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Tuesday, July 31, 2007

The BitTorrent Economy

BitTorrent is a good model for founding an alternative economic system.

BitTorrent is used to transfer large files on the Internet. It can be used for large downloads. It's more commonly used for illegal downloading of copyrighted content. The BitTorrent user is able to escape detection due to the decentralized nature of the network.

Each download is broken up into a bunch of pieces. Different clients trade with each other. If one client has piece #543 but not #420 and another client has #420 but not #543, those clients can trade. A well-written client tries to make sure its upload and download rates to each other client are nearly even. Clients download pieces semi-randomly. They try to download pieces that other clients don't have, so they can continue sharing.

A client with the entire download is called a seed. At least one seed must be present to guarantee that everyone will be able to finish the download. The seeds try to upload their pieces to the clients with the highest upload rate. This ensures that other clients become seeds as quickly as possible.

A hash check is used to compare uploaded data. This insures that the data received is valid.

There is a centralized tracker. A client logs into the tracker, announcing its IP address and port. The client then receives a list of other clients that it can connect to. Whenever a piece of the file is sent, both clients report to the tracker that the piece was transferred. Because both clients are reporting a successful transfer, that means that a client can't cheat. The tracker logs everyone's upload and download rates, so the seeds know which client it is most efficient to upload to.

The tracker represents a single point of failure for the BitTorrent network. A BitTorrent download could be eliminated by shutting down the tracker. If I were using BitTorrent as a model for an alternate monetary system, I would make it not dependent on a centralized tracker.

Most consumer internet packages have a defect. The download rates are typically a lot higher than the upload rates. For example, I can download at 100k/second, but only upload at 20k/second. This is bad for BitTorrent, because any download by one person must be matched by an upload by someone else. A misbehaving client could download a lot more than it uploads, ruining the performance of everyone else.

Some BitTorrent trackers have a "ratio policy". Each user is given a unique ID#, so they know exactly who is uploading and downloading. The ratio of uploads to downloads for each user is tracked. Users with a low ratio are called leechers. Users with a very low ratio are banned.

In other words, the BitTorrent economy fairly tracks this limited resource: upload bandwidth. A BitTorrent tracker with a "ratio policy" is an example of a fair economy. It's an example of a Social Credit Monetary System. A user gets a credit for uploaded data and a debit for downloaded data. New users are given some free downloads, so they can start sharing. The penalty for violating the policy is that the violator is banned from the community. Some sites are pretty sophisticated in the banning of violators and ensuring that duplicate accounts are not created.

That is another point about the BitTorrent economy. Violence is not needed to enforce the rules. Banning someone is a sufficient penalty.

Some of the ratio sites have a policy where a banned user can be readmitted on an upload-only basis, so they can repay their debt. There is an opportunity to earn member status again.

The Federal Reserve and the income tax enable the government and financial industry to leech off my productive abilities. Even if I disapprove of the government's policies, anytime I do productive work I'm supporting the bad guys. Is it possible for people to say "LEECHER - BANNED!" to the Federal Reserve, financial industry, and income tax?

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