BitTorrent, the first Binance Launchpad IEO, was launched to fuel the BitTorrent Speed network, with several use cases for the token stated in the whitepaper and subsequent evaluations.
Famous crypto VC Barry Dilbert noted that most utility tokens act as friction tokens, slowing down efficiency while providing no actual utility. BTCManager discusses the benefits and drawbacks of the BitTorrent project in this rundown.
Peer-to-Peer File Sharing Client
BitTorrent was a well-known brand even before Satoshi Nakamoto wrote his Bitcoin whitepaper. It was the most widely used P2P software and prospered owing to its ‘give and receive’ economic mechanism.
TRON purchased BitTorrent in 2018 and announced plans to integrate it into their network. This was met with criticism from BitTorrent’s ex-CSO. He argued that the TRON blockchain could not handle the number of BitTorrent transfers.
As fate would have it, the whitepaper said that they would implement an on-chain token exchange with a private ledger to execute BTT transactions because TRON cannot provide the required throughput.
TRON purchased a company that owned the world’s largest peer-to-peer data transfer client. It was already thriving and deployed it on a blockchain with a token to create friction that did not exist.
According to the creators, the token’s purpose is to incentivize seeders and allow consumers to purchase network capacity. They didn’t realize that the existing BitTorrent game theory was grand as it was. Seeders maintain seeding to keep the network robust. When they need to leech, there are enough seeders.
With that stated, another use-case for the token is the launch of BLive, BitTorrent’s mobile streaming service similar to the Brave browser. Users may tip their favorite broadcasters and content creators in BTT, among other features. While this broadens the use-case for BTT, what can be about the token’s market performance?
BitTorrent Tokenomics
TRON’s attempt to integrate a new incentive layer atop BitTorrent is ambitious, but their aim is unmistakable. But the economics of BTT issuance make it an asset that no one wants to hold. So what’s the point of having the token at all?
BitTorrent best compares to ERC20 tokens because they are both utility tokens on a foundation network.
Most ERC-20 tokens, such as Golem (GNT), Basic Attention Token (BAT), and OmiseGo (OMG), have issued their entire supply and have no inflation. Others, such as ChainLink (LINK) and 0x, have not and have given 93% and 65% of their supply, respectively.
With a reported quantity of 212 billion tokens and a hard maximum of 990 billion, BTT has issued 40% of its supply. According to Messari data, the inflation rate on BTT is a mind-boggling 70.98 percent.
Investing in BitTorrent now means that your position will dilute to more than half of what it is today when the final supply releases. BTT has the most excellent inflation rate of any 588 cryptocurrencies and tokens, for which Messari has statistics.
The TRON Foundation team will hold approximately 40% of the supply. The public auction accounts for only 15% of the overall collection. If the Foundation and investors dump their tokens in the market to maximize their profits, the minority will perish.
Nobody in their right mind would invest with such high inflation; add token dilution and low market float to the mix, and you have a recipe for economic disaster.
