Computer scientist and prominent Bitcoin advocate Andreas Antonopoulos has resigned from the Bitcoin Foundation over the group’s “complete lack of transparency,” according to his Twitter feed. Antonopoulos previously stepped down from the Foundation’s anti-poverty committee two weeks ago, and recent events have pushed Antonopoulos to sever the rest of his ties with the group. He no longer has “even the smallest association” with the Bitcoin Foundation.
The Bitcoin Foundation is a group of industry insiders with the stated goals of funding Bitcoin infrastructure and promoting it to the public. This is partly why the Foundation made over $350,000 from membership dues last year alone — dozens of Bitcoin-related startups and hundreds of paying members think they’re actually helping to improve Bitcoin through the Foundation.
However, the Bitcoin Foundation has been criticized in the past for actually doing very little to fund the core Bitcoin infrastructure. Developer Mike Hearn has said the Foundation only pays three people to work on Bitcoin’s core code, and that that the underlying infrastructure is “radically underfunded.” If that is truly the case, what are the hundreds of paying members actually getting out of the Bitcoin Foundation?
Expensive Lobbying Efforts
Part of the answer may lie in recent news that the Bitcoin Foundation’s Board decided to hire the major lobbying firm Thorsen French Advocacy to push the group’s agenda in Washington, D.C. The firm’s other clients include Sprint, Western Union, Comcast NBC Universal, and the largest pharmaceutical lobbying group in the United States. This would suggest that Thorsen French Advocacy is highly successful at getting favorable legislation passed for their clients.
However, it also means that Thorsen French Advocacy charges a hefty fee for their work. After all, greasing the gears of the U.S. political machine doesn’t come cheap these days — especially when it’s done by Washington insiders Alec French and Carl Thorsen. According to the firm’s website, French played a “key role” in passing the Digital Millenium Copyright Act (DMCA) in 1998 — a law that has controversially been used to levy inordinate and unreasonable penalties against file-sharers.
Thorsen, on the other hand, previously worked as legal counsel for the Bush Administration and helped push its agenda in Congress. Attorney General John Ashcroft praised Thorsen for his efforts to help pass the USA Patriot Act of 2001, a law that has subsequently been used as legal basis for draconian surveillance measures in the United States. During 2004, Thorsen worked in Iraq as a senior advisor for Coalition military officials who were tasked with training a new Iraqi police force — a job which has failed spectacularly considering recent events in that country.
Alec French and Carl Thorsen joined forces in 2010 to create Thorsen French Advocacy, a private-sector lobbying firm that boasts deep and intricate connections with politicians on Capitol Hill. Getting that kind of access doesn’t come cheap, especially in the age of unlimited corporate donations. In 2013 alone, Thorsen French Advocacy made nearly $3 million from their work lobbying Congress on behalf of corporations and special interest groups.
Notably, some of the highest-paying clients include groups that use copyright law to inflict considerable violence on end users in the form of expensive lawsuits. The list also includes Comcast, which is currently attempting to create a communications monopoly by merging with Time Warner. Such a blatantly anti-consumer move is only possible when the political machine is greased with Comcast’s dollars — $320,000 to be precise, and that’s just through Thorsen French Advocacy.
We don’t know how much the Bitcoin Foundation is paying Thorsen French Advocacy, but eventually it will be revealed by OpenSecrets via the Senate Office of Public Records. Until then, we can at least hope that the Foundation is paying more than the $80,000 from Western Union — a company whose business model is directly threatened by Bitcoin’s low transaction fees. Buying influence in Washington is nearly useless if a competitor is paying more than you, and it’s even worse if it’s through the same lobbying firm.
Of course, all of this assumes that lobbying politicians is a worthwhile and ethical exercise in the first place — an assumption that is vehemently denied by many in the Bitcoin community who ascribe to libertarian values. They believe that the Bitcoin Foundation is making a mistake by reaching out to politicians and regulators, and that a decentralized digital currency like Bitcoin can thrive on its own without government interference.
Regardless of the political motivations behind lobbying efforts, we can safely say that such efforts are outrageously expensive — whether or not they have the intended legislative effects. As seen above, the majority of 2013 payments to Thorsen French Advocacy were well above $100,000. If these examples are any indication of how much the Bitcoin Foundation paid for this particular brand of political influence, then it’s just more evidence that the Foundation is more focused on political approval than improving the core code of Bitcoin itself.
This goes back to Mike Hearn’s original criticism of the Foundation, and it’s also likely part of the reason Andreas Antonopoulos has resigned from his position. The Bitcoin Foundation — which is a “foundation” for Bitcoin, the technology, in name only — simply has its priorities backwards. It has focused the majority of its efforts and financial strength in gaining the tenuous and unstable approval of government regulators, and probably at an extreme cost. Many in the Bitcoin community believe that such funds would be better spent on improving the technology itself, rather than trying to convince the government to support it.
It remains to be seen if more members will leave the Bitcoin Foundation over such issues, but new funding models are already being put in place to improve the core infrastructure without the help of the Foundation. The most prominent example is Lighthouse, which earned Mike Hearn a $40,000 reward from wealthy entrepreneur Olivier Janssens. If such decentralized funding structures can improve the core Bitcoin code on their own, perhaps we can eventually let the Bitcoin Foundation fade into irrelevancy.