The Inside Story of BitTorrent's Bizarre Collapse

What a fascinating read about BitTorrent, a protocol famous for moving big files at high speed across the internet in a peer-to-peer way. Everyone agreed that the protocol was genius, but the company failed to capitalize, and its creator faced its struggle for 10 years:

Amid all of these efforts Cohen had little sway — and little interaction with the rest of people at the company he had created to make something of his invention. His equity had been so diluted that he had little voice; the professional investors controlled 70 percent of BitTorrent.

One quote in this story really stood out to me:

Perhaps the lesson here is that sometimes technologies are not products. And they’re not companies. They’re just damn good technologies. Vint Cerf did not land a Google-size fortune for having helped invent the TCP/IP protocols that power the Internet (though he did get the U.S. National Medal of Technology). What’s more, to be successful, a startup requires both a great idea for a product or service, and a great idea for how to make money off of it. One without the other will fail.

This may also come down to strong vs. weak technologies:

Torrents for music or video basically get beat out by a centralized service with better experience, whether that’s Netflix, Spotify, Amazon, etc.

So the question we should ask ourselves: How can Interledger become a strong technology?


30% is still above average … if you look at %ownership at IPO

you wouldn’t guess that the average is ~15% and this is the most successful companies so pity the walking zombies. The assumption that Torrents for music or video basically get beat out by a centralized service should be questioned. What P2P did was liberate tracks from albums so instead of bundling tired old crap with one or two new songs (cf DeBeers diamond boxes), people downloaded exactly what they wanted at the relatively low price of some bandwidth and fiddly-time. So their users were RUNNING away from a bad value proposition (somewhat validated by MPAA who later admitted they used the same stats to estimate demand for CDs at physical store distribution). So when the indie labels woke up and smelt the coffee, they set up track selection and user playlists and all the convenience that a pure distribution network service couldn’t deliver. I think the fact that most people subconsiously realised they were doing economic tort (not criminal theft!!!) meant it would always be hard to charge money for people hiding in shadows, so once a legit low-cost high bandwidth solution came along, BitTorrent haemoraged. P2P per se still popular (DragonFly) in developing countries where connectivity is spotty.

This is a little harder as it is more infrastructure … TCP/IP won over DECnet, iBM SNA and all the heavyweight networks out because there was an unencumbered reference implementation. A network power grows as the square of the number of nodes and at the moment there are 3? wallets (none non-custodian) so as a platform play, you need to encourage both wallets and novel content sites (hence the dual prong of Coil grant for the web). Also timing is important since TiVo had great tech but slow start. The pundits are right that now is the time for new financial architecture to emerge (cough * Libra * cough) especially in India (huge talent pool) and China (PS I was in HK and found out about underground banking … let’s face it, they want to get their cash out before the economy implodes).

There’s still a lot of space

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