July 18, 2024

The battle for decentralization: who will win? Bittorrent Lessons for the Crypto Industry - Part 4

The Bittorrent ecosystem has grown into a decentralized, unwieldy, and nearly ungovernable network. However, shestill censorship resistant as hundredsmillions of users continue to exchange multimedia files of all types through the Internet. BitTorrent Inc built a small business, distributing the two most popular torrent clients: uTorrent and Bittorrent, placing ads for users in them. There were a number of other investing companies that began to participate in various parts of the ecosystem, and they all hoped to find a way to get part of the impressive mass of money that a huge number of users promised. But, if their goal in the game was to provide billions of dollars in revenue and significant returns on invested capital, then they all failed. And this is what really happened.


Bittorrent certainly succeeded: he made the media industry think. The Bittorrent ecosystem simply did not allow users to charge for re-receiving all their music in the new MP3 format, as was the case with those who wanted to transfer already purchased music from vinyl, tapes or CDs.

Revolution and Reaction

And despite the ever more sophisticated technologycopy protection, measures to protect potential incomes, as well as demonstration lawsuits and punishments, in general, in the process of everything that happened against the backdrop of this grandiose confrontation of interests and technologies, neither of the parties received a final advantage. But at the same time, it gave rise to something more completely different and radically modified.

In other words, the whole concept of a “file” as suchdisappeared, and the old media have revived in a new and better way, in particular, this is a business model of services such as Spotify, Netflix, YouTube, Instagram, etc., focused on online experience.

All the media everywhere began to write about suchonline services, and consumers no longer worry about owning music or movies. Now, they are completely preoccupied with access to them - a simple opportunity to listen to music at any time, and watch magnificent exciting shows and channels on demand. Consumers do not want to worry about where the digital file is located, how long it takes to receive it, whether their device can play the file, or how often they can listen or watch content. All these requests are satisfied, and all their experience comes down to a simple search mechanism and pressing the play button.

A similar picture can be observed in relation tosoftware, games or applications that are mainly available only in an online format. Almost everywhere now they pay for a subscription, and not for a copy of a file.

The Bittorrent ecosystem was obviously notthe only active force for such changes. The steady increase in the bandwidth of Internet providers and the spread of powerful computers in all aspects of our lives, as well as the emergence of various innovative methods of interactive digital interaction, which are largely promoted by the new “industrial data processing complex”, make, for today, the concept The “files” are increasingly anachronistic. Files were abstracted almost everywhere and replaced by online services. And we can assume that the vast majority of users will agree that this is a wonderful thing for everyone.

Who will win?


Despite the scale and impact of the ecosystemBittorrent - BitTorrent Inc itself has not been able to take a truly active role in it. Is it possible that a better or more successful team could do better?

There were a lot of homegrown ideas, but, the company has alwaysrefrained from solving the biggest problems in the Bittorrent ecosystem, such as the terrible mechanism for detecting content, as well as the anonymity of users, which was most in demand due to possible legal problems. Indeed, the companies that identified the intruder could set him a huge bill of up to 150 thousand dollars for each copied file. It's about $ 50 trillion of potential liabilities per month!

Promote offending technology moreactively BitTorrent Inc was not going to, because I understood that nothing is durable. As an example, a service such as Popcorn Time experienced only a short burst of popularity. It was a kind of combination of a torrent site and a torrent client, like Netflix for pirated movies. The project, which the development team from Argentina was working on, suddenly disappeared - the developers decided that a real technical career was more interesting than a one-sided battle alone with copyright lawyers.

So, in a revolution led by an ecosystemBitTorrent - there were no clear winners, in any case, who came directly from this system. And although, be that as it may, BitTorrent Inc was one of the key actors, it is obvious that neither the company itself, nor any other member of the Bittorrent ecosystem, were able to get significant profit from this.

Perhaps one of the most forward-thinkingThe winners were Daniel Ek &#8212; CEO and founder of Spotify, whose success with the service was preceded by the sale of the uTorrent client to BitTorrent Inc. And while early versions of Spotify used a P2P protocol similar to Bittorrent to save money on bandwidth - they quickly realized that the whole point of Bittorrent had nothing to do with saving money, and decentralizing their architecture, in view of their goals, was in fact counterproductive. Perhaps it was already obvious to them that leading a revolution was, of course, an exciting prospect, but it was much more profitable to create a thing that would save important people from the “unbelted crowd.”

In general, the main conclusion is that decentralization canbe very useful for destruction. But, if the Bittorrent experience is something that can be used, it is not clear what role it will play in what happens next.

Blockchain architecture is great forto untie the hands of a rampant crowd breaking the rules, but do not confuse violators of the rules with the winners. A prominent political scientist once remarked that political revolutions are great in “destroying the state,” but not so great in “creating a state” or replacing it with something better. The same can be said about the violation of the rules, which is encouraged by decentralized architectures. When looking at violators of the rules, it becomes interesting, what could be the reaction? What paradigm can change (for example, abstracting files in the media industry), which will lead to a completely new way of interacting? Indeed, only by results, the final winners can be revealed.

Summary: Bittorrent blockchain lessons

It is well known that Bitcoin and Bittorrent are stronglydiffer from each other in many respects, but, nevertheless, a number of similarities are striking. In the hope of helping people avoid a repeat of history, it is worthwhile to learn the following lessons from the Bittorrent experience, which is especially relevant to the new participants in the blockchain revolution.

Do not worry about decentralization - worry about what it gives.In particular, consider whethera project to break rules that open up new ways of interacting or new possibilities that were previously directly or indirectly prohibited by existing rules. In general, if you do not break the rules, your decentralization is “wrong”.

If you break the rules, then be careful!Various rules have many defenders,guardians and security forces. A good way to tell if you are breaking the rules is to find out if there is someone who is really bothered by what you are doing and wants you to stop doing it. Now there are many rules that have become obsolete, and the development of new rules is often too slow. Therefore, the process can be stimulated by a good dose of rule-breaking - with good intentions, of course.

Intention is an extremely dangerous factor in the initial stagebut nonetheless with respect to companiestrying to obtain status and funding, it is difficult to understand how they will remain silent about their intentions. Bittorrent succeeded by accident. Bitcoin revealed its intentions, but defended itself with anonymity. You can’t advise anything unique to beginners in this area, except that it is worth remembering that your stated intention is likely to always follow you.

Truly decentralized projects are extremely complexand complexity is expensive. These costs can be distributed in different ways in a decentralized system, but you need to be very careful with projects that are too optimistic about how quickly they can complete their tasks, and especially with those who promise decentralization, as a way to do things are cheaper. Managing a decentralized system is extremely difficult. If you have full decentralization, then coordination costs will be very high, and the process will be very slow and often inefficient. Moreover, if you have strong coordination and the ability to carry out the plan with strict discipline, then you may not have a very decentralized system, and you will most likely depend on a long set of rules.

The ICO boom is the best example of successful rule breaking.Capital formation through the ICO boom wasthe first and perhaps only strong example of rule-breaking that has, so far, taken place in the blockchain space. Although, it was stopped quite effectively by law enforcement, which somewhat calls into question how well the entire decentralized system is designed to support this option.

The possibilities for breaking the rules are not unlimited. States (and even Internet service providers)possess tremendous power. Bitcoin's stated intention to undermine the rules of state control over sovereign currencies poses an interesting challenge for governments if this is ever realized. China and North Korea have quite clearly demonstrated that if you control the Internet channels, then you control the entire local Internet space. Bittorrent could easily be destroyed by state intervention, but most states opted for a different approach. The same applies to cryptocurrencies, but the scale here is much wider, and time will tell at what point the state will be forced to intervene. For example, if you come up with a way to save everyone from paying taxes. Good luck with that ...


Winners (Spotify and Netflix) created afterthe destruction of Bittorrent, got rid of any semblance of decentralization - it simply was no longer required and in fact only complicated the situation. But, their success was the result of a paradigm shift when the files were abstracted. What will be eliminated as a result of violations caused by Bitcoin or other cryptocurrency systems? What will be the paradigm shift? And will decentralized architecture become irrelevant after defining a “new path”?


Posted by: Simon Morris