If all goes to plan, tomorrow we will see the launch of BitTorrent Speed.
BitTorrent is the well-known file-sharing protocol used to legally share copyright-free content to other people around the world—or more realistically, to download illegal content from The Pirate Bay. “BitTorrent Speed” will attempt to make money out of the protocol by adding, shudder, blockchain.
It will be one of the biggest examples of blockchainification, that is, the notion of taking a pre-existing product and tacking on a blockchain. Similar attempts at blockchainification include Long Island Iced Tea pivoting to blockchain—which failed. Digipulse using crypto to strengthen online file storage—which failed. And Agora putting the Sierra Leone voting system on the blockchain—which was just an abject lie.
So will BitTorrent Speed buck the trend?
In July, 2018, Justin Sun, CEO of Tron—which raised $70 million in an ICO—purchased BitTorrent Inc., after a messy legal battle. Then, in January this year, he managed to raise a further $7 million selling BitTorrent tokens, promising that they will have a real-world use case.
Tomorrow that may well be the case. And if it works, it’s a major deal—one that could bring cryptocurrency to many more people. According to BitTorrent, the protocol is used by 170 million people a month, and accounts for four percent of daily Internet traffic.
BitTorrent is a peer-to-peer network of computers that share files between them. When someone downloads a file, they are encouraged to “seed” it, by continuing to share the file to other people on the network. However, any user may choose to not do so, a practice known as “leeching.” If everybody did this, the network wouldn’t function.
The purpose of a BitTorrent token is to give people an incentive to seed files. And in theory, this should make the network stronger and make more resources available, which could make the network faster. Hence, BitTorrent Speed.
But there are a few problems with this.
First, it isn’t really using blockchain—at least, from a purist’s perspective.
Due to a lack of sufficiently fast and scalable public blockchains, BitTorrent Speed will instead use a high-performance private ledger. This off-chain blockchain (or database, to most people) will record transactions. This centralized service will then upload the transactions to the Tron blockchain periodically.
Second, the service isn’t free.
One of the reasons BitTorrent has been successful is that it was free. By contrast, BitTorrent Speed is a service where users bid to get faster download speeds. That means they will be paying to ensure continued access to that seed. Which means they’re paying for the ability to download the file again and again. A feature that seems kind of pointless.
Third, the token is highly inflationary.
BitTorrent plans to regularly hand out rewards to encourage people to start using the paid service. The funds that pay for the reward will come through inflation of the BitTorrent token. Currently, about 20 percent of the total supply is circulating—which will increase to 80 percent in under four years. That means unless many more people enter the market, everyone holding and using the token will watch their token’s price sink.
Fourth, it’s a privacy crisis waiting to happen.
Not many people downloading illegal files want to have their details linked to any kind of financial record—let alone connected to their bank. In this system, the user will have a BitTorrent address showing the transactions they’ve made to people sharing the files—if anything is put on the blockchain. (And any transactions that aren’t will be on BitTorrent’s centralized records, which any government will be able to request data from). So, when a user wants to cash out, perhaps using a KYC-embedded crypto wallet or to send money to their bank, it could expose their shady dealings—and love of obscure Japanese Manga films.
Fifth, it creates a black market for illegal content.
BitTorrent is hard for the government to crack down on because it is based on a peer-to-peer network. Plus, there’s no money being moved across it—providing less of an incentive for governments to spend money stopping it. However, once people are getting paid to send files, this creates an online black market—one hiding in plain sight. And with a centralized company behind it keeping records of everyone’s transactions, it might just be too easy for governments to get involved. Meaning that not only will everyone be easier to identify—but there is a bigger incentive for law enforcement to step in too.
So, is this a maverick move or just plain stupid? Guess we’ll find out tomorrow.