Developers have soured on Bitcoin over the past year. Here’s why it matters

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Crypto prices have suffered badly in 2022, but developer activity for the year paints a more bullish picture for investors. New data released by Electric Capital on Tuesday shows that Ethereum had the most full-time developers in 2022 with 1,873, as of December 15. This brings developer growth to 9% for the year, according to the report, even as the price of ether fell 67%, according to Coin Metrics. Ethereum rivals like Polkadot and Solana followed closely behind, posting growth of 9% and 36%, respectively. For Solana, this growth has come despite the network facing a watershed moment in the wake of the FTX scandal. Its price crashed 50% in the last year, but the strength of its developer community gave investors hope it would pull through. Meanwhile, Bitcoin’s developer population has shrunk by 4%, although it is still fifth in the market with 300 full-time builders. “Crypto is so much more than Bitcoin from a developer perspective,” said Avichal Garg, co-founder of Electric Capital, which invests in early-stage crypto and fintech companies. “Bitcoin is like a digital commodity; it wasn’t really, as a platform, built for ease, scalability, and building on.” He added that although Bitcoin is the most decentralized network in crypto, 90% of developers rely on other blockchains. The Stacks ecosystem, which is dedicated to creating a layer of smart contracts for DeFi, NFT and other decentralized applications on Bitcoin, saw a 20% drop in the number of full-time developers. Why It Matters to Investors Developer activity is an indicator of a network’s usefulness and potential for end users. The more developers that build not only the blockchain itself but, more importantly, the user applications on it, the more likely the blockchain is to grow and sustain a user base. Nick Hotz, vice president of research at Arca, said he sees developer activity as a leading indicator of price for this reason. Garg compared it to the early days of Apple, Google, and other large-cap tech companies we know today. “They spent so much time wooing developers because they figured out if they could get all the developers they would get all the apps and the apps are really the gap around the phone and the OS,” said said Garg. “It’s a proven thing in computing platforms, you have to get every developer.” This is especially important as the industry is still dusting itself off from the FTX collapse, with many hoping for a new era of crypto innovation and investment driven by real and real use cases rather than speculation. on prices. For comparison, Amazon had about 36,000 developers employed at this time last year and Goldman Sachs had 9,000. Electric Capital did not include comparison numbers in this year’s report, and Garg noted that many large companies are cutting jobs, in some cases by the same amount as some of these crypto networks are expanding their developer bases. Bitcoin in perspective In 2022, the price of bitcoin fell by around 64% and in recent years some investors have become critical of the cryptocurrency because it is nothing more than an asset to be bought and monitor through its price fluctuations. It would be easy to conclude that these things drove developers away from bitcoin. Garg and Hotz hinted that the 4% decline in developer numbers over the past year might look like a blow in the near future. “Those are really solid numbers,” Hots said. “Single-digit losses or single-digit gains, versus a big drop in prices over the year, shows that people are sticking around.” Garg also said of the developer decline that, more than a year into the current bear market, the flat performance numbers are “pretty amazing.” He also expects growth to turn “vertical” again in the next bull cycle, noting a similar trend during the previous crypto winter in 2018. “These numbers are not as sensitive as the price on the downside. the price goes up, a bunch of new developers come in” and often end up being retained, he said. “It’s easy to untie a trade. Untying a career decision is really hard.”

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