Very insightful! Thanks for sharing.
I don't see the main benefits of it for developers to make a living. I see it more as a voting system, where people can vote on the features they want to see develop. I imagine it will draw attention to projects and people will actively rate projects and try to contribute their opinion, even as non-developers. The idea is not so much about paying developers, but more about governance of open source projects using blockchain tokens.
Of course there is a lot more needed for this to work than just paying developers in crypto for resolving issues. There need to be smart contracts tied to a test suite, which needs to be extremely robust, there has to be support for reviews, discussions, collaborative decision-making and administration. It is basically the refactoring of collaborative open source software development as it is done today using git and github, etc.
This is very much going in that direction 
Okay so the paying for solutions part has been done. I see you even funded that issue 
The other idea is the governance part, where people work out designs collaboratively and basically design software tests democratically. Kind of like a git repository for a test suite, which can be used as a test driven project plan. Along with social networking features, like following, liking, commenting, sharing and review support, i.e. change proposals, questions and answers, documentation, everything in one place, like github should have been (maybe), this could be a real marketplace for software. And actually, I like to think about it even beyond software. Something like that could be used for any kind of collaborative planning, design, governance, in companies and governments. Decentralized, using a blockchain based database (built on Solana), all open source and international. I really believe in this kind of idea, and I hope it will still come to be in my lifetime 
I think this is what we need to really solve global political issues and all of the problems people have. By basically giving everyone the opportunity to make laws and vote.
Neither cryptocurrency nor "smart" "contracts" should be involved in any way in this process. The people doing the work will want to get paid in the kind of money that they can use to buy groceries and whose value doesn't fluctuate by 50% or more a day. The organizations providing funding will want to work with traditional, court-enforced employment contracts.
There are crypto currencies that mirror the value of the US Dollar, Tether USDT. You can withdraw crypto from any crypto exchange and get paid into the banking system. And as I said, it is not supposed to replace work to make a living.
Regardless, it's sheer overhead, you get nothing useful out of cryptocurrency in this context.
My day job involves, among other things, keeping tabs on the ever more ridiculous things people are trying to make cryptocurrency be useful. I have come to the conclusion that there is no way to make cryptocurrency be useful for transactions that are legal and not gambling speculative.
One concern I have hear is that a lot of people do work in discussions, working out the details etc, but probably only one or two people would get the reward. Which could lead to jealosy and people helping in targetted but less helpful ways.
I'm completely down with sponsored projects. RSoC style etc. But definitely nothing at the PR level. That would kill more contributrons than it encouraged.
It allows for decentralized, secure data storage, which is very useful when you have to keep track of anything that has critical value. Currency is just the prime example, but you can just aswell use it for votes or tokens that grant you rights in a project.
I don't understand how you came to that conclusion. Blockchains are decentralized secure data histories, as soon as their APIs become more stable, they will become extremely useful for decentralized applications that need to trust their data.
That is a problem I have also been thinking about, how do you decide who did how much of the work? I guess the best way to handle this is to break a project up into tasks and assign each task a reward. People can then work on the tasks, alone or in teams, unlock the reward and split it up on their own accord. The point is, that they can also split up the task beforehand and delegate the reward on those subtasks, which they then complete on their own. It is like making a contract, were everyone says exactly what they will do and agree on what they will get.
It does, but less efficiently and with more negative side effects than more conventional alternatives, and I don't think it's possible to change that. I could go into great detail about why, but this is already veering off-topic. Let's stick to the specific case of paying developers to work on Rust.
We know we need a "Rust Foundation" anyway—a legal entity that can own property, be a party to contracts, and employ people, and is trusted to steward the language. If that entity receives donations, grants, etc. in conventional currency, and disburses funds to people in exchange for their labor, that will accomplish all of your goals better than blockchain can. A larger and more predictable fraction of the money will arrive in the pockets of the people actually doing the work, and it will get there faster. It will be easier for the organization to demonstrate that the money is being spent well and for independent auditors to confirm that fact. It will be possible to change what the money is being spent on, using ordinary organizational decision-making procedures. And last but not least, there will be no need to rely on external organizations with a track record of absconding with all the money.
For the Rust Project that is probably the most efficient solution. But I am looking for a solution which can apply to any open source project. And for this, providing a decentralized system for managing funds has many benefits.
It does take more effort and risk to apply this, that is why I can completely understand that a Rust foundation would not want to start out with a system like this. But for open source in general, for software development, I think this would be a good future.
Please remember that the original post is about paying developers. Discussion of whether cryptocurrencies should be preferred over conventional currencies is completely off-topic.
Discussing how to potentially pay developers is definitely on topic. But appearently blockchain is too much of a buzzword to take it seriously.
The discussion went from if we should pay developers for completing tasks to how it could be implemented. I find that to be completely on topic.
To me any project that uses cryptocurrencies immediately loses all credibility. I would not participate in any such scheme, as I would immediately assume it's a scam (even if not targeting me personally. Most are scams where VC money goes in, smart contracts come out). It's the reason I stopped using keybase. It's the reason I stay away from Brave.
Blockchain is a new technology and it needs time and testing, and there need to be established standards just as with other cryptographic technologies. But we are moving there.
Whenever there is money involved, fraud is always around the corner, so it is natural and completely justifyable to be wary. But completely discarding of anything regarding crypto currencies is not helpful, and I think it is because of a lack of understanding, combined with the unreasonable hype around this technology. As I said, if it is implemented correctly, blockchain opens up many possibilities.
Please do not make assumptions about my reasoning for posting. All I am trying to do is keep it on-topic. Also note that a moderator "liked" my response, possibly indicating agreement.
Not everyone even agrees that a Rust foundation should be paying developers for issues/PRs/whatever else. You're putting the cart in front of the horse here. And if you want to counter with the fact that a third party could be used instead of a Rust foundation, consider that that would then leave no reason for this to be on IRLO.
This thread stems from a suggestion in a thread about a Rust Foundation, that is why it is on this forum. As Rust as a project does not plan on applying a model like this, it may be off topic to discuss about this further, as the suggestion has been "rejected" or "put on hold".
I want to be clear that I do support the (hypothetical) Rust Foundation paying people to work on Rust, at least sometimes, much as, for instance, the Python Software Foundation sometimes funds work on Python. I just have some opinions about what sort of work should be funded and how the money should be handled. I think I have explained those opinions clearly enough already so I won't repeat them.
Seems reasonable that some tasks may need to be contracted out. That's a lot more structured of a process compared to promoting the use of PRs. It's maybe more interesting to consider what might be directly funded.