How State Channels aims to make torrenting cool again

Before streaming services took over the web, many users relied on peer-to-peer file sharing services like BitTorrent for quick, free and easy access to movies, music, and other forms of entertainment. After the entertainment industry pushed back, citing copyright and piracy issues, those sites fell out of style.

Now the mechanism underlying BitTorrent and similar services, called torrenting, is getting interesting again — at least in the world of Ethereum.

Torrenting is a way to share files via a network instead of a central server. It lets users locate files stored on other devices on the network and download them. They can also upload files from their own devices and make them available for public download.

In the early 2000s, people used torrents to download free content. Now, an open-source project called State Channels aims to help torrenting regain its lost popularity. This time there will be money on the line — and, in theory, more incentive to host (or “seed”) good content.

State channels

State Channels is focused on developing a technology with the same name — state channels — to enable cryptographically secure peer-to-peer transactions off the blockchain (“off-chain”). One of its main projects is a torrenting network that lets users pay each other using the Ethereum blockchain — well, state channels based on the Ethereum blockchain — called Web3Torrent.

State channels allow users to avoid relying on the main chain to verify every single transaction. This enhances user privacy because unlike on the public blockchain, transactions made inside the channel are only visible to those in it.

Users should also be able to transact faster and more cheaply with state channels. Instead of paying fees for each transaction, users only have to pay the gas fee for opening and closing a channel. These transactions are also instantaneous because parties don’t have to wait for any blockchain confirmations.

These interactions, which could occur on the blockchain, can be used for different purposes. But the most famous example is a payment channel, which allows two individuals to transfer money back and forth quickly and efficiently.

To open a state channel, first a user “locks up” a portion of the blockchain state by sending money to a multi-signature contract. Once both parties are finished transacting, they close the state by submitting the final outcome to the main chain, sort of like a game of chess where all moves are conducted off-chain but the outcome is broadcast to the network.

Web3Torrent is a state-channel-based micropayment system built specifically to support torrenting. Users who upload files to the network can earn small amounts of money from anyone that downloads them, paid via Web3Torrent.

The system demonstrates how Ethereum can be applied to introduce incentives to a system that traditionally lacked them, according to State Channels Co-Founder Liam Horne. Adding permissionless micropayments to a torrenting network is "an innovation in both technology and mechanism design,” he said.

Web 3.0?

Some see state channels not only as a way to help blockchain networks scale, but also as a potential component of a future decentralized web.

What Web3Torrent has demonstrated is “a missing piece of infrastructure to the internet,” according to Brian Mosoff, CEO of publicly-traded investing firm Ether Capital. (Mosoff is not an investor in Web3Torrent.)

“I got goosebumps reading about it because it addresses a problem that has been around since the 90s,” he said.“If you wanted to download an mp3, you would connect to a server and they would have this incentive problem: everyone wants to be a leecher, nobody wants to be a seeder.”

Mosoff said the big question about the future of torrents pertains to the nature of files and data being passed around. Is the data that is being transferred exactly what it claims to be? For example, is it pirated content disguised as some other kind of information that was not illegally acquired? Does the data comply with copyright laws? Mosoff said it also remains unclear exactly what happens if a user seeds a file and doesn’t receive payments.

Conducting transactions off-chain is also not without its own unique risks. For state channels to work, both parties must be able to publish the final state of the channel to the blockchain. If one of the participants disappears, the only way the other party can get their money back is by going to the blockchain to withdraw the funds the participants put into the channel. This means that someone has to stay online to protect each party until the channel has been closed.

Other crypto projects have tried to address this problem. For instance, decentralized storage network Filecoin is also building a peer-to-peer file storage system. However, Filecoin is taking a different approach — it aims to turn cloud storage into an algorithmic market where miners can earn filecoins by providing data storage or retrieving it for users.

Horne says that a unique appeal of Web3Torrent’s approach is that the technology is compatible with existing open-source web services like WebRTC, which developers can use to give their web sites and application real-time communication capabilities.

Web3Torrent, he said, is “a demonstration both Ethereum’s wide applicability to all sorts of problems and the importance of state channels for providing the toolkit necessary to build the software to make Ethereum’s value proposition seamlessly available to regular internet users.”

Still, the project could struggle to get off the ground due to lack “Web3” infrastructure, according to Vaibhav Saini, who has been working with state channels since 2017. Saini currently runs a project called “Daapkit,” which uses state channels to provide tools and infrastructure to dApp developers.

The ecosystem still lacks enough developer tools and user-facing applications for state channel enabled applications to take off, said Saini. Besides that, he argued, just because it uses blockchain-based payments doesn’t mean it can resolve the problem of “data censorship” on its own.

“Data censorship regarding copyright issues and illicit content is not something that a single project can just ‘solve,’ said Saini. “It's a problem that we need to solve as a community of Internet users,” he said.

Thus far, around 50,000 people have visited the webpage, and 500 people have created a channel and participated in the torrent network using Ethereum’s Goerli testnet, according to Horne. He says State Channels is now in the process of launching a version of the project on the Ethereum mainnet.

Horne said he wants to continue to expand the product globally, especially in communities where there are few users uploading data relative to local demand. He cited foreign subtitles for movies from around the world as an example of content for which there is significant global demand but which can be difficult to find. WebTorrent could make this kind of data more accessible, he said.