Here’s what I concluded about decentralizing video with bitcoin…

Last week, I attended Demuxed 2015 in San Francisco. The conference is organized by members of the SF Video Technology Meetup, a group of people that build the core elements of internet video. If you watch video on the web, then you have been touched by these engineers that make it all work.

Valerian Bennett presenting PopChest at Demuxed 2015

The presentation I anticipated most was “Decentralizing Video Streaming” by Hadar Weiss of Peer5. Peer5 uses a unique hybrid peer-to-peer platform built on top of a client-server system to create its CDN (content delivery network). Imagine if the speed of BitTorrent had a baby with the stability of Amazon CloudFront…you’d get Peer5.

At PopChest, we use the Bitcoin peer-to-peer payment network to let viewers directly compensate content creators in a way that is not possible with the existing credit card payment infrastructure used online. It’s only natural that we keep our eye on the rising tide of alternative content delivery platforms, particularly ones that incentivize decentralization using cryptocurrency.

Decentralize All Things

In our vision for reinventing media distribution we dream of smart contracts divvying royalties to cryptographically authenticated identities, payment channels that handle thousands of transactions per second before settling on the blockchain, and a decentralized content distribution network with no single point of failure.

It will likely take years of technical development before this suite of technologies is commercially viable. Yet, this mountain of computer engineering is not our greatest challenge.

The real challenge is to build something that’s actually worth building.

As I evaluate these technologies going forward the question I constantly ask is “Is this better, faster, cheaper than what we already have?” Right now, the answer is a resounding no.

Build a series of buses on rails…or build a train.

Let’s take a look at one element of the stack, decentralized video distribution with micropayment incentives, which we may as well call “BitTorrent…but with bitcoin.”

Can you imagine buying a movie on iTunes and getting an error message, “Sorry but the video you want is still seeding. Come back later.”

Obviously this is unacceptable. As a service provider, you actually have to guarantee your service. So, if you are truly committed to a peer-to-peer solution then the obvious answer would be to run nodes yourself.

I don’t have five hundred unused computers strategically positioned around the world to run my nodes. So, the next logical thing would be to use a service provider like Amazon.

Now, I have a peer-to-peer network that may or may not be scalable but definitely needs to be monitored by top (expensive) engineers 24/7/365. I have added a whole new accounting layer because I’m effectively paying myself for securing this network by running my own nodes. And, all of this is built on top of the centralized service I aimed to escape in the beginning.

What’s the point again?

Even if you get lots of disparate people to run your specific desktop node application, which the handful of engineers I spoke to at Demuxed found highly unlikely, then you are still plagued by BitTorrent’s problems. Specifically, the vast majority of seeding is done by very few nodes and the least popular content is the least accessible. But, remember, as a service provider you have to guarantee ALL delivery not just the most popular stuff. Once again, we find ourselves back at square one needing a hybrid peer-to-peer/client-server model to maintain reliability.

Of course, none of the reliability issues matter if the end user experience is not guaranteed, the original content creators are not being paid, and the goal of the network is simply to share files with a willfully blind eye as to where those files originated.

But, assuming the goal of the network is to create a whole new world of direct commerce that is not possible with today’s technology, there is a place for incentivized peer-to-peer media distribution for mainstream applications. The great opportunity comes at scale with concurrent users.

Maximize Your Unique Advantage

Peer5 has an amazing demo illuminating the efficiency of playing a video using the one-to-many method that, as the file plays on, switches to a peer-based system. Competitor Steamroot has a similar methodology.

Both of the above use WebRTC (Web Real-Time Communication), the same foundation as Streamium. One of the great things about WebRTC is that it works in the browser. No plugins, no secondary applications.

Ultimately, the more seamless we can make payments, the better. Projects like Ben Chan’s ZeroClick and the ProTip collective’s new plugin go a long way towards achieving that goal.

With Streamium, the second layer that handles the back and forth flow of funds is Bitcoin Micropayment Channels. Ironically, PopChest co-founder and bitcoin developer, James Poole, was the first to publically demonstrate Bitcoin Micropayment Channels over a year ago. After evaluating the technology, we just didn’t feel an added layer of complexity was right for our specific needs at the time.

Last year, I spent a few days in Argentina and interviewed Manuel Aráoz, one of the creators of Streamium, for the documentary I directed “Bitcoin: Buenos Aires”. The team of brilliant developers in BsAs have created a very valuable building block with their real-time, one-to-one streaming platform. Issues of scalability, reliability, and most importantly, user experience are far from resolved. But clearly this is a step in the right direction.

Go Where They Cannot Follow

PopChest has taken the exact opposite approach to solving the problem of connecting content providers with their video consumers. We are using the tools that are available right now to create a product that people can reliably use today.

Torsten Hoffmann’s “Bitcoin: The End of Money As We Know It” debuted using PopChest technology the same day it was released on Vimeo On Demand. At last check we were doing 70% of the business as the much larger platform. Because we use bitcoin, we were able to lower the price for the consumer AND have the producer get paid a much higher percentage of revenue, in real-time.

Hollywood-based filmmaker Laura Lopez is using PopChest to make her online TV show “Hacker Lairs” available for $0.25 in bitcoin. This is an amount that is impossible to charge over the internet using standard payment rails because of credit card transaction fees. Laura generated more revenue using bitcoin micropayments in one day than an ad-supported version would in its entire lifetime.

It’s Bitcoin, Not the Blockchain

This element, the peer-to-peer payment mechanism, was the thing that ultimately garnered the most positive response when I did my impromptu Lightning Talk at Demuxed. To have engineers from Google shake your hand after showing them a “cut out the middleman” video distribution app tells me a lot about the appeal of PopChest and bitcoin micropayments for video. Sure, this is a massive and crazy idea. But maybe it’s crazy in just the right way.

These are turbulent times in the media world. Online publishers are seeing advertising revenue plummet due to adblockers. Traditional television and film distributors can see their ‘Napster moment’ coming with the rise of elegant filesharing programs like Popcorntime. Stock prices of old media companies are tanking while investment in new media is in a frenzy.

With all the uncertainty, one thing is clear: the old way of distributing media is dying. This is terrifying for the established, but it is a once-in-a-lifetime opportunity for the insurgent.

-Valerian Bennett, Founder & CEO, PopChest

Special Thanks to Ryan Cunningham for video from Demuxed 2015

About PopChest Inc.

PopChest is a content distribution platform that leverages Bitcoin to provide instant, worldwide micropayments for media. This unlocks a whole universe of value that, until the advent of cryptocurrency and the blockchain, was impossible to extract.

Originally published at TheProtocol.TV on October 8, 2015.