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Out of Balance: ICO Funding and Developer Availability

The abundance of blockchain initiatives and associated initial coin offerings (ICOs) is generating substantial pools of funding, but a skills gap threatens the stability of blockchain development. If developers aren’t available to maintain the platforms’ momentum, this could mean inefficiencies will seep in and weaken the system as a whole. More pragmatically, projects can stall and funds can sit unused or get misused. Ultimately, if the pool of developers doesn’t grow or mobilize to handle the volume of funds invested in blockchain projects, then this could heighten the risk and threaten an already volatile ecosystem.

To understand this skills imbalance and identify the source of uncertainty, we need a better sense of how many capable blockchain developers are actually out there.

What We Know

In The Business Blockchain, William Mougayar explored the emergence of this new breed of developers, estimating that in the middle of 2016, there were only “5000 developers dedicated to writing software for cryptocurrency, Bitcoin, or blockchain in general.” He suggested there could be four times as many developers; people who have already contributed front-end applications that connect with the blockchain ecosystem.

In February 2017, Mougayar provided an estimate specific to the Ethereum ecosystem and put the number of developers between 20,000 and 25,000.

For comparison, Mougayar also reported that there are an estimated nine million Java developers and more than 18 million software developers worldwide. For its part, Stack Overflow estimates that 16.8 million developers and university level students visit their website on a monthly basis.

In the corporate sector, demand for recruiting and retaining developers is growing, and recruiters say the supply of skilled talent is far from meeting that demand. For example, CEO of Toronto-based Fintech Recruiters Nako Mbelle recently confirmed the developer shortage is especially acute. Among the areas hardest to supply are in the general-purpose purely functional programming languages like Scala and Haskell. Developers who work in the more common languages of Python, Erlang and Golang are more common but staffing remains a challenge.

Antoni Sabado, who works through The Blockchain Connector confirms that the number one issue for the industry is the talent-shortage. He explains that languages like Python and Ruby are most common across blockchain platforms, and when it comes to delivering front-end user support what’s especially needed is Javascript expertise, especially for platforms like Angular, React and Meteor.

Why We Don’t Know More

Like many innovative IT developments before blockchain, the field we see today has humble beginnings that trace back to pioneer developers who began contributing through passion projects. The best and brightest developers emerged from outside the established workforce, or even beyond the established IT sector. The reason isn’t hard to fathom, since blockchain development was a specialized but relatively unsung pursuit with no immediate or clear commercial benefit. If anything, the commercial impacts expected to derive from the platforms have only surfaced in the last couple of years. As Ameer Rosic wrote in his article on Blockgeeks, this outsider status of blockchain has meant ”the best and most experienced developers tend to be in it for the passion.”

Developers Aren’t Always Where We Expect Them

Another route we can use to understand how large the pool is of competent developers is through platforms like LinkedIn or Github. Again, however, the results aren’t conclusive. Developers may already be working on sizable projects from within established organizations, but this work hasn’t been consistently recorded or reported on LinkedIn or Github. Maybe there are legions of in-house developers at big firms, but it’s just as likely that there are many more who are independently working away from the confines of their houses, apartments and even dorm rooms.

There just isn’t clear or decisive information on who’s part of and how large this new workforce really is. The barriers to entry are low, with time and motivation being the main factors deciding if and when a developer decides to get on the blockchain bandwagon. All it takes to get started is a computer, access to online courses and the rest of the field is wide open.

The Competence Shift Can Happen Quickly

Adding to the complexity of the problem is that there’s likely a lot of personal or even professional development going on isn’t yet captured or reflected in job titles. Large companies may be committing their workforce to blockchain work, but this ad hoc work may not yet be formal or consistent enough to be reflected in the company hierarchy. Professional teams may be committing internal resources for training and competence without it being broken out into independent silos.

At the smaller level, incubators and startups may also be so busy on development and getting traction that their work isn’t yet visible in the market. For ever large corporate player committing to blockchain, there may be a much larger pool of independent developers also forging ahead.

Addressing The Talent Shortage

That there’s a gap between available developers and the funds flowing into blockchain is clear, but this also reveals the opportunity. In their 2017 developer survey, Stack Overflow found that, while “only 13.1% of developers are actively looking for a job, 75.2% of developers are interested in hearing about new job opportunities.” Here are a few ways the skills gap is being crossed at the industry level:

  • Blockchain Education Network (BEN) – This network calls itself “Grassroots Blockchain Education” that was created for students, by students. Students and alumni from around the world are collaborating on the network to develop blockchain clubs that run from campuses and other academic faculties. BEN’s mission is to unite people across various connected blockchain hubs for greater knowledge and skill development.
  • Udemy – Their specialist courses aim at strengthening core competencies. For example, in the course “Ethereum Developer: Build A Decentralised Blockchain App,” facilitators Ravinder Deol and Thomas Wiesner promise to deliver a comprehensive course on building a decentralised blockchain application.
  • ConsenSys Academy – Although the application intake for the 2017 developer program is now closed, ConsenSys Academy offers immersive developer bootcamps where participants access the “world’s largest blockchain venture studio and custom software consultancy.” The training is designed to offer a clear career or project path on high-demand blockchain projects.

It will be interesting to see how all of this training and development will evolve and whether successful ICOs will simply draw the talent coming from these programs or not. Another possibility is that funds from strong ICOs will be used to fund more education, or that we’ll continue to see new training programs being offered.

The Tezos Venture Fund Approach

The Tezos Foundation is a new, non-profit foundation that aims at securing its place as the source for direct governance-boosting blockchain protocols. After their record record-breaking $232 million ICO, the Foundation announced the creation of a $50 million venture fund. This fund will be used to invest in projects that will improve Tezos-platform adoption, and funds will be distributed through direct investment and from Tezos’ venture capital partners.

Rather than being a product in and of itself, Tezos aims to strengthen and secure blockchain protocols. To succeed as a high-trust component in the blockchain ecosystem, Tezos will only succeed if the platform is stable, secure and seamless enough to handle rapid adoption. Failure in the early stage could have a significant limiting effect, which is precisely why Tezos needs talented in-house developers and people who contribute to platform use. At such an early stage, the skills gap is critical in order to bridge their credibility gap.

The Path to a Steady State

These are clearly the early days of what promises to be a massive change in large, systemic platforms. Since we find ourselves so close to this horizon, it’s difficult to accurately predict what the future will bring. If there’s one trend to watch, it’s that the need for developers will keep growing as the blockchain domain develops and matures.

About the Author

Josh Davis is a Strategist with ITFO Communications and Managing Editor on the blockchain and cryptocurrency research team. He has over a decade of experience in financial services and technology communications, helping clients implement tangible, multi-year global programs by leveraging future trends. His research on emerging technologies has been quoted in top publications, including The New York Times, Tech Crunch and Forbes.
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