This is a following up for the conversation started by @Scoresby with the question:
what is a sustainable model for onchain Bitcoin wallet software development?
This is an extreme opinion (even for myself) but I think is the best answer to what we're pursuing as bitcoiners.
Introduction: The Paradox of Free and Critical
The Bitcoin ecosystem thrives on open-source software. It's a world where people entrust their life savings to applications they didn’t pay a cent for. This introduces a unique paradox: we demand freedom, security, and transparency, but we don’t pay for the tools that guarantee it. Even more, we value free markets and incentives, yet expect Bitcoin wallets to exist and evolve out of altruism.
So what’s the path forward? What kind of model can ensure long-term development, security patches, feature upgrades, and alignment with Bitcoin’s protocol—without betraying its ethos?
Let’s explore the current landscape of wallet monetization and build toward a model that honors the freedom Bitcoin offers.
Wallet Monetization Models
Here’s an overview of how current Bitcoin-only (or mostly Bitcoin) onchain wallets sustain themselves based on #944967:
| Model | Description | Example Projects | Pros | Cons |
|---|---|---|---|---|
| Donations/Grants | Funded by community or institutional support | Bitcoin Core, Sparrow, Specter | User-focused, preserves freedom | Unstable, depends on goodwill or VC altruism |
| Freemium/Subscription | Free basic app, premium features unlocked through subscriptions | Nunchuk, Keeper, Theya | Predictable revenue | Introduces centralization, relies on dev infrastructure |
| Device Sales | Wallet tied to hardware devices | Bitkey, Envoy | Scalable, aligned with sovereignty | Limits access based on geography or price |
| Custodial Services | Funds held by a third party | Casa, River, Swan | Simple onboarding for new users | Compromises on "Not your keys, not your coins" |
| Tx Commissions | Wallet takes a fee from trades within the app | BlueWallet (speculatively, maybe not) | Transparent funding method | User becomes product; hard to avoid surveillance and KYC |
| L2 Services | Monetization through Lightning routing fees or service layers | Phoenix, Breez, Zeus | Innovative, supports network growth | Not suitable for cold storage or large holdings |
| Sell the Software | Direct payment for downloading or unlocking the app | (Rare or nonexistent) | Clear transaction, sustainable if valued | Cultural resistance; rare in open-source culture |
Each of these models carries tradeoffs—especially when you consider global context.
Why Context Matters: Global Finance Is Not Equal
In countries with stable banking systems (U.S., Europe, Japan), Bitcoin wallets are largely seen as savings vaults. People use their banks for spending and turn to Bitcoin as a hedge or long-term store of value. In these places, users are more comfortable with subscription models or regulated custodial solutions.
But in the global south—Latin America, North Africa, parts of Asia—Bitcoin plays a different role. Banks are distrusted, inflation is high, and people are not just saving in Bitcoin; they’re trying living on Bitcoin. Wallets aren't just tools, they’re lifelines. Asking users to subscribe, give up sovereignty, or rely on opaque intermediaries is antithetical to the entire point. Can't use bitcoin? Go straight to cash or side-banks solutions like EMP (Giros Tigo, M-PESA). Taxes? We don't care, I don't mind not pay taxes when I buy nor I care even less how to present my fill form to authorities. Bitcoin is need.
In this context, the question isn't “can I pay for a wallet?”—it's “can I use it without being surveilled, blocked, or priced out?”. That's why technologies Lightning-L2 related have some much adoption, because we need not only to save but to pay our things. Just look El Salvador, Argentina or lately Bolivia, countries that need alternative to keep receiving/sending while having a volatility index very high.
The Bitcoin Standard: Build Your Own Wallet
Under the Bitcoin standard, the sustainable model must allow any individual to create their own wallet—no permission required, no gatekeepers, no payment walls. Think of it like designing your own leather wallet to carry cash. Anyone can do it, because the knowledge is public, the materials are available, and there’s no centralized authority controlling the process.
The same is true with Bitcoin:
- Wallets can integrate privacy-enhancing tools like Whirlpool (CoinJoin).
- They can adopt PayNym or BIP47 for stealth addresses.
- Features like automated DCA (Dollar Cost Averaging) can be designed to optimize both strategy and privacy.
- Visuals can display only sats, not fiat denominations, reinforcing the mindset that Bitcoin is the native unit.
What sustains these features? A community of developers building modular, composable, interoperable tools. The protocol enables this—Bitcoin is both a financial layer and a developer’s playground.
The Custodial Dilemma: Easier, But Risky
Let’s be honest: custodial wallets make onboarding smoother. They're easier to explain. “Download app, get coins.” That’s it. But this simplicity comes at a cost.
- “Not your keys, not your coins” is not just a mantra—it’s survival.
- Custodial wallets are subject to seizure, surveillance, and censorship.
- They build bad habits: users don’t learn how to verify, back up, or transact privately.
And yet, we’ve seen it again and again: many newcomers start with custodial solutions and only move to self-custody after something goes wrong—a blocked account, a missing withdrawal, or an unexplained freeze. Then they meet the 12 words. And yes, the seed phrase is scary at first. But over time, it becomes the ultimate expression of financial freedom.
Transaction Fees: A Ticking Time Bomb
Some wallet developers seek sustainability by taking a small cut of in-app transactions. It's easy to justify: "We only take 0.5% for maintenance." But this model is fundamentally flawed in the context of Bitcoin.
- It reintroduces third-party dependence into a tool meant to eliminate it.
- It discourages self-custody by tying wallet use to an ongoing cost.
- It creates perverse incentives: developers are now driven to optimize for volume, not user sovereignty.
In the short term, this might work. But long term, it turns wallets into surveillance engines and behavioral data extractors—exactly what Bitcoin was meant to disrupt.
A sustainable model can’t be built on transaction tax. That’s fiat logic.
Conclusion: DIY Is the Only Model That Scales with Sovereignty
In Bitcoin, every decision is a reflection of trust. Who do you rely on for custody, code, and convenience? A sustainable model for wallet software must allow people to opt out at every layer. If you don’t like the wallet UI—change it. If the devs abandon the project—fork it. If the company goes under—run your own build.
This is only possible because the information is free, the protocol is neutral, and the design is decentralized by nature. We don’t need more paywalls. We need more builders. More tinkerers. More people realizing that “wallet software” is not a product you buy—it’s a freedom you exercise.
That’s the Bitcoin way.
That’s the model that lasts. That's my two sats.
That’s the model that lasts. That's my two sats.