Why BitTorrent trackers are markets

Every second, massive amount of data are shared between users via torrents. The legal status of such downloads is complicated, depending on local legislation and more. For instance, the torrentz site was shut down in 2016. What is clear, however, is that torrents are not disappearing despite any measures to eliminate them from the internet. But has it ever crossed your mind that their nature is similar to economic markets?

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What are private torrents exactly?

These are file-sharing communities that accept owners on an invite-only basis. Invites must not be bought, as this gets you banned along with the inviting party. The upload/download ratio must show that you give back as well as download. Otherwise, you get punished with a ban.

As files are shared directly between peers, torrents are associated with infected files and hacking attacks. However, a thoughtful user has ways to stay safe and access a wealth of content. Trent Reznor once compared OiNK to the world’s greatest record store with almost anything a user could imagine.

Economics

The comparison in the headline applies to private torrent platforms, and is backed by the recent study titled “Economics of BitTorrent Communities”. It presents a compelling case. The researchers describe a number of similarities, such as:

1. Upload/download ratios constitute currency

The required ratio may be 1:1 or less. Sometimes, you have to upload no less than 25% of the downloaded amount (1:4, or 0.25). This may be perceived as “credits”, which are calculated using the formula: 1 credit = 4 × upload − download. Hence, uploading 100MB while downloading 150MB gives you 250MB of credit worthiness.

2. Newbies get extra time

This is a form of loans. You do not get banned right as soon as your ratio drops below 0.25. For instance, on DIME, the ban is only imposed when the downloaded volume reaches 5GB. This restriction is another form of loaning: users may maintain a negative amount of credit - just make sure your balance becomes positive by the subsequent enforcement cycle.

4. Users with low-speed internet are characterized by less “earning potential”

These participants have to spend more time to meet community requirements.

5. Equal pricing suppresses supply and demand

Files are prices by the byte. Hence, the amount of credits you spend on a file depends on its size. However, its “resale value”, or the credits you earn by uploading, varies. This will depend on the upload rate (determined by your bandwidth) and the duration of seeding (determined by you). In traditional markets, the price of a product drops when demand is low. But on torrents, this does not happen.

6. Market behavior is influenced by altruism and status

This effect proves that effects of digital media may be positive. DIME marks users in green or red depending on their behavior. Those who donate to the site or upload more content receive different kinds of social rewards, like site privileges or achievement badges.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes.