Cryptocurrency developers now pulling $1 million+ signing bonuses
2018 has seen cryptocurrency consolidate around huge amounts of money and not enough developers.
One of the key elements to look at when vetting a cryptocurrency project is the team behind it. Not only is it a great way to pick out the scams, but it can also give some broad hints about the overall quality of a project.
Experienced blockchain developers are an especially big draw card. They can make a fortune working anywhere they want, so if they choose to work on a specific project, commonly held wisdom is that the project must have serious potential.
According to Ripple chief cryptographer David Schwartz, speaking to The Wall Street Journal, one developer on his team recently received not one, but two, $1 million signing bonus offers. One was from a cryptocurrency startup he said, while the other was from a large established tech company looking for blockchain talent.
The hiring packages have "gotten insane", he said.
Despite slumping bitcoin prices, the cryptocurrency space has continued to see monumental growth in other areas throughout 2018, attracting top talent from established financial services with top-dollar offers.
So far, 4,500 job openings with the terms "blockchain", "bitcoin" or "cryptocurrency" in the title have been posted on LinkedIn this year. By mid-May 2018, this is a 151% increase over 2017, while only 645 were posted in 2016. VC funding in cryptocurrency and blockchain has followed an identical trend, with 2018 already smashing the total amount invested in all of 2017.
Signing bonuses are relatively common among top tech companies, with a recent TeamBlind survey finding that 67% of surveyed tech company employees received one. But only 11% of those were $100,000+, while far more were under $10,000. The $1 million+ signing bonuses for developers with just a few years' experience is far beyond the norm in any tech company.
There might be several inter-related factors contributing to the enormous hiring bonuses right now, beyond simple supply and demand.
Demand has spiked in 2018. On the part of exchanges, the surge of demand in December saw many realise that they had to drastically scale up, while simultaneously endowing them with the funds to do so.
Cryptopia, a relatively small exchange that's all but unknown outside New Zealand started 2017 with 2 staff members and finished with about 100 and plans to hire many more. Coinbase aims to double its headcount in 2018 with top talent, while Kraken plans to quintuple it from 200 to 1,000.
Crypto projects are trying to scale similarly. ICOs raise funds before even having a viable product, and then scramble around the same space trying to hire developers afterwards. Projects conceived or funded in 2017 are now all trying to hire at the same time and experiencing delays because they just can't find developers.
The demand for blockchain developers isn't just increasing – it's multiplied many times over in a very short period of time.
Fortunately, there's plenty of money to go around. Those ICOs might not be able to find developers, but they had no trouble raising funds. Large exchanges similarly finished 2017 with massive war chests, big plans for the future and a complete lack of experienced developers in the marketplace.
At the same time, blockchain venture capital funds have also multiplied and eagerly started throwing money into the space.
"Today, there are probably more of these 'professional VC funds' than there are startups," as Binance CEO Zhao Zhangpeng has sardonically noted.
Many of those VC funds are the ones who have recently followed the money and found themselves in crypto. But some of the biggest spenders might be the blockchain early birds and crypto companies left with huge amounts of money after the growth of crypto in 2017.
Many of these crypto companies are now sprouting their own VC arms to fund other projects, such as Ripple (Xpring), Coinbase (Coinbase Ventures) and Bitmain (just Bitmain with suitcases full of cash).
This might be a sensible response to the more-money-than-talent problem facing the cryptocurrency industry right now. One of the problems facing recruiters is that many developers with more than a couple of years' experience in blockchain technology are millionaires already and more interested in valuable projects than a big pay cheque.
Funding useful projects directly, rather than trying to hire the project's lead developers, lets companies give developers a level of creative freedom and personal investment in a project that money can't always buy.
Disclosure: At the time of writing, the author holds ETH, IOTA, ICX, VEN, XLM, BTC and NANO.