BitTorrent is Creating a Token Economy but Its Prospects are Murky

People unfamiliar with cryptocurrency BitTorrent (CCC:BTT-USD) probably at least have some recollection of the name. It is a peer-to-peer protocol for sharing large, in-demand files. 

A concept image of the BitTorrent (BTT) token.
Source: Shutterstock

The premise of the protocol is to first eliminate the need for a centralized server and then allow the transfer of data between clients who use the software. 

Peers within the network share data with one another, and by iteratively gaining more data a user can piece together a full file. Back in the early 2000s when BitTorrent burst onto the scene, this sharing meant lots of music and movies. Anyone who was in college at that time likely remembers a power user among their inner circle.

These days it also includes a token called BitTorrent Token (BTT). It is connected to the peer-to-peer protocol and is worth understanding.

BitTorrent Incentivies Speed

BitTorrent Speed is an extension of the BitTorrent file-sharing protocol that is still available for Windows and Mac clients. Basically, BitTorrent users who want to get crypto rewards for sharing files now can via BitTorrent Speed. 

It looks like all users will have access to BTT regardless of whether they plan to use it. As noted on its website, “When downloading or upgrading to the latest version of µTorrent Classic for Windows, or BitTorrent or µTorrent Web, a digital cryptocurrency wallet and a BTT token balance will be automatically enabled.

BTT is bid to other users for faster speeds. So, users passively utilize BitTorrent as they always have. In return, they can earn BTT. In essence, the benefit of BTT is that it incentivizes nodes offering faster data transfer through BitTorrent via BTT rewards.

It’s fairly clear that this enables power sharers to potentially earn a nice amount of BTT. Right now, BTT is worth roughly $0.0028. That isn’t much money, but a case could be made that those who deliver the fastest speeds stand to be rewarded handsomely. 

It’s All About Scale

Those who can best capture and utilize BitTorrent’s 1 billion-plus users and 100 million monthly active users can capitalize. It is also noted in a 2019 whitepaper that BitTorrent sees roughly 1 million new installs daily.

Those new installations are now automatically provided with a crypto wallet and a BTT balance. Again, this provides a great opportunity for the fastest nodes to capitalize within the BitTorrent network. 

Over time, BTT can then become more valuable. That will theoretically happen as users become more willing to spend more BTT for faster downloads. It’s a kind of virtuous economic cycle that leads to greater rewards — greater amounts of more valuable BTT for sharing data — and quicker downloads for that BTT. 

One of the positive aspects of BitTorrent Speed is that BTT is airdropped to users. That means they begin with a small initial balance. That BTT can be used to bid for any piece of data the user wants to get faster. 

However, bidding is automated and users’ clients bid to and from their balance of tokens on their behalf. In the future, rates for bandwidth will be refined, which will determine a market rate. 

The Bottom Line on BitTorrent

At its heart, BitTorrent Speed and the BitTorrent Token act as simple economic mechanisms. Their premise is fairly straightforward: receive a reward for doing something quicker. 

I doubt investors will be extremely excited about BTT, though. It seems like those who will benefit most from it are those who already participate most in the network. I can’t imagine a scenario in which people suddenly decide to become power sharers on BitTorrent for the express purpose of receiving BTT.

On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.-


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