VideoCoin – ICO Report
Designed to be the Airbnb of Video and VR distribution, VideoCoin intends to create a decentralised peer-to-peer network for the encoding, storage and content distribution, running on its blockchain protocol, with its native token. Their vision is to turn all cloud-based video services into an efficient algorithmic market, running on a new blockchain. The VideoCoin network’s goal is to dramatically reduce the cost of encoding, storing and distributing internet video and new virtual reality technologies through the productive use of currently idle internet computing resources, thus freeing up capital to create an entirely new and innovative ecosystem of video and VR applications.
With internet traffic growing at around 24% annually and the majority of IP traffic being dominated by video distribution, storage and encoding demands; video streaming has become the Internet. With the evolution of Virtual Reality, the demand for video streaming will only increase. Today’s modern cloud video infrastructure market has three core components:
- Encode – Creating video bitstreams by encoding and transcoding it to match device requirements and enable playback. Modern video infrastructure makes use of many codecs to achieve high degrees of compression, but the cost of this is high CPU requirements.
- Storage – Video storage requirements have expanded exponentially given the number of formats, bitrates and codecs that result after encoding. With increased resolution, these files are occupying more storage space, for example with 4k videos now being the preferred format for high-end device consumption. As consumers view videos on an ever-increasing number of devices and in a number of formats, storing these videos in their encoded formats for later consumption is necessary.
- Delivery – ‘Chunks’ of video are delivered over the internet using servers that are geographically within close proximity to the consumer, to avoid long buffering times. Currently, modern video infrastructure uses content delivery networks (CDN) to provide this service to consumers. Locality matters for consistent bandwidth and delivery speeds.
Below are some risk factors facing the video infrastructure market currently:
Centralisation if left unchecked with stifle innovation and increase costs in the long term to consumers and video content providers. The end of net neutrality by US regulators has highlighted the risks to privacy and of censorship within a highly centralised system of service delivery regulated by government entities.
VideoCoin will develop a decentralised network that provides cloud video infrastructure services such as video encoding, storage and content delivery network in the form of a peer-to-peer algorithmic market. This marketplace will allow all miners to earn VideoCoins by providing video infrastructure services and consumers/clients to spend VideoCoins renting these services. The ecosystem structure is outlined visually below:
The ecosystem will create four classes of ‘miners’ who provide different services in exchange for VideoCoins:
Large-scale video processing and encoding is a complex distributed systems problem. VideoCoin addresses this issue by creating a distributed video processing platform, which splits video encoding tasks into several ‘chunks’ and processes them in parallel, thus producing much higher frame rates on commodity hardware of compute miners. In addition to this, VideoCoin implements a scalable, fault-tolerant, distributed storage system, called Sonata, on top of commodity hardware provided by storage miners. Sonata works closely with a wide variety of concurrent data access applications and splits videos into playable segments for storage. These segments are then distributed, across the storage network created, on top of disk space provided by storage miners.
In the VideoCoin ecosystem, distribution miners act as paid proxy servers for storage miners who store data. VideoCoin builds an algorithmic market for clients to negotiate directly with distribution miners and storage miners to deliver high-quality video streaming to the end-user via a proxy server that is in close geographical proximity.
Miners can run via data centres, household desktop computer and even mobile phones, creating a ecosystem of computers which would otherwise go unused. Currently, in today’s infrastructure, over 30% of data centre servers are inactive. These four types of miners will be incentivised through the VideoCoin peer-to-peer ecosystem to utilise unused resources to provide as much computational resource, storage and bandwidth as possible.
The experience and expertise of the VideoCoin team is very impressive. However, I have more questions than answers about their ecosystem and how it will work in practice. A few are listed below:
- Have VideoCoin built their native blockchain protocol? Their website claims they have 250 nodes. I could not find a project roadmap with milestones or dates for delivery of key network component such as an open beta for testing or open protocol release. Building a native blockchain protocol is an ambitious project in and of itself, even without the VideoCoin ecosystem above it.
- What is their acquisition strategy for ecosystem participants? I want to understand miner acquisition and the unique selling points of the platform for consumers and clients. It is hard to evaluate the business model behind the network or how supply and demand will work without understanding the incentives behind using it for all participants.
- How will the limited number of coins sold affect token value? There is no way to know without understanding the token economics behind VideoCoin. Of the total token supply issued, VideoCoin will distribute 70% to miners, but there is no detail around how this distribution will take place or when, or at what price per token. Only circa 13% of the total token supply will be sold during the pre-sale and main sale, which means that the majority of token supply will remain within the network for all intensive purposes.
The idea behind the project, to be the Airbnb of Video, could be hype-driven marketing. However, the potential for market disruption in this space is huge and could drive a new wave of innovation around video streaming and content delivery from video provider to consumer directly via VideoCoin’s ecosystem. As with all promising ideas, please Start with Why…for all ecosystem participants, but especially relay miners such as Amazon and Google, and provide more information around the network business model, its native token and project delivery timeline.
By CeAnn Simpson