Generations of Cryptocurrencies
First Generation: Bitcoin.
This cryptocurrency has proven the most important thing in practice – blockchain technology works. For simplicity, let’s try to explain it in a way that even a 6-year-old child can understand:
Imagine you have two friends: Joe and Ed. One of them, Joe, asked you to play a rare item, and the other, Ed, witnesses the transaction being made. A week later you fight with Ed and Joe. Now Joe says he didn’t take the toy from you, and Ed says he didn’t see anything. The caretaker (the state regulator) can press Ed and he will “remember” the deal. And maybe then you’ll get your thing back. That’s how the classic bargain system works through a guarantor.
\n Scenario 2
Joe asked you for a toy during kindergarten lunch, and the whole group saw the deal. A week later, when you fight with Ed and Joe, it will be the word of all the other kids in the group against their words. And you won’t need regulator intervention, because thirty votes to two will still be in your favor. What’s more, each of the kids in the group is a carrier of knowledge about the deal. In other words, even if five kids in the group get sick, the rest of them can still confirm that the deal was done. That’s how blockchain works.
You have a distributed database stored by many at once. If any node tries to compromise one of the records in the database, blockchain technology will exclude that information because it will contradict the data in more participants. This, unfortunately, is where the technological merits of bitcoin end.
Second Generation: Etherium
Etherium brought such an important thing as “smart contracts” or automatic execution of payments if some conditions are met. Going back to our example with the kids:
Imagine that you have an agreement that Joe takes a toy from you for exactly one week, after which he returns it to your locker and adds one apple as a thank you.
Smart contracts mean that after exactly 168 hours, your toy and Joe’s apple will automatically transfer from Joe’s locker to yours. Neither you nor Joe will need to do anything, and everything will happen automatically. Again, Joe won’t be able to back out of the deal, because the whole group will be a witness to the contract.
The main disadvantage of this scheme is high commissions from Etherium (conventionally, you will need another half-apple in commissions to make transfers between boxes). And frankly speaking, Etherium is not so decentralized, as it talks about itself. It’s as if, in our example, a third of the children in the group are relatives of the daycare owner and it’s not entirely clear whether they will be neutral in a really difficult situation.
Third generation cryptocurrencies try to be decentralized, fast, have smart contracts, and, most importantly, low commissions. At the same time, every project (except memes) is also trying to be useful. Since, as I wrote above, I’ve devoted many years to video, let’s talk about what crypto projects bring to the topic.
Video delivery now and why the Theta project claims to be a revolution
So, how does a video get delivered to the consumer now? For you to get a video stream of maximum quality and at maximum speed, the server with the video needs to be close to you. To accomplish this, many projects use a CDN.
In other words, there are many servers scattered around the world that have copies of frequently requested videos. As soon as you type in the site address, you will be redirected to the nearest server.
Understandably, this method of transferring content is insanely expensive. The owners of the resource have to pay for many copies (just imagine that a Baby Shark video clip has been copied several dozen times and scattered all over the world) and still, if you look at the map above, the coverage of the territory remains low.
\n Theta, a big blockchain project that aims to become first the new Twitch and then, with any luck, the new Youtube, is taking on this problem.
\n Theta’s main goal is to decentralize video streaming and peripheral computing, making it more efficient and cheaper for all participants. In other words, Theta allows you to rent out users’ computers to:
- video streams are distributed through them to the region in which you live
- they can perform calculations of a given type without having to chase data to and from a central server \n
To explain the beauty of the technology, let’s reintroduce an analogy that kids can understand:
Imagine that everyone in your class loves Marvel heroes, and you’ve just gotten your hands on a rare set of superhero cards. The kids are all out of town for the weekend, but the interest in the cards hasn’t waned. Periodically, one of the kids calls and asks to see them. No problem, you say, come on over. And one classmate is coming to you halfway across town, then another. It’s a classic one-server concept.
To cut down on travel time, you hand 10 of your classmates who live in different parts of the city full-fledged copies of these cards. Now the path to view is equal to the path to the nearest classmate. That’s how CDN works.
Theta offers to become such a “classmate” to anyone, bringing the absolute situation to the point that the cards you are looking for are available on every street. You are rewarded for using your resources in the form of your own coins used in the project.
\n An attentive reader might ask a reasonable question: why create such complexity with blockchain if:
- You can work on the principle of torrents: you download the file yourself and immediately become its distributor for others. Isn’t that right?
- It is possible to make a central server where those who want to be CDN nodes will register and pay them as they contribute to the network? \n
The beauty of blockchain is that you don’t need a single decision-making center, and the appearance of clips and the number of views are imprinted into the blockchain, increasing the transparency of payments. By the way, video broadcasting during viewing, like in torrents, is also present. \n
Thus, the project has several advantages:
- The cost of content delivery is drastically reduced. At the current moment, Theta has 128834 distributing nodes.
- As video quality grows (first 4K, then 8K, then ∞K and/or video for VR glasses with 360° viewing capability) you do not depend on the channel width to the main node, distributing the load among intermediate nodes.
- Creators do not depend on the policies of the main resource and distribute content without the risk of blocking (minus censorship, plus anarchy).
- The commission charged by the resource for its work is reduced. Accordingly, advertisers receive more services for the same money, and content creators receive greater total remuneration.
- All participants of the project see the transparent statistics of the node’s work and calculate their remuneration based on their contribution to the common cause.
How does Theta work?
Theta’s functionality is based on three different types of nodes:
- The largest unit is represented by Enterprise Validator nodes. Node owners include companies such as Google, Sony or Binance). Enterprise Validator nodes offer new blocks and generate them in the blockchain. To become an Enterprise Validator, a node needs to own 1,000,000 THETA coins (an internal blockchain coin, currently about $3 million).
- Guardian nodes store blocks in the blockchain and are used to manage malicious or otherwise dysfunctional nodes. Guardian nodes thus play an important role in protecting the security of Theta blockchain, as they form a second layer of protection against potential attackers. To be a guardian node, one must have 1,000 THETA (about $3,000 at current exchange rates). There are currently about 3,500 such nodes around the world.
- Edge nodes are the worker bees of a project. They are used to forward video streams over the Theta network. Any user that has a computer with average characteristics and a decent connection channel can be the owner of an edge node. Node owners are rewarded for their work with a second internal blockchain coin called Theta Fuel (TFUEL).
Since the project does not have a single center, financial relations within the project are self-regulating, using its currency. Thus, the Theta project’s economy is carried out through the use of the two tokens THETA and TFUEL. To achieve crystal clarity, let’s break them down:
- THETA (a kind of deposit in the bank, showing the seriousness of the node’s intentions). New Theta coins are earned by depositing your existing coins. The more coins you have, the more you get when new coins are distributed by the network (Proof of Stake concept). In addition, THETA coins act as an analog of shares with voting rights, allowing you to vote for changes in the project. That is, the more coins a node has, the more influence it has on the development of the network.
- TFUEL. This is given to nodes for sending video content, thus stimulating the participants. \n
Both types of coins are traded on cryptocurrency exchanges and can be converted into real money. Theta recently introduced a third type of coin, the TDROP ticket. But it is intended to work with newfangled NFT and it’s rather the topic of a separate big article.
A small remark: I understand that the word “trendy” can refer to the whole crypto market, but the activity here is such that trends arise and die in a few months. So NFT is really a newfangled part of the crypto market, threatening to become a classic 🙂
The theory looks interesting, but what about the practice?
Theta has several partners. These are usually specialized projects uncomfortable on YouTube, or food producers trying to build a Red Bull video empire around them.
The main video streaming site based on Theta technology is Theta.TV, which positions itself as a substitute for Twitch.TV (check out the mimicry of the name). The Theta.TV site is filled with a huge number of live-action video playlists, with (and let’s face it) really good video quality.
However, despite its clear ideological and technological advantage over its competitors, the platform is not all that rosy. First, Theta.TV’s audience is not actively growing and is more of a permanent one. The fact is that for ordinary users, the benefit of the same Twitch is not obvious. The creators of the platform also understand this, so they are trying to increase competitiveness by introducing new features like the same NFT.
Secondly, the market itself does not really believe in the project. The value of THETA coins at one time reached $ 11 per coin and gradually rolled back to the current $ 2.8. The rise in value to record marks was associated with the announcement of partnerships with Google, Sony and other market whales (see screenshot with nodes Enterprise Validator). However, I could not find any objective evidence of these companies’ use of blockchain technology (the same cooperation with Google is rather related to the fact that Theta actively uses Google Cloud for scaling). If you know of such examples, please write about them in the comments.
So what’s stopping Theta?
I think this blockchain is working a bit in the wrong direction. At the moment the main bet of the project is in the market of game broadcasting, where, frankly, it’s not bad at all. It seems to me that based on the general atmosphere of anarchy, such a network would be a great way to distribute adult videos, thereby pulling itself out of its current stagnation. History knows quite a few instances where “hot video” has been a condition for winning one standard or another. By starting with adult content, the technology could have become a prominent, non-alternative content distribution network, gradually dragging other market players onto itself. But I will not be able to tell this story to my son 🙂