Summary

BitTorrent's Evolution and Integration into Blockchain

Since its inception in 2001, BitTorrent has evolved significantly, transitioning from a popular file-sharing platform to a key player in the blockchain era. Created by Brad Cohen and David Harrison, BitTorrent revolutionized digital file sharing, particularly for music and movies, commanding over 20% of global internet traffic at its peak. Despite its massive user base, BitTorrent faced monetization challenges, leading to its acquisition by the TRON Foundation in 2018. This acquisition marked BitTorrent's entry into the blockchain space, underscored by the introduction of the BitTorrent Token (BTT).

BTT's Impact and Technology Integration

BTT emerged as a solution to incentivize file sharing, addressing the traditional altruistic model of seeding. It became the tenth most successful Binance Launchpad project, amassing significant funds through token sales. BitTorrent’s technology leverages peer-to-peer file sharing, enhancing efficiency and democratizing access to digital content. The integration of blockchain technology through BTT has introduced new functionalities, reinforcing BitTorrent’s role in the digital landscape.

BitTorrent Chain (BTTC) and Its Functionality

The BitTorrent Chain (BTTC) is a cross-chain protocol designed to improve scalability through off-chain computing and sidechains. It is compatible with Ethernet Virtual Machines (EVMs), ensuring seamless integration. The network relies on validators for its Proof of Stake (PoS) consensus mechanism, contributing to its stability and efficiency. The BTTC network architecture comprises three layers: the delivery, staking, and BTTC layers, each playing a crucial role in the network’s functionality.

Decentralized Applications and Tokenomics

BitTorrent has expanded its utility through various decentralized applications (dApps), including BitTorrent Speed and the BitTorrent File System (BTFS). BitTorrent Speed integrates financial incentives into the network, using BTT to improve download speeds. BTFS addresses the limitations of centralized storage systems, offering a decentralized alternative for file storage. The BTT launch on Binance Launchpad was a significant milestone, indicating the growing interest and potential of the token.

Overview and Genesis

BitTorrent's journey, from its inception in 2001 to its integration into the blockchain era, encapsulates a significant evolution in digital file sharing. Developed by Brad Cohen and David Harrison, BitTorrent quickly became a staple for music and movie aficionados in the early 2000s, revolutionizing the way files were shared over the internet. BitTorrent has consistently commanded a substantial portion of internet bandwidth. Its protocol is the largest decentralized P2P network in the world, driving 22% of upstream and 3% of downstream traffic globally. With over 100 million active users, BitTorrent products have been installed on over 1 billion devices in over 138 countries worldwide.

BitTorrent's software allowed users to engage in peer-to-peer file sharing, deviating from the traditional model of downloading or uploading files from a single server. Instead, it enabled a network of computers, each running the BitTorrent software, to exchange files and data directly with each other. This decentralized approach not only improved efficiency but also democratized access to various forms of digital content.

Despite its massive popularity and transformative impact on digital file sharing, BitTorrent faced challenges in effectively monetizing its service. This dilemma was a driving factor behind its acquisition by the TRON Foundation, currently known as TRON DAO, led by Justin Sun, in 2018. TRON DAO is credited for developing and maintaining the TRON blockchain. It also recognized the potential of BitTorrent and sought to integrate it into the emerging blockchain ecosystem. This move was further amplified by the launch of a TRC-10 token, BTT, underpinning BitTorrent. 

There have also been legal concerns: Justin Sun and his entities, including TRON and BitTorrent, are currently faced with an SEC investigation regarding TRX (TRON) and BTT (BitTorrent Token); it's key to remember that these matters are yet to be resolved. The SEC’s scrutiny, part of its broader approach towards cryptocurrencies like Ripple and Cardano, highlights the growing importance of regulatory clarity in this sector. As BitTorrent continues into this new chapter, its impact on tech integration and the broader digital landscape is poised to be both innovative and far-reaching.

The token sale of BTT, hosted on Binance's Launchpad platform, was a landmark event, concluding in less than 15 minutes and amassing ~$7.2 million. This feat was accomplished following a $20 million private sale. The BitTorrent Token (BTT) is used to incentivize users to host files on the protocol. 

Technology

BitTorrent's evolution into a more sophisticated and efficient file-sharing network is deeply intertwined with the integration of blockchain technology, particularly through the BitTorrent Token (BTT). This integration has not only enhanced the network's capabilities but also introduced new functionalities and applications.

At its essence, BitTorrent is a software platform that enables direct file sharing between users within its network. The BitTorrent network's proficiency lies in its ability to harness the bandwidth of every user, thereby distributing peer-to-peer content delivery evenly across all clients. The process begins when a user (requester) seeks files from other users (providers) who host these files on their computers. These files are divided into multiple pieces, allowing requesters to download different segments of the file from various providers simultaneously. This decentralized method of file distribution enhances the speed and efficiency of file sharing.

After the download is complete, users have the option to "seed," a practice where they allow others to download the file from them, even though they no longer require any parts of the file. The process of seeding is open to anyone who possesses the full file. As the number of individuals who obtain the complete torrent increases, so does the potential pool of seeders. This expansion significantly enhances the file's availability within the network. Essentially, users who invest in speeding up their own download of a particular torrent inadvertently contribute to broadening access for other users within the torrenting community. This creates a virtuous cycle where the act of accelerating one's download not only benefits the individual but also strengthens the overall network by increasing file accessibility. However, this seeding process has traditionally been altruistic, offering no financial incentives or other benefits to participants.

To address this lack of incentivization and to fortify the network's robustness and resilience, the BitTorrent team introduced the BitTorrent Token. This innovation aimed to provide economic rewards and motivations for users to engage in seeding, thereby enhancing the overall efficiency and reliability of the network.

The incorporation of BTT into the BitTorrent ecosystem was aimed at further decentralizing the network. It introduced a system of compensation for providers, incentivizing them to share larger files more efficiently, thereby reducing the overall impact on servers and networks. Additionally, requesters can use BTT tokens to gain access to local resources offered by providers, such as bandwidth for faster content download or storage space for remote backup.

While the BitTorrent software facilitates file transactions, the network relies on the TRON blockchain to record BTT transactions. When a bid is agreed upon between a requester and a provider, a payment channel is established on the TRON blockchain. This channel manages the micropayments to each provider based on the file pieces they share. After the service is completed, these transactions are aggregated, finalized, and recorded on the blockchain, ensuring transparency and security.

BTTC

BitTorrent Chain (BTTC) is an interoperable cross-chain protocol designed to enhance scalability through the use of off-chain computing and sidechains. It is also fully compatible with Ethernet Virtual Machines (EVMs), ensuring seamless integration and functionality. The BTTC (BitTorrent Chain) network, a vital component of the BitTorrent ecosystem, relies heavily on validators to maintain its functionality and security. Validators play a crucial role in the network's Proof of Stake (PoS) consensus mechanism, contributing to the overall stability and efficiency of the blockchain. Validators produce blocks, validate transactions, and participate in the PoS consensus. In return, they earn staking rewards for validating state transitions on the blockchain. However, they are also subject to penalties or slashing for actions like double signing or validator downtime.

Currently, the network hosts 12 active validators, and the capacity to include additional validators is constrained. The only opportunity for new validators to become part of the active roster arises when an existing validator decides to withdraw. To facilitate the integration of new validators in such instances, a novel auction mechanism for replacing validators is set to be implemented.

Validators are responsible for several critical technical tasks:

• Maintaining high uptime for their node.
• Regularly checking node-related services and processes.
• Running node monitoring and maintaining an ETH balance on the signer address.

Validators must sign checkpoint transactions (a transaction containing the Merkle root of blocks of the BTTC layer) approximately every ~34 minutes. These transactions are submitted to the TRON/BSC/Ethereum mainnet by a Delivery node, and a validator's failure to sign a checkpoint transaction can negatively impact their node's performance.

Architecture of the BTTC Network

The BTTC network is structured across three layers: the delivery, staking, and BTTC layers. 

Delivery Layer

The BitTorrent Chain (BTTC) network's Delivery layer plays a pivotal role as a proof-of-stake verifier, integral to the network's security and efficiency. This layer is crucial in bridging the BTTC and the TRON/BSC/Ethereum mainnets, ensuring the integrity and finality of transactions.

Delivery is responsible for checkpointing the representation of the BTTC layer blocks to the TRON/BSC/Ethereum mainnet. It aggregates blocks produced by BTTC into a Merkle tree and periodically publishes the Merkle root to the TRON/BSC/Ethereum mainnet. Based on Tendermint, it acts as a verifier layer within the BTTC network. These nodes monitor the staking contracts on the TRON mainnet and commit BTTC Network checkpoints to it. This process, known as checkpointing, is critical for two main reasons: providing finality on the root chain and serving as proof of burn in the withdrawal of assets.

Every change in the validator set is relayed by the validator nodes on the Delivery layer, which is embedded within the validator node structure. This design ensures that the Delivery layer remains constantly in sync with the BTTC contract state on the TRON mainnet. 

Responsibilities and Processes of Validators in the Delivery Layer

• Validator Duties: Every few blocks on BTTC, validators on the Delivery layer are tasked with:

• Validating all blocks since the last checkpoint.
• Creating a Merkle tree of the block hashes.
• Publishing the Merkle root to the TRON/BSC/Ethereum mainnet.

• Block Production and Checkpointing:

• A subset of active validators is chosen to act as block producers for a specific span, consented to by at least two-thirds in power.
• These block producers are responsible for creating and broadcasting blocks to the rest of the network.
• Checkpoints include the root of all blocks created during a given interval, validated and signed by all nodes.
• A proposer from the validator set collects all signatures for a checkpoint and commits them to the main chain.

The responsibility of creating blocks and proposing checkpoints depends variably on a validator’s stake ratio in the overall pool, ensuring a balanced and secure approach to network management.

Staking Layer

The Staking Smart Contracts Layer consists of a set of contracts on the TRON mainnet, which serves as the foundational Layer 1 Settlement Layer. The staking contract on the TRON mainnet collaborates with the Delivery node. This setup manages stakes for the PoS engine trustlessly and plays a key role in selecting and updating validators. The use of staking contracts on the TRON mainnet enhances security by not solely relying on validator honesty.

BTTC Layer

This layer includes block-producing BTTC nodes shuffled by Delivery nodes and is based on Go Ethereum. The BTTC contract deployed on the TRON/BSC/Ethereum mainnet is regarded as the ultimate source of truth for the network. Consequently, all validation processes within the BTTC network are conducted by querying the TRON/BSC/Ethereum mainnet contract. This approach ensures the highest level of accuracy and reliability in the network's operations.

Proposer Selection

The BTTC network uses Tendermint's weighted round-robin algorithm for the initial selection of proposers for checkpoint transactions. This algorithm ensures a fair and balanced approach to choosing proposers based on their weighted stakes. The proposer, chosen via the round-robin algorithm, submits a checkpoint transaction. This transaction includes the proposer's address and the Merkle hash in the proposer field. Other proposers in the network validate the data in the proposer field before adding the Merkle hash to their state. Subsequently, the next proposer sends an acknowledgment transaction to confirm the success of the previous checkpoint transaction on the TRON mainnet.

BTTC implements an additional check based on the success of checkpoint submissions. This mechanism allows the BTTC system to adapt its proposer selection process, enabling functionalities like choosing a proposer only if the previous checkpoint transaction on the TRON mainnet was successful or resubmitting checkpoint transactions for blocks associated with previous failed checkpoints.

Validator Node Setup on the TRON Network

A full node, in the context of the BTTC blockchain,  represents an integral component, functioning as a fully synchronized sentry node that concurrently operates the Delivery and BTTC systems. The Sentry Node plays a crucial role, operating as an intermediary by downloading data from various nodes within the network and disseminating validator data across the network. This type of node maintains open communication with all other sentry nodes. The Delivery Node operates in tandem with the TRON/BSC/Ethereum mainnet, continuously monitoring a set of deployed contracts and committing BTTC Network checkpoints to the mainnet, all while being based on the Tendermint protocol. Meanwhile, a BTTC Node is tasked with block production within the BTTC Network, drawing its foundational technology from Go Ethereum. Each of these components collectively ensures robust and efficient network operations within the blockchain infrastructure.

To become a validator on the TRON Network, participants must operate two types of nodes:

• Sentry Node: This is a separate machine running both a Delivery node and a BTTC node. It is open to all nodes on the TRON Network and acts as a protective layer for the validator node.
• Validator Node: This is also a separate machine running a Delivery node and a BTTC node. It interfaces with the sentry node to receive and send data.

Validators must stake BTT tokens in the staking contracts deployed on the TRON mainnet to participate in the network.

Decentralized Applications on BitTorrent

The BitTorrent network leverages TRON's smart contract capabilities to develop various decentralized applications (dApps), including:

• BitTorrent Speed: This dApp enables requesters to use BTT to buy bandwidth from providers, thereby increasing their download speeds.
• BitTorrent File System (BTFS): Functioning similarly to other decentralized cloud storage platforms like Filecoin, BTFS addresses the cost and trust issues associated with centralized storage systems. It offers a decentralized solution for file storage, adding another layer of functionality to the BitTorrent ecosystem.

BitTorrent Speed

BitTorrent Speed represents a notable enhancement to the BitTorrent ecosystem, significantly impacting the adoption and utility of the BTT token. BitTorrent Speed is a new product integrated into the uTorrent Classic Client that rewards users with BTT in exchange for seeding and bandwidth, enabling faster downloads. The concept of BitTorrent Speed was aimed to solve the problem of having a low number of altruistic seeders in the ecosystem. By introducing an incentive for seeders, we hope to encourage the BitTorrent community to share their bandwidth.

The core functionality of BitTorrent Speed revolves around incentivizing user interactions within the BitTorrent network. It introduces a system where peers, those downloading files, can offer BTT tokens to improve their position in download queues, thereby accelerating the download process. Conversely, seeds — users who provide complete file copies — are compensated for their contributions, encouraging them to maintain their seeding activities for extended durations.

This system of financial incentives is anticipated to optimize network and computing resource utilization. BitTorrent Speed will employ a bidding mechanism, initially simple and predominantly automated, with plans for more sophisticated features and functionalities to be integrated in subsequent updates.

As detailed in the BTT whitepaper, BitTorrent Speed will allow users to publicize their bids within a file-sharing swarm, facilitating the exchange of BTT in return for prioritized access to seeds. The objective is to incentivize longer seeding periods from users, enhancing the overall health and efficiency of the swarm. This, in turn, is expected to result in faster download speeds for all participants within a swarm, thereby improving the user experience and the efficacy of the BitTorrent network.

Wallet accounts on BitTorrent Speed have surpassed 420 million, while TRON addresses on BitTorrent Speed have eclipsed 5.6 Million.

BTFS

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The BitTorrent File System (BTFS) is a novel file-sharing protocol within the BitTorrent ecosystem, specifically designed to address the limitations of both current mainstream public blockchains and centralized storage systems. While the majority of public blockchains focus on computational tasks, they often fall short of providing scalable, cost-effective, and efficient solutions for file storage and sharing. 

Digital storage comes in two primary forms: centralized and decentralized. The former is offered by major cloud service providers, including Microsoft, Google Drive, and Amazon Web Services. Centralized storage systems, the traditional solution for digital storage, are fraught with various intrinsic problems. These systems necessitate a high degree of centralized trust, making them more vulnerable to control and manipulation. They are also prone to censorship by central authorities, face high maintenance costs, and often lock users into specific technologies or formats, which can impede data migration and access. Additionally, these centralized solutions typically have low fault tolerance, increasing the risk of data loss or system failures.

On the other hand, decentralized storage adopts a blockchain-based model, where data is stored across a distributed network of nodes rather than on a single central server. This decentralized method has several benefits. Firstly, it enhances data sovereignty, allowing users more control over their personal data. Secondly, thanks to its distributed nature, it boosts resilience against cyber threats and system downtimes. Lastly, it often proves to be more cost-efficient since users are charged only for the specific amount of storage they utilize.

BTFS offers a decentralized alternative that leverages the capabilities of the BitTorrent Chain (BTTC) network. This integration facilitates cross-chain connectivity and supports multi-channel payments, making it an increasingly convenient option for users. Furthermore, the synergy between BTFS, BitTorrent, and the BTTC network significantly enhances the efficiency of dApp developers, allowing them to reach a wider market more effectively.

The architecture of the BTFS network is primarily composed of nodes, including both renters and hosts. Renters who wish to upload files to the network do so by paying with WBTT (Wrapped BTT), while hosts provide storage space in exchange for BTT rewards. This setup creates a mutually beneficial ecosystem where file storage and accessibility are decentralized and incentivized.

BTFS also incorporates several smart contracts to streamline its operations and ensure reliability. The Vault Contract is crucial for facilitating the payment process for storage services. Through this contract, renters pay hosts for their storage services, and hosts can subsequently withdraw these funds. The Online Proof Contract is designed to maintain the latest online proof data for each node, contributing to the overall reliability and integrity of the network.

Moreover, the Staking Contract in BTFS mandates that every storage node (or host) must stake BTT. This requirement is pivotal in determining how files uploaded by renters are allocated for storage, with considerations based on the staking amount or sometimes done randomly. To ensure continuous and reliable storage, the Proof-of-Storage Contract requires hosts to periodically generate and submit proof of file storage. This contract plays a vital role in maintaining the trust and efficiency of the system. In addition, hosts benefit from the Airdrop Contract, which rewards them with BTT airdrops based on the size and duration of file storage.

Total miners on BTFS have surpassed 7.3 million,while total storage contracts on BTFS have surpassed 132 Million.

Lastly, the Price Oracle Contract is an essential component of BTFS, responsible for updating storage prices across the network in a timely manner. This contract ensures that the pricing within the BTFS network remains dynamic and responsive to market conditions, thereby maintaining its competitiveness and attractiveness to users.

Security/Audits

SlowMist has conducted two separate audits pertaining to BTTC: one in 2021 for the TRC-20 token contract and one in 2022 for the ERC-20 token contract. The audit of the TRC-20 token revealed no meaningful security concerns. However, the second audit of the ERC-20 token uncovered a significant finding: the PREDICATE_ROLE has the capability to mint an unlimited quantity of tokens. The project team addressed this by explaining that the PREDICATE_ROLE is decentralized under the management of the BitTorrent Chain's governance contract. However, only 12 validators oversee BTTC, suggesting that there is room for improvement in the decentralization among the validators.Additionally, the security website Certik, gives BTTC an overall score of 78.97, with code security and the aforementioned governance design weighing down the overall score.

Finally, the primary BTTC Github repo (first image) has received a negligible amount of contributions since late 2021, while the Delivery repo (second image) has demonstrated modest activity over the last ~two years.

Tokenomics

Launchpad

According to Binance Launchpad, the BTT launch “completed the sale of BitTorrent (BTT) tokens, which began on January 28, 2019, at exactly 3:00 PM UTC. The token sale ran in two simultaneous sessions: one for purchases using Binance Coin (BNB) and another for purchases using TRON (TRX), both of which were concluded quickly.

In the BNB session, all 23.76 billion BTT were sold to token sale participants within 13 minutes and 25 seconds. Meanwhile, in the TRON session, all 35.64 billion BTT were sold within 14 minutes and 41 seconds.

At the time of the sale, one BTT is priced at 0.00001824 BNB or 0.00447261 TRX. In other words, 1 BNB can buy 54,824.56 BTT, while 1 TRX can buy 223.58 BTT. Participants were able to purchase between 100,000 BTT (the minimum amount eligible for purchase) and 166,666,666 BTT (the maximum amount).”

Information regarding the token sale(s), distribution, and issuance can be found in the diagrams below.

Primary Use

The acquisition of the BitTorrent network by the TRON Foundation in 2019 marked a turning point for the platform that previously struggled to effectively monetize its widely-used services. To address this, the BitTorrent Token (BTT) was introduced as a TRC-10 token, aiming to resolve issues like sluggish download speeds and limited file availability. This utility token is integral to the network's functionality and is employed by users to request downloads or boost their download speeds. Moreover, it serves as a form of compensation for providers who contribute to the network by sharing files. Beyond this, BTT is used to purchase premium features on the BitTorrent network, including ad-free browsing and acquiring additional storage, bandwidth, and computing power.

The BitTorrent (BTT) whitepaper details the primary use of BTT to improve the efficiency of the file-sharing process central to the BitTorrent network. Operating on a peer-to-peer model, the network relies on two principal groups of participants: peers, who are in the process of downloading files, and seeds, who provide complete files for download. BTT's introduction is intended to streamline this interaction, a move that could potentially redefine file sharing within this expansive network.

Other Planned Use Cases

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The strategic roadmap for the BitTorrent Token (BTT) extends far beyond the immediate scope of BitTorrent Speed, encompassing a variety of future applications aimed at enhancing and expanding the BitTorrent ecosystem. The overarching vision of the TRON DAO and BitTorrent aligns with the broader objectives of many blockchain projects: to cultivate an economy where micropayments power system interactions and organic growth is driven by sustained user engagement. While building such an economy presents considerable challenges, such as concerns regarding the legality of monetizing the download of copyrighted materials, BitTorrent's established platform – characterized by its immense size and popularity – offers a unique foundation to realize this vision.

These planned features are designed to enable BitTorrent users to derive value from participating in the network's infrastructure, marking a significant shift towards a more interactive and incentivized model. 

Community skepticism has been raised regarding the BTT token’s practical value and users’ willingness to pay for faster downloads. However, planned features for BTT, including enabling a content delivery system and allowing users to use BTT to prioritize content delivery, are helping to alleviate these concerns. Furthermore, participants can place bids in BTT to expedite the receipt of desired content, aligning financial incentives with content accessibility.

Recognizing the challenge of unreliable internet connectivity, a planned proxy service will enable users to pay a client in BTT to retrieve content via URL on their behalf. 

Additionally, a proposed storage service within the BitTorrent ecosystem is being devised and will offer users the option to purchase additional storage space or earn BTT by providing storage capacity to others. This platform exemplifies the peer-to-peer principle foundational to BitTorrent, extending it to digital storage solutions.

Navigating U.S. Legal Issues

The landscape of digital technology and blockchain is ever-evolving, with BitTorrent standing as a testament to adaptability and innovation in this sector. From its beginnings as a file-sharing platform to its current role in the blockchain era, BitTorrent has consistently been at the forefront of technological evolution. However, it is not without its concerns, specifically its legal concerns.

• SEC's Allegations: The SEC has charged Justin Sun and his companies, including TRON Foundation Limited, BitTorrent Foundation Ltd., and Rainberry Inc., with the unregistered offer and sale of crypto asset securities, specifically TRX (TRON) and BTT (BitTorrent Token). Sun and his entities are accused of engaging in wash trading.  Additionally, the SEC also alleged that Sun and his companies orchestrated a campaign to pay influential celebrities to promote TRX and BTT on social media without disclosing the fact that they were being paid to do so.”

As BitTorrent navigates through these regulatory challenges, it is not just responding to change but actively shaping its course. The journey ahead is filled with legal risks that may slow down BitTorrent's growth. However, these risks provide opportunities for BitTorrent to overcome them as BitTorrent stays competitors in the current market.

Conclusion

In conclusion, BitTorrent's evolution from a pioneering file-sharing service to a blockchain-integrated platform represents a remarkable but unfinished journey. Its shift, under the TRON DAO’s stewardship, towards blockchain integration via the BitTorrent Token (BTT) highlights a forward-thinking approach to incentivizing and democratizing digital content distribution. While the introduction of BTT and the BitTorrent Chain (BTTC) has unlocked new possibilities in terms of efficiency, compensation, and network resilience, it has also prompted considerations around technological robustness, legal implications, and market conduct. The recent legal challenges facing Justin Sun and the scrutiny over the governance of BTTC are natural aspects of an evolving cryptocurrency landscape, indicating the industry's maturation and adaptation. As BitTorrent continues to innovate and adapt, its journey remains emblematic of the ongoing convergence between traditional digital platforms and the emerging blockchain ecosystem, with its future hinging on the balance between technological advancement, user engagement, and regulatory adherence.

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Disclaimer: This report was commissioned by TRON Network Ltd. This research report is exactly that — a research report. It is not intended to serve as financial advice, nor should you blindly assume that any of the information is accurate without confirming through your own research. Bitcoin, cryptocurrencies, and other digital assets are incredibly risky and nothing in this report should be considered an endorsement to buy or sell any asset. Never invest more than you are willing to lose and understand the risk that you are taking. Do your own research. All information in this report is for educational purposes only and should not be the basis for any investment decisions that you make.