The use of Bitcoin to reward programmers in open-source software projects is becoming popular, WSJ's Venture Capital Dispatch reported.

BitAngels Executive Director David Johnston told the Venture Capital Dispatch, "The real potential [of Bitcoin], the mass-market potential, is the stuff we are working on with these new projects. It's where we replace more consumer-facing things, like eTrade or Dropbox. In the next couple of years this next wave of applications will be built on top of Bitcoin." BitAngels is a loose network of angel investors that support startups that focus on the Bitcoin.

Most of the open-source software is formed by several programmers who provide their skills for free for the project. Some of them have obtained compensation for the work they do through crowdfunding on such platforms as Kickstarter or BountySource.com. The latter is a site developed specifically to finance the development of open-source software, the report said.

For Johnston, the digital currency could be another and potentially better way to monetize open-source. BitAngels have already poured the Bitcoin equivalent of $5 million into the open-source platform MSC Protocol which runs on the website of Mastercoin.org. Johnston said Bitcoin was used by 50 members of BitAngels network to purchase digital tokens known as mastercoin. The Bitcoins obtained are now utilized to encourage programmers to make new features using the MSC Protocol, the report said.

While the primary feature of the MSC Protocol is that of a digital-currency exchange, Johnston said it could have other uses down the line. For instance, it could allow people to virtually give digital documents such as titles and deeds, the report said.

Johnston said that the idea behind their efforts is that the value of mastercoin rises as the Mastercoin platform becomes more developed and gives new features. As a result, the original investors would be able to reap returns on their investment, the report said.