<img src="https://bitcoinmagazine.com/.image/c_fit%2Ch_800%2Cw_1200/MTc5Mjk3NzYxMzkzMTI1MDE1/educating-the-next-wave-of-bitcoin-developers.jpg” />
Of the 11 financial institutions that issued spot bitcoin ETFs in January 2024, only two (Bitwise and VanEck) have committed to donating a percentage of their profits to open source bitcoin development.
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Regardless of whether large holders are harassing ETF sponsors to fund core development, the real question is: why only twitter.com/BitwiseInvest?ref_src=twsrc%5Etfw”>@BitwiseInvest
—nic "full of money" carter (@nic__carter) twitter.com/nic__carter/status/1778069465894178995?ref_src=twsrc%5Etfw”>April 10, 2024
When considering the logic behind Bitwise and VanEck's decision to donate to the developers who maintain and update the bitcoin protocol, it is difficult to imagine why more spot bitcoin ETF issuers have not followed suit.
“While we use 'donation' language when supporting developers, I think it's actually closer to a self-investment to strengthen the asset,” Hong Kim, co-founder and CTO of Bitwise, wrote in a AMA thread on Stacker News. “Many people think that bitcoin is magically maintained, but that is not true! If you manage a large pool of bitcoin and charge fees for doing so, why not reinvest some of that into the underlying infrastructure?
For this reason, Bitwise, which issued its bitcoin spot ETF under the name bitcoin-etf-bitb-begins-trading”>Bit by Bit bitcoin ETF (ticker: BITB), pledged to donate 10% of its ETF fee profits to three different nonprofits that fund bitcoin Core developers: OpenSats, Edge and the Human Rights Foundation (HRF) – for 10 years.
“Brink, OpenSats, and HRF were the most established nonprofits with a history of funding bitcoin developers; they had proof of work, so to speak,” Kim told bitcoin Magazine.
VanEck, which issued its bitcoin spot ETF under the name bitcoin-trust-hodl/overview/”>VanEck bitcoin Trust (ticker: HODL), also sees the value in supporting bitcoin Core developers. Therefore, he promised to contribute 5% of HODL profits to Brink, as well as make an initial donation of $10,000 to the organization.
“We believe TradFi will benefit from the efforts of major bitcoin contributors,” Matthew Sigel, head of digital asset research at VanEck, told bitcoin Magazine.
“Since we are going to benefit from the increase in the price of bitcoin, it makes sense that we also give back to the work of the innovators who make the chain possible,” he added.
Given that the only sensible thing to do is for spot bitcoin ETF issuers to give back to bitcoin Core developers (those who support and promote the underlying asset of their financial product), who will be next to follow Bitwise and VanEck's lead?
bitcoin development and open source scaling solutions for the protocol could benefit significantly if more of these major financial institutions donated even a small portion of the profits from their bitcoin ETF spot fees.
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