The Problem

As a lawyer I have become concerned by the legal risks faced by bitcoin core developers. The issue of legal protection for these vital players in the bitcoin ecosystem is complex and there is no obvious solution. I have broken down the problem areas as I see them:

Bitcoin is decentralized

Bitcoin is not a corporation, foundation, or other legal entity. In essence, “there’s no there there.” This is one of its greatest strengths, but it is also one of the reasons why it is difficult to protect bitcoin developers. There’s no legal department to provide representation, review contracts, etc., nor should there be.

Bitcoin is open source software

Bitcoin’s code is open source. Once again, this is one of its important strengths. Anyone can validate any piece of its code at any time. This presents a legal liability issue for developers, because the licenses endorsed by the Open Source Initiative (OSI) can’t provide liability protection by their very nature. That can only be achieved through proprietary software licensing, which is a non-starter for bitcoin.

Bitcoin has no borders

Bitcoin can be used without permission worldwide, which is another one of its great strengths. This is also a problem when it comes to legal liability, as has been seen recently. Plaintiffs can “forum shop” for jurisdictions in a country or region whose laws are most favorable to a party looking to sue a software developer. Developers can be financially devastated by a frivolous lawsuit, even if they win in the end. It is costly to pay travel expenses, living expenses and legal fees, and their source of income will be disrupted while they defend themselves.
Currently bitcoin core developers are funded by renewable grants provided by Brink, an independent, London based non profit. As a result of the long bear market funding has reportedly been stretched thin. I looked at the Brink website and it does not mention grant funding for legal defense. I am not suggesting that Brink should take over this financial obligation.

The Solution

As I see it, the solution is to work out a system to provide legal funding to developers who are sued as a result of their work on bitcoin core. This funding would include travel expenses incurred to defend themselves, legal fees for local lawyers retained for their defense, and (less likely) payment of judgments if cases end in adverse decisions. I have no doubt the bitcoin community would be generous with funding. This fact was proven with the generous assistance provided to hodlonaut.
I believe the bitcoin community realizes the risk of losing core developers in the current environment, and the necessity of attracting and retaining talented individuals to maintain and improve the software. If developers knew they would be protected and indemnified attrition issues would probably disappear.
I think that rather than creating a central organization, it would be best to develop a decentralized network of lawyers and donors worldwide to provide assistance on an ad hoc basis. The network can be activated when needed, and fundraising could be crowd sourced. I think it is important that this network be publicized so that developers know they have the support of the community.
I agree with your concerns.
"Currently bitcoin core developers are funded by renewable grants provided by Brink, an independent, London based non profit. As a result of the long bear market funding has reportedly been stretched thin."
Several organizations have fortunately been funding developers to work full-time. The longest-running ones that are currently active are probably Blockstream, Chaincode Labs, Spiral (previously Square Crypto), HRF (Human Rights Foundation), BitMex and OkCoin, along with Brink and Strike, among others that are more recent. Gemini unfortunately recently shuttered their funding program called Superlunar. Compass Mining and Coinbase also did some funding but AFAIK not currently.
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Everyone coming together to make the space sound and secure. :) I agree crowd source funding is better than centrally sourced.
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Part of the story may be COPA: https://www.opencrypto.org or other jack's initiatives
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Thanks for the links. Do you know the status of Jack's initiative and whether he was involved in assisting the developers in this ongoing litigation? I know the Bitcoin Magazine article from early 2022 mentions the case, but I have not seen mention of his involvement recently. Also, I can't find a website for The Bitcoin Legal Defense Fund, nor can I find any mention of it in the press over the last year.
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If you have questions, their contact is info at bitcoindefensefund.org. They are pretty responsive.
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Thanks! I'm happy to hear that they are available for those developers who need their help. With Jack involved I would guess funding isn't an issue.
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I asked Jack about the state and he says that it's just him and Alex from Chaincode currently.
The case you link is well known, so I hope one of the organizations is looking into it.
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Do the satoshi. No need to fight with lawyers when we can fight with technology. The former is a lost cause, but in the latter we have complete advantage. Bitcoin is above the law.
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