Impact of Cryptocurrency on Open-Source Software Communities

Cryptocurrency comes with promise and skepticism. While the decentralization of the governance structures brings up the promises for egalitarianism, the lack of a trusted party (e.g., bank or government) nourishes systematical risks. The ongoing discussions on regulating cryptocurrency have been focusing on the characteristics related to its production process, usage, and investment. In this study, we propose that cryptocurrency has a broader impact, and its price movement can affect the communities that share a similar egalitarianism ideology, such as the open-source software (OSS) communities. OSS communities are rooted in an egalitarian engagement of software developers, and the activities of participants on these communities can be affected by cryptocurrency price movement because participants pay close attention to the cryptocurrency market. Specifically, we explore the impacts of cryptocurrency price movement on software development and monetary donations to OSS projects. Our analyses show that the increase in cryptocurrency price decreases the monetary donations to OSS projects. Specifically, a one-standard-deviation increase in Bitcoin price leads to 6.5% decrease in monetary donations to OSS projects. We strengthen the causality with an instrumental-variable approach and verify the result with an extensive group of robustness checks. Additional analyses indicate that the impact of cryptocurrency price movement is more salient when participants on OSS communities become more aware of cryptocurrency, supporting our theorizations. Although we do not find a direct relationship between the cryptocurrency price movement and software development of OSS projects in the main analyses, the follow-up analyses show that the relationship manifests in an indirect manner via monetary donations. The study verifies that the impacts of cryptocurrency are broader than what is commonly believed, and the results call attention to its impacts on non-financial industries