BitTorrent, an early mover in concept of building a business around decentralised computing architecture to distribute and store data, is being sold for $140 million in cash to Justin Sun and his blockchain media startup Tron, TechCrunch has learned.
Variety yesterday reported that a sale of the company to Sun closed last week, without naming a price, following rumors that circulated for at least a month that the two were in negotiations.
TechCrunch understands that shareholders have now been sent the paperwork to sign off on the deal. Some are, we understand, still disputing the terms because more than one person claims to have made the introduction between Sun and BitTorrent, and the one who facilitated the deal will get an extra payout. A source says it’s unlikely that the disputes will actually kill the acquisition, given how long BitTorrent has been looking for a buyer.
BitTorrent most recently said it has about 170 million users of its products. Currently, these include its main client and BitTorrent Now. The latter is focused on video, music and other creative content. BitTorrent claims that its protocols move as much as 40 percent of the world’s Internet traffic on a typical day.
Tron is one of the new kids on the block in the wide world of blockchain startups. Founded by Sun, who previously had worked for Ripple (a settlement system built on blockchain tech), Tron says its mission is to build “a truly decentralized Internet and its infrastructure,” which has included (no surprises here) the creation of its own cryptocurrency, the TRX. TRX, loosely, appears to be a cryptocoin for the entertainment industry. Tron has plans to use TRX as a way to pay for content on its network, according to this whitepaper.
Tron is also just intended for trading. The company has launched a MainNet distributed ledger for transactions, with its own TRX migrating to the MainNet starting later this week. Tron says that the market cap for all TRX is currently valued at just under $4.6 billion with the value of a single TRX coin $0.045.
Neither Tron, Justin Sun, nor representatives for BitTorrent responded to our requests for comment, so it’s not completely confirmed how Tron plans to use BitTorrent. But one shareholder we spoke to says there are two plans. First, it will be used to “legitimise” Tron’s business, which has met with some controversy: it has been accused of plagiarising FileCoin and Ethereum in the development of its technology. And second, as a potential network to help mine coins, using BitTorrent’s P2P architecture and wide network of users.
The acquisition will close off a tumultuous but also interesting life for BitTorrent, founded in 2004 by Bram Cohen and Ashwin Navin to commercialise peer-to-peer networking technology as a way to share and store files.
BitTorrent was a trailblazer in considering how decentralised network architectures using all the machines in a network as nodes — in contrast with the server-based architectures that dominate the tech world today — could be used to share, store and backup data. Some believe this is a more secure system overall because there is no central repository to hack.
Yet the company has also become synonymous with “file sharing” and all the pros and cons that have come with that. Most notably, it has fought long against a bad rap for torrenting technology — which can be used to share copyrighted files illegally — by positioning itself as creator-friendly, buying in content rights, and establishing a range of products built on the P2P protocol. It also used its architecture to take a stand on privacy on the web at the height of the NSA controversy.
And while BitTorrent makes revenues — it hadn’t raised money since 2008 — its strategy to build a long-term larger business on that technology never really took off as investors and others hoped it would. That resulted in a number of management changes and a couple of reshuffles of its product as its leaders looked for the killer app. Some of its earlier product efforts are still around: BitTorrent’s enterprise services were spun off into a standalone company now called Resilio, led by BitTorrent’s former CTO and CEO, Eric Klinger.
(Side note: Interestingly, both Cohen and Navin are still following the trajectory of decentralisation that has led to the rise of blockchain, and that led Tron to BitTorrent. Cohen is building “eco-friendly” cryptocurrency Chia, and Navin, as the CEO of measurement and analytics provider Samba TV, is building a cryptocurrency to incentivise users to share more of their viewership data.)
Despite the current buzz for decentralised architectures around blockchain, we understand that BitTorrent had been looking for a buyer for a while, Long ago, one source told us, both Akamai and Rovi (which is now TiVo) had both considered buying BitTorrent but nothing came to pass. Akamai instead acquired Red Swoosh, a BitTorrent competitor that was Travis Kalanick’s first startup before Uber, and Rovi moved on in its own direction. More recently, offers were less forthcoming. The company had raised around $60 million in funding, according to PitchBook data, which notes that it had been valued around $145 million at its peak. Its investors have included DCM, Accel and DAG.
We will update this story as we learn more.