With BitStream, the use of Bitcoin in data markets is on the rise

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Robert Linus, ZeroSync developer and creator of the BitVM protocol, has created a new protocol to integrate data sales and downloads into the trustless security of the Bitcoin blockchain, and it could open up a new area of ​​use for Bitcoin.

Linus has recently had a busy career revolutionizing the potential of Bitcoin. Although much of the buzz around Bitcoin among the general public relates to its monetization and use as a financial instrument, as it becomes increasingly entangled with the existing financial world, Linus has undertaken several significant projects to mine au maximum blockchain in surprising new areas. In addition to his work at ZeroSync to create zero-knowledge proofs, in October Linus made headlines with his new BitVM protocol: a method for creating logic gates and complex calculations entirely within the Bitcoin blockchain. Such functionality, at scale, would allow Bitcoin to execute smart contracts to the same degree as other tokens like Ethereum, but without sacrificing any of Bitcoin’s decentralized characteristics.

On November 11, Linus announced the proof of concept of a new protocol: BitStream. Essentially, the plan is to use Bitcoin’s blockchain to make atomic purchases of various packets of data; that is, purchases that require no intermediary and can be accepted or disputed by the buyer and seller using only the functions of their contract. Linus’ white paper goes into more detail: he specifically draws attention to Nostr, a decentralized protocol designed to create censorship-resistant communications.

Although its trustless nature and general goals are very close to Bitcoin’s philosophy, Nostr does not use Bitcoin directly, and Linus claims that “paid servers for platforms like Nostr often underestimate their operating costs when They charge a monthly payment for storing a user’s data. Users can split their payment into daily or weekly installments if they don’t trust the servers, but this strategy doesn’t solve the economic challenges servers face. Users pay to download their data, so servers are not paid per download. He went on to state that one of BitStream’s main goals is the requirement that servers be incentivized and compensated, using a pay-for-download basis.

Although Linus was quick to point out some of the very simple ways that BitStream’s encryption protocol could be further complicated, in order to make the service more secure overall, he explained the basic fundamentals using a much more simplified model. Essentially, as is extremely common in file encryption, the initial file is split into chunks to form a Merkle tree and then hashes each chunk of data. The new file ID is the root of this tree, the information that contains all the hashes and none of the original data. A unique buffer is then used to encrypt each of the original chunks, using a different formula than the hashes in the unencrypted tree. The hashed chunks and new encryptions of the same chunks are then associated into a new tree with a new root shared with the server.

With the encrypted ID available, an automated process can exist in which payment by the seller is automatically responded to with the other pieces of data needed to decrypt the actual file: all encrypted chunks, hashes of all unencrypted chunks, and the Original file ID. If there is a difference between encrypted chunks and unencrypted chunks, this will be immediately obvious and the buyer can use this as proof to the blockchain that the transaction is somehow fake and needs to be refunded. In this way, a secure method of file transfer is transformed into a trustless contract that financially incentivizes the data server, all using the power of the Bitcoin blockchain.

This protocol is enabled with a wide variety of Bitcoin payment channels, including obviously the Lightning Network but also sidechains like Liquid and several more obscure solutions. It is also built similarly to BitVM, not necessarily clogging the Bitcoin blockchain by requiring every step to require on-chain transactions, but verification and disputes can easily do so to resolve disputes. When Linus was told that BitStream did for storage space what BitVM did for runtime, and asked if they could be combined, he replied in the affirmative and claimed that he first proposed BitStream and needed to figure out how to generalize it into BitVM.

Although this protocol had both its advantages supporters And critics, Linus was succinct when asked on Twitter what makes this protocol better than other storage solutions? Her answer: “It’s Bitcoin.” Once again, Linus has found a way to fulfill some of the functions that some altcoins have centered their business model on, all using the number one decentralized currency, and without even having any negative side effects. It is with this in mind that we should consider Durabit: a similar protocol for using Bitcoin to incentivize and guarantee the security of data transfers, but with an anonymous creator.

Durabit is a protocol built on one of the Internet’s best-known protocols, BitTorrent, the file hosting service. Although it has gained an immense reputation over its 22 years of functionality, it requires users to actively seed data for later downloads. If a file is downloaded by users more often than it is reset, it disappears. Durabit does not offer a completely trustless method to solve this problem, although it is reasonably weak: a mint runs the protocol and accepts funds from users who want to see a file generated. The Mint then makes micropayments to the seed companies at regular intervals, so that the Mint cannot run away directly with the funds and the original investor can revoke the remaining funds if they believe the Mint is acting improperly. dishonest.

This protocol is much more specialized and, moreover, less reliable than BitStream, but it nevertheless opens up a truly new use case in the history of Bitcoin. Although the cry of “sow your streams!” has been an essential refrain of good Internet etiquette for decades, the disappearance of files from the platform and the difficulties in operating a program like Nostr show that good will is not always enough. With Bitcoin, there can be a real incentive to maintain best practices and encourage the free flow of information, all without tying those incentives to an outside authority.

Even the most well-intentioned controller can still be pressured by outside forces to stop the flow of data, but protocols like this show how information can flow with little or no arbiter. Bitcoin has a powerful ability to transform the entire world of data markets, and all this is contained in the most fundamental laws of Bitcoin philosophy. If BitStream is widely used, if other anonymous Bitcoiners create protocols like Durabit, who knows what the possibilities are? Once the community starts innovating on a new concept for Bitcoin, the sky is the limit.