What Is BitStream?

It’s been a long and winding bear market, with many so-called “hodlers” jumping ship, as builders giving up on their projects or putting them on pause as markets aren’t as liquid as they were during a bull market. The previous all-time high was two years ago, and as the market deflated, it’s been a slow grind watching leveraged companies and traders implode along the way, driving even more volatility. 

It’s not easy being a Bitcoin company. It’s not easy finding consistent income opportunities in the Bitcoin space. Still, as the market matures, new companies and use cases will emerge as more capital flows into Bitcoin and as more users become familiar with it and are willing to send and receive it and pay for services with it. 

The bear market might seem like doom and gloom, but with every cycle, the quiet time allows developers to work on ideas and provide the seeds for what will undoubtedly be exploited and overblown during the next upturn. 

This cycle is no different; while the money guys might see Bitcoin losing 70% of its value and slowly starting to reclaim some of what it lost, those focusing on the tech would see promising scaling solutions like Ark or the recent launch of BitVM as bullish sentiment for Bitcoin. 

Bitcoin researcher Robin Linus and SuperTest net released the “BitVM” Whitepaper a few weeks ago, which outlined a path for bringing more robust Ethereum-style smart contracts to the Bitcoin blockchain. While a few developers are working on proof-of-concept implementations of BitVM, nothing concrete has hit the market yet. 

While BitVM’s possibilities are still being explored, that hasn’t stopped Robin from pushing out new ideas, and he has also released another proposal for decentralised file hosting, incentivised via Bitcoin payments.

The new “BitStream” proposal by Linus, a core contributor to Bitcoin-based zero-knowledge proofs developer ZeroSync, sets out how an open market for content hosting could be created by “an atomic swap of coins for files.” The Bitstream white paper explores a new system for file storage that leverages Bitcoin payments to disrupt the current economic structure.

The state of online storage

Today, many of us rely on file storage service providers to store our data, be it for work or personal information; from iCloud to Dropbox, these consumer storage services have become part of how we relay data online. 

In the current file storage model, regardless of the consumer app you’re using, in all likelihood, you’re relying on one of three centralised providers like Amazon Web Services (AWS), Microsoft Azure or Google Cloud Platform (GCP) as big tech companies have invested billions to spin up data centres and dominate the market. These providers offer various storage and hosting services, but they also charge relatively high fees.

Of course, you can choose to self-host your files, but this comes with its own set of challenges and not everyone has the time and technical expertise to run a home server, hence the popularity of cloud storage and cloud servers. 

Bitstream aims to offer a third option by creating a decentralised file storage network where servers are rewarded with Bitcoin payments for each file download they facilitate. This usage-based model aligns server profit with content demand, which could lead to lower prices for users and more competition among providers.

If you’ve been in the cryptocurrency space for some time, you’ll probably know that there have been attempts to tackle this problem with altcoin projects like Filecoin and Sia Coin, which have not had much traction, while IPFS has its drawbacks that have slowed down its adoption as an alternative. 

So, how would BitStream differ from these services, and why would anyone want to use it?

How Bitstream works?

Bitstream creates a directory of accountable servers from which clients can choose. Clients pay servers directly in Bitcoin for each file they download. Servers are compensated for providing storage space to the network, and the incentive is to host files that users might find valuable and would like to retrieve or access regularly. 

A Bitstream server encrypts a file such that if there’s any mismatch during decryption, the client can derive a compact fraud-proof and bond contract that guarantees the client receives the exact file, or they can punish the server.

The system is Bitcoin native, meaning these payment channels can be fed through the base layer or secondary payment rails like the Lightning Network, Liquid, Chaumian eCash, Fedimint, or Cashu to afford swift microtransactions for file access.

This opens up the ability for storage providers to cater to uses of all needs and sizes and service users from all over the world with instant clearing of funds.

To ensure that servers provide the correct files, Bitstream uses a Merkle tree for file verification. This system allows clients to confirm the accuracy of the content being transferred quickly.

The BitStream, like the BitVM, addresses the risk of additional load on the Bitcoin network by carrying out verification off-chain most of the time. In both cases, transactions or computations would only need to be carried out on-chain for verification or to address a dispute.

The possible benefits of Bitstream

Bitstream offers several potential benefits over the current file storage model, including:

• Lower prices: Bitstream’s usage-based model and increased competition among providers could lead to lower prices for users.
• More choice: Bitstream gives users more choice over where they store their files and how much they pay.
• Decentralisation: Bitstream is a decentralised network, which means that any single entity does not control it. This makes it more resistant to censorship and other forms of interference.
• Transparency: All transactions on the Bitstream network are recorded on the Bitcoin blockchain, which makes them transparent and auditable.

Challenges ahead for Bitstream

Bitstream is still in its early stages of development, and there are a number of challenges that need to be addressed before it can become a mainstream file storage solution.

One challenge is building a network of reliable servers. Bitstream needs to attract a large number of servers in order to offer users a wide range of choices and competitive prices.

Another challenge is educating users about the benefits of Bitstream. Many users are still not familiar with Bitcoin or blockchain technology, so it will be important to explain the advantages of Bitstream in a clear and concise way.

Currently, there are also issues with implementing the bond contract, which requires workarounds, such as using the Liquid sidechain; however, reactivating OPCAT would be sufficient to implement BitStream directly on Bitcoin.

Early implementations of BitStream

The Bitcoin community has wasted no time in putting BitStream to the test, with Lightning Network and Cashu Developer Calle launching an eCash-compatible demo and announcing it on Nostr. BitStream eCash is achieved via a “Nutbond” Ecash contract, which can be challenged if the downloaded file doesn’t decrypt correctly.

Monetising new markets

Bitstream has the potential to disrupt the file storage economy by offering users a chance to monetise their free storage in an open and competitive market. This market for storage would be a more decentralised, affordable, and transparent way to store their files and give consumers a chance to pick from service providers that suit their unique needs instead of subscribing to rigorous subscriptions that force users to pay for storage they might never use. 

Given the fact that there is a growing cohort of users who run their own personal servers in the form of a Bitcoin node, the leap to tacking on a personal server that rents out storage and generates an income might be attractive, especially for Lightning node operators looking for additional ways to earn an income. 

While Bitstream could definitely be a disruptive alternative to the current offerings, it has a long way to go before we see storage marketplaces springing up to compete on any meaningful scale.

Users would need to be comfortable with their files being hosted with peers and not a centralised company and also get used to using Bitcoin as their native form of payment, which right now is still a major hurdle. 

Additionally, marketplaces will need time to strike a balance between demand and supply, and this will be reflected in the offered price for decentralised storage versus centralised storage. 

It remains to be seen whether Bitstream will be able to overcome the challenges it faces, but the project is certainly worth watching.

Do your own research.

If you want to learn more about BitStream, use this article as a jumping-off point and don’t trust what we say as the final say. Take the time to research, check out their official resources below or review other articles and videos tackling the topic.

• robinlinus.com/bitstream.pdf