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 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’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 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.

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.