Many open source software projects run on donations. After all, open source is about giving code away for free, and without any revenue, you need some way of covering costs and motivating coders.

Though some of the larger projects, like the increasingly popular Linux operating system, now are backed by big foundations and massive corporations, a smaller project is often on its own when it comes to pulling in dollars and distributing them among volunteer programmers. And that can be a pain.

But Moxie Marlinspike and the rest of the hackers at Open WhisperSystems think they may have a solution: a new piece of software called BitHub that collects donations in the popular Bitcoin digital currency and automatically doles them out to devs. And you can use it for free: BitHub itself is open source.

Open WhisperSystems is best known for TextSecure, an Android application for sending and receiving encrypted text messages, and RedPhone, an app for encrypting telephone calls. In the era of the NSA's PRISM surveillance program, these are rather important, in-demand projects. But since Marlinspike left Twitter, which had acquired his previous company, development of these security apps has been funded mostly by large grants, which cover only part of the work.

"There are ongoing tasks – that are hard to fund through grants – that we rely on donations for," says Marlinspike. "But in the past, it's been hard to accept small donations, because it's not always clear how to deal with them."

BitHub solves that problem by accepting bitcoin donations and collecting them into a common pool. It then monitors a project on the code hosting and collaboration site GitHub, and anytime someone submits code to the project – a process known as a "pull request" – BitHub awards that person a portion of the pool. Open Whispersystems is already using the tool, and the first payment – about $19.12 worth of bitcoins – went out yesterday.

Using the online Bitcoin system to cut out the need for bank accounts and traditional payment processing systems, BitHub is a remarkably simple system. "It's actually easier and lower friction to use Bitcoin instead of some other payment system in terms of how the money gets allocated and distributed," says Marlinspike. "It's harder to do it with other currency." He says Open WhisperSystems may eventually setup a system that would let people accept and disperse donations in traditional currency, if there's enough demand, but he wants to see how the bitcoin experiment pans out first.

It seems like the system is ripe for abuse, but Marlinspike says he's not too worried about that. "It could certainly encourage lots of low quality or fluff pull requests, but our hypothesis is that even fluff commits are better than no commits," he says. "We think the overhead of a creating an accounting system is worse than just occasionally paying out for a low quality commit, but we'll see." Eventually, the team may add a tool that lets donors sponsor the development of particular code features, and that could go a long way towards solving this problem.

If you're looking to donate some bitcoins to an open source project, you can start with BitHub. The project is funded by itself. Such is the circular nature of software.