraced me as a first-time contributor. They share knowledge. I like those people. I like to learn from them.”

Although CardCoins has seen a modest incline in the past few months, this move wasn’t inspired by extra cash to spend. Instead, the startup co-sponsored the grant because keeping bitcoin decentralized is fundamental to the firm’s business model. 

“Peer review is the cornerstone of Bitcoin Core and keeping bitcoin safe, generally,” the spokesperson said. “He [Stepanov] is making sure that Bitcoin Core will run on many different platforms in a safe way.”

Most CardCoins users convert gift cards into bitcoin in under an hour using a phone number and a few pictures of the receipt and card details. This allows the startup to serve underbanked clients attracted to bitcoin’s censorship-resistant properties. 

“We’ve made enormous investments in compliance and our programs and procedures have been overseen by a former federal prosecutor,” CardCoins said of the mission to serve this user group without regulatory arbitrage. “Those customers are vital to the lifeblood of bitcoin.”