In a Variety report released earlier this week, the entertainment business magazine has reported that the Tron Foundation appears to have purchased BitTorrent.
Justin Sun, the normally vocal CEO of Tron, has been uncharacteristically silent about the deal — leaving the market to speculate as to why the purchase occurred and how Tron might hope to integrate Bittorrent’s file-sharing technology into its grand vision?
Originally launched in 2001, BitTorrent allows users to download files via a client like utorrent or Deluge. The network operates by downloading small pieces of files for a user, from many different web sources that host the file. This means it is a ‘true’ P2P model, unlike other clients like Kazaa and Limewire, where a ‘publisher server’ posts files and then facilitates downloads.
Bittorrent’s operating philosophy relies to some extent on a ‘pay-it-forward’ system where users ‘seed’ (download a file and then host it), as opposed to ‘leech’ (download but do not host), because they are altruistic and want to facilitate greater network activity.
Although the BitTorrent client has built a large user-base, its model has a few key issues. Firstly, most users generally stop seeding files once they have completed downloading a file. Secondly, older less popular files that aren’t being actively downloaded are not generally seeded and thereby can take a long time to download. Tokenizing the BitTorrent client could potentially alleviate these issues.
Potential business models
A ‘Tron Torrent token’ could act as the reward for seeders to host portions of files. One potential model is a flat reward every time a seeder’s file is downloaded, incentivizing more active hosting.
Additionally, for files that are popular enough that there is some download demand (a movie with a cult following for example), but not enough that there are active seeders for it, an incentivized token system could bridge the gap for users looking for obscure torrent downloads.
A marketplace where users could post files that they are looking for, and rewards can be attached to those postings, could be created. I.e. postings like;
“10 TRX tokens for seeding 100mb of Office_Space.Mp4”
This would incentivise network seeders to download and retain not just popular files, but also obscure ones. This could potentially create a collection game element akin to CryptoKitties, where seeders download files that may become fashionable semi-randomly.
In the same way, seeders could advertise their hosting services and be market makers, letting the network know how much it would cost for a seeder to lend processing power and host part of a file.
Tokenizing a file sharing client has novelty, and not surprisingly there are already blockchains, such as IPFS and Upfiring, that are embracing this model. In some regards, they possess key advantages over a tokenized BitTorrent model.
A key disadvantage of the BitTorrent model, for example, is that users can only download files that exist within the contained torrent ecosystem, whereas IPFS uses a model called Bitswap that lets users access any type of file. Based on this technology, IPFS has set up a file marketplace called filecoin, where incentives for users to host on the network are similar to those in the described tokenized torrent marketplace.
Upfiring runs on smart contracts, which differentiates it from traditional file-sharing services. File exchanges in Upfiring are operated as smart contracts between host and clients, UFR tokens work as gas to fuel the contracts, which then initiates the movement of files by nodes. Once verified, seeders receive their hosting reward. This system adds utility to the network, for example, features like spam-filter code can be written into a smart contract, adding benefits over clients simply ‘paying’ file hosters to seed files.
Filecoin was able to raise US$257 million via ICO, more than projects like TEZOS, in a month of activity during September 2017. The vast majority of funds were raised via SAFT (simple agreement of future tokens), only available to accredited investors. Pre-sale purchasers included major VC names like Sequoia Capital and Andreessen Horowitz. Upfiring is a smaller project and currently has a market cap of $2,236,257 USD.
Comparatively, Tron has a current market cap of over US$4 billion. If needs be, it certainly has funds to inject into any new blockchain file sharing project and develop new features to secure its position within this space.
What the Tron foundation hopes to achieve with the Bittorent buy remains unclear although there is clearly an opportunity to monetize the BitTorrent network and address some of the incentive problems within it. That said, there are already existing blockchain file-sharing platforms that offer their own unique utility — and the Tron network should consider its next steps carefully.