The Cathedral and the Bazaar: Moving from Barter to a Currency System

This post was originally published as "How blockchain can complement open source" on under CC BY-SA 4.0. If you prefer, you can also read the same post on Medium.

Open Won Over Closed

The Cathedral and The Bazaar is the classic open source story written 20 years ago by Eric Steven Raymond. In the story, Eric describes a new revolutionary software development model where complex software projects are built without (or with a very little) central management. This new model is open source. Eric's story compares two models:
  • The classic model (represented by the cathedral) where software is crafted by a small group of individuals in a closed and controlled environment through slow and stable releases.
  • And the new model (represented by the bazaar) where software is crafted in an open environment where individuals can participate freely, but still produce a stable and coherent system.
Some of the reasons for open source being so successful can be traced back to the founding principles described by Eric. Releasing early, releasing often, accepting the fact that many heads are inevitably better than one allows open source projects to tap into the world's pool of talent (and not many companies can match that using the closed source model).

Two decades after Eric's reflective analysis of the hacker community, we see open source becoming dominant. It is not any longer a model only for scratching a developer’s personal itch, but instead, the place where innovation happens. It is the model that even worlds largest software companies are transitioning to in order to continue dominating.

A Barter System

If we look closely at how the open source model works in practice, we realize that it is a closed system exclusive only to open source developers and techies. The only way to influence the direction of a project is by joining the open source community, understanding the written and the unwritten rules, learning how to contribute, the coding standards, etc, and doing it yourself. This is how the bazaar works and where the barter system analogy comes from. A barter system is a method of exchange of services and goods for other services and goods in return. In the bazaar - where the software is built, that means, in order to take something, you have to be also a producer yourself, and give something back in return. And that is, by exchanging your time and knowledge for getting something done. A bazaar is a place where open source developers interact with other open source developers and produce open source software, the open source way.

The barter system is a great step forward and an evolution from the state of self-sufficiency where everybody has to be a jack of all trades. The bazaar (open source model) using the barter system allows people with common interests and different skills to gather, collaborate and create something that no individual can create on their own. The barter system is simple and lacks complex problems of the modern monetary systems, but it also has some limitations to name a few:
  • Lack of divisibility - in the absence of a common medium of exchange, a large indivisible commodity/value cannot be exchanged for a smaller commodity/value. For example, even if you want to do a small change in an open source project, you may still have to go through a high entry barrier sometimes.
  • Storing value - if a project is important to your company, you may want to have a large investment/commitment in it. But since it is a barter system among open source developers, the only way to have a strong say is by employing many open source committers and that is not always possible.
  • Transferring value - if you have invested in a project (trained employees, hired open source developers) and want to move focus to another project, it is not possible to transfer expertise, reputation, influence quickly.
  • Temporal decoupling - the barter system does not provide a good mechanism for deferred or in advance commitments. In the open source world, that means a user cannot express its commitment/interest in a project in a measurable way in advance, or continuously for future periods.
We will see below what is the back door to the bazaar and how to address these limitations.

A Currency System

People are hanging at the bazaar for different reasons: some are there to learn, some are there to scratch a developer’s personal itch and some work for large software farms. And since the only way to have a say in the bazaar is by becoming part of the open source community and joining the barter system, in order to gain credibility in the open source world, many large software companies pay these developers in a monetary value and employ them. The latter represents the use of a currency system to influence the bazaar. Open source is not any longer for scratching the personal developer itch only. It also accounts for a significant part of the overall software production worldwide and there are many who want to have an influence.

Open source sets the guiding principles through which developers interact and build a coherent system in a distributed way. It dictates how a project is governed, software is built and the output distributed to users. It is an open consensus model for decentralized entities for building quality software together. But the open source model does not cover how open source is subsidized. Whether it is sponsored, directly or indirectly, through intrinsic or extrinsic motivators is irrelevant to the bazaar.
Centralized and decentralized ecosystems supporting open source

Currently, there is no equivalent of the decentralized open source development model for subsidization purpose. The majority of the open source subsidization is centralized and monopolized typically by one company which dominates a project by employing the majority of the open source developers of that project. And to be honest, this is currently the best case scenario which guarantees that the developers will be employed and the project will continue flourishing. While a company is working on its paid software or services whether that is SaaS subsodizes open source development indirectly.

There are also exceptions for the project monopoly scenario: for example, some of the Cloud Native Computing Foundation projects are developed by a large number of competing companies. Also, the Apache Software Foundation aims for their projects not to be dominated by a single vendor by encouraging diverse contributors, but most of the popular projects, in reality, are still single vendor projects...

What we are still missing is an open and decentralized model that works like the bazaar without a central coordination and ownership, where consumers (open source users) and producers (open source developers) interact with each other driven by market forces and open source value. In order to complement open source, such a model also has to be open and decentralized and this is why the blockchain technology would fit here best. This would create an complementary ecosystem that flows subsidies from users to developers, but without a centralized and monopolized entity (such as an open source company). There are already successful open source cryptocurrency projects such as Decred, Dash, Monero, Zcash, that use a similar decentralized funding model where a portion of the mining or donations subsidy is used for their own development.

Most of the existing platforms (blockchain or non-blockchain) that aim to subsidize open source development are targeting primarily bug bounties, small and piecemeal tasks. There are also a few focused on the funding of new open source projects. But there are not many that aim to provide mechanisms for sustaining continued development of open source projects. Basically, a system that would emulate the behavior of an open source service provider company, or open core, open source based SaaS product company: ensuring developers get continued and predictable incentives, and guiding the project development based on the priorities of the incentivizers, i.e. the users. Such a model would address the limitations of the barter system listed above:
  • Allow divisibility - if you want something small fixed, you can pay a small amount without paying the full premium of becoming an open source developer for a project.
  • Storing value - you can invest a large amount into a project and ensure its continued development and ensure your voice is heard.
  • Transferring value - at any point, you can stop investing in the project and move funds into other projects.
  • Temporal decoupling - allow regular recurring payments and subscriptions.
There would be also other benefits raising purely from the fact that such a blockchain based system is transparent and decentralized: to quantify a project's value/usefulness based on its users' commitment, decentralized roadmap governance, decentralized decision making, etc. While there still will be user who prefer to use the more centrally managed software, there will be others who prefer the more transparent and decentralized way of influencing projects. There is enough room for all parties.


On the one hand, we see large companies hiring open source developers, and acquiring open source startups and even foundational platforms (such as Microsoft buying Github). Many if not most long-running successful open source projects are centralised around a single vendor. The significance of open source, and its centralisation is a fact.

On the other hand, the challenges around sustaining open source software are becoming more apparent, and there are many investigating deeper this space and its foundational issues. There are a few projects with high visibility and a large number of contributors, but there are also many other still important projects but with not enough contributors and maintainers.

There are many efforts trying to address the challenges of open source through blockchain. These projects should improve the transparency, decentralization, subsidization, and establish a direct link between open source users and developers. This space is still very young but progressing fast, and with time, the bazaar is going to have a cryptocurrency system.

Given enough time, and adequate technology, decentralization is happening at many levels:
  • The Internet is a decentralised medium that unlocked world's potential for sharing and acquiring knowledge.
  • Open source is a decentralized collaboration model that unlocked the world's potential for innovation.
  • And similarly, blockchain can complement open source and become the decentralized open source subsidization model.
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