Summary

• Over 23,343 open source software engineers are responsible for a market worth over $1 trillion currently.
• The U.S. has lost market share to emerging markets such as India and Ukraine.
• The U.S. is losing 2 percent market share per year for the last five years and is now down to 29% market share. This threatens US preeminence in finance and technology.
• If current growth rates continue, we anticipate 1 million new open source software engineering jobs in blockchain created by 2030. There are likely 3 million new non-technical roles that will also be created by 2030. U.S. losing developer mindshare early means it may be difficult to recapture mindshare as the blockchain sector grows.
• A version of this article first appeared on Electric Capital. Check out the Crypto Council’s Analysis page for more insights.

The U.S. must move quickly to preserve preeminence in financial markets & related technologies

Crypto and blockchain technologies are the next wave of the Internet, with the potential to fundamentally change money, the financial system, and the Internet more broadly. That the U.S. is losing market share in blockchain software development highlights the need for the country to take action to preserve its preeminence in financial markets and related technologies.

The U.S. must consider the following aspects:

1. Jobs & Financial Impact: Maintaining a strong presence in blockchain software development enables the U.S. to create jobs and fuel financial inclusion as the broader blockchain ecosystem continues to grow.
2. Standards Influence: By designing new protocols, U.S. engineers can define the standards for financial and data systems, shaping the modern equivalents of SWIFT and HTTP. Losing market share means that other countries can exert more influence over global financial and data standards.
3. National Security: The U.S. must shape the development of new technology and financial products to reflect American values and national security objectives.

Understanding the geographical distribution of blockchain developers is crucial for the United States in order to maintain its leadership in the rapidly evolving blockchain and cryptocurrency ecosystem. With the growth of crypto developers in other regions, such as India, Africa, and LATAM, the U.S. must adapt its strategies and policies to foster innovation, attract and retain talent, and ensure that its interests are protected in the development of new financial and technological standards.

To achieve this, the U.S. can consider implementing the following measures:

1. Education and Training: Investing in educational programs and initiatives that focus on blockchain and cryptocurrency development can help to create a highly skilled workforce and retain top talent within the U.S.
2. Regulatory Clarity: Providing clear and supportive regulations for the cryptocurrency and blockchain industries will encourage more innovation and foster growth within the country. This will make the U.S. an attractive destination for both new and established developers.
3. Public-Private Partnerships: Encouraging collaboration between the government, private sector, and academic institutions can foster research, development, and innovation in the blockchain and cryptocurrency space, further solidifying the U.S.’s position as a global leader in this field.
4. Global Collaboration: Engaging with other countries and international organizations to develop global standards and best practices for blockchain and cryptocurrency technologies can help ensure that the U.S. maintains its influence in shaping the future of these industries.

By taking these steps, the United States can not only regain its leadership position in the global blockchain and cryptocurrency ecosystems but also drive innovation, job creation, and economic growth, while ensuring national security and promoting American values in the development of new financial and technological systems.

Full Analysis

Overview: 23,343+ open source software engineers are responsible for a market worth $1 trillion

The blockchain ecosystem has seen remarkable growth in recent years: the number of active developers increased by 297% even as prices returned to January 2018 levels.

As of December 2022, there were 23,343 monthly active blockchain developers, and based on a growth model from 2017 to 2022, this number is projected to reach 1 million by 2030.

In this blog post, we analyze the geographic distribution of these developers.

Methodology: We use self-reported data & time zone data to analyze developer geography

We use two methods to determine the geographic distribution of open source blockchain developers:

Methodology #1: Self-Reported Locations

We extract country information from the location data specified by developers on their social media and code versioning platform accounts such as Twitter and GitHub. This technique allows us to extract the geography of 11,024 developers that contributed to blockchain open-source development.

Limitations to Methodology #1:

1. Users can input free text in the location information. A percentage of values may be false locations or unrelated values.
2. Users who move from one country to another might forget or not want to update their location information.
3. We mapped 193 countries in 33 languages, including flag emojis, 1,008 U.S. locations and the top 30 cities in the world. However, we didn’t map cities in certain languages. As a result, countries like China, India, Brazil or Indonesia may be underrepresented.

Methodology #2: Developer Time Zones

This method infers developer location using the time on their local machine when they submit code to the git open-source database. All commit timestamps have an offset component at the end, which we map to regions that cover different sets of longitudes. If the developer used multiple offsets, we picked the most frequent one for each year.Our analysis uses over 200 million time zones from code commits, dividing the world into three broad regions: Americas (between UTC -12 and UTC -3), Europe / Africa (between UTC -2 and UTC +3), and Asia / Oceania (between UTC +4 and UTC +14).

Limitations to Methodology #2:

1. Time zones are usually shared by multiple countries and even continents. For example, U.S. time zones are shared with Canada, Central America, and Latin America. Accordingly, we can distinguish between developer activity in the Americas vs. other locations, but not within the Americas. Same thing happens with Europe and Africa, and with Asia and Oceania.
2. To evaluate this model’s performance, we used Method 1 (Self-Reported Locations) as the ground truth to conclude that Method 2 has an accuracy of 85%. In other words, this time zone-based model corroborates the data findings from Method 1.

Results from Self Reported Location Data: U.S. loses 2% of blockchain developer share annually since 2017

Currently, North America and Europe are home to 29% of all crypto developers each. Asia is the next largest region at 13%. The UK, India, and LATAM each have 5% to 6%. Canada and Africa have similar shares of blockchain developers at 4% and 3% respectively.

By mapping developer shares over multiple years, we can analyze how developer shares have evolved across each region. India’s blockchain developer share has grown the most consistently compared to other regions from 2% in 2017 to 6% in 2022.

However, the U.S. is losing its lead: its share of blockchain developers has declined by around 2% every year since 2017. Developer share in the U.S. fell from 40% in 2017 to 29% in 2022.

In contrast to the U.S. which has consistently lost share, Europe (excluding the U.K.) has maintained a consistent share of 29% of crypto developers.

Zooming in on Europe, the U.K. and Germany lead in developer share, but both are losing developer share across time. Out of the European countries with 4%+ developer share, Ukraine is the only country gaining developer share.

By normalizing the data, we can analyze how developer share dominance has changed over time. India, Africa, and LATAM are capturing blockchain developer share away from the U.S.

Results from Developer Time Zone Data: Share of blockchain developers from the Americas is below 30% for the first time

Using timezone data from code commits, we see that developer share in the Americas has dropped below 30% for the first time, even when including LATAM countries.

Meanwhile, countries in the Asia / Oceania regions took three years longer to onboard crypto developers than their counterparts in other regions.

The Two Methodologies Corroborate Developer Geographic Trends

We use two methodologies in order to corroborate that developer geography trends are directionally correct and not merely a consequence of the methodology we used.To summarize, we use two methodologies to infer developer geography:

1. Methodology #1: Self Reported Location data pulled from Github and social media profiles.
2. Methodology #2: Timestamps of developer code commits. We use the offset between the timestamp of a developer’s commit and UTC (Coordinated Universal Time) to infer their location.

Methodology #2 provides a more complete picture of the global distribution of developers, even if they have not provided detailed location information on their social media profiles. Albeit being less precise than Methodology #1, the volume of data available with Methodology #2 is orders of magnitude larger.

Using developers’ time zones as a proxy for location, we found that Methodology #2 has an accuracy of 85% when using Methodology #1 as the ground-truth or baseline.