- Halsey Minor, who founded CNET and cofounded Salesforce, is spearheading a new distributed computing project focused on encoding, storing, and streaming video.
- The effort is designed to tap into so-called zombie servers, which are unused or underutilized computers in data centers.
- Server owners will be paid via a new cryptocurrency called VideoCoin; Minor plans an initial coin offering for the token in March and has already raised $25 million in pre-ICO funding for it.
- The VideoCoin Network is designed to be a rival to Amazon Web Services and other cloud-based video processing offerings. Minor says the service will be 60% to 80% cheaper and give video producers greater ability to create their own apps on top of it.
- It’s unclear whether Hollywood or other video producers will buy into the system.
Halsey Minor was one of the pioneers of cloud computing. Now he thinks he’s come up with a way to replace the cloud with an even more avant-garde technology — a blockchain-backed cryptocurrency.
Minor is developing a distributed computing project for encoding, storing, and streaming video. His goal is to create a system that could offer everyone from Hollywood studios to amateur videographers a way to process their videos that would be just as easy to use as Amazon Web Services or Google Cloud, but far less expensive. And because the effort will be open source, anyone will be able to build whatever applications they want to on top of it — including, potentially, the next YouTube.
The system would work kind of like the SETI@home project, which harnesses the power of participants’ home computers to crunch astronomical data for signs of alien life. But instead of searching for E.T., this technology would process the video for what could be the next “E.T.” film. And instead of people sharing their computing resources for free, they’d be getting paid for it via a new cryptocurrency called VideoCoin.
“We can harness all these computers around world,” said Minor. “We can do things Amazon can’t.”
Minor plans to launch VideoCoin with an initial coin offering in March; as of this week, the effort had already raised $25 million in pre-ICO investments. Trading in the cyber token will begin the following month. His plan is to begin testing the distributed computing service built around VideoCoin later this year and have it fully up and running within 12 to 18 months. However, before the service launches, token purchasers will be able to use the token to buy processing power on the cloud servers of Live Planet, Minor’s virtual reality video startup.
Minor has a history of launching and funding innovative startups
Perhaps best known for founding CNET (where I once worked), Minor is a serial tech entrepreneur and investor who cofounded or was an earlier investor in Salesforce, Grand Central Communications, which became Google Voice, and OpenDNS, which was later acquired by Cisco. VideoCoin is an outgrowth of two of Minor’s most recent companies, the cryptocurrency exchange Uphold and Live Planet, which offers a 360-degree stereoscopic video camera and a cloud service for hosting and streaming video.
We can harness all these computers around world. We can do things Amazon can’t.
Live Planet’s camera is designed to capture enough video information to send a 4K stream to each eye in a virtual reality headset. Minor’s dream is to have the cameras located just about everywhere, streaming video 24 hours a day, seven days a week. But encoding all that data and streaming it to users around the planet via the existing cloud services would be incredibly costly; Minor estimated that for just one camera, it would cost $30,000 a month.
So, he got to thinking that there must be a better way — and Uphold suggested a possible solution. With Bitcoin and other cryptocurrencies, anyone on the internet can earn money by using their computing power to solve complex algorithmic problems. As the algorithms have become more difficult to solve, the market has responded by adding more computing power.
Minor figured he could tap into a similar idea. But instead of using computing power to solve complex puzzles just to do the simple accounting task of adding a line to a digital ledger, he figured he could have those computers do something that’s already processor-intensive — encoding video.
“We’re trying to bring the same idea to a form of computing that’s useful,” he said.
VideoCoin could undercut the competition on price
Hollywood studios and streaming services frequently encode their videos multiple times so they can be streamed to a variety of devices at a range of resolutions. Video providers also need places to store and stream their videos.
Right now, many upload their videos to cloud service providers. Each of the major ones has its own video encoding or streaming technology built-in. Other players in the space include IBM and dedicated video companies such as Brightcove and BAMtech.
Video providers will be able to use the VideoCoin Network in much the same way they would those services, Minor said. Meanwhile, whether a video is streaming from AWS or from a server on the VideoCoin Network should be invisible to consumers.
VideoCoin will be able to undercut the competition on price, Minor said. Unlike SETI@Home, which relied on computing power of millions of idle home PCs, VideoCoin is designed to be run largely on unused or underutilized servers in data centers. There are lots of them out there — some 20 million according to Live Planet. Minor estimates that at any given time, about 30% of the computing power in data centers is idle, being reserved for peak demand. Another 20% isn’t being used at all.
“You’ve got $10 billion to $20 billion of data center assets that are doing nothing,” he said.
You’ve got $10 billion to $20 billion of data center assets that are doing nothing
These so-called zombie servers and data centers could all be tapped to process video, he said. And because they’re not being used for much of anything else at the moment, their owners would likely let them be used for far cheaper than it would cost to have video processed on AWS or other cloud services. Indeed, Minor thinks VideoCoin can turn the computing power needed to encode video into a commodity and, in the process, cut the price by 60 to 80%.
“The terrifying thing for Amazon and Google … is that the way to make money in bitcoin is not by having better software or hardware. It’s having the lowest cost of power,” he said. He added: “We’re trying to bring that same idea to a form of computing that’s useful.”
But Minor thinks that the even bigger draw for VideoCoin will be the freedom video providers will have to build applications on top of it.
“A lot of new things will happen, because it’s open source,” he said.
Minor and VideoCoin have some big challenges ahead
And at least some in the industry think he’s onto something. VideoCoin has quickly raised money from some of the leading cryptocurrency investors, including Alphabit and Galaxy Investment Partners.
There are several efforts to use cryptocurrencies to underlie distributed cloud storage and cloud processing efforts, including Filecoin and Golem, noted Lex Sokolin, a partner at Autonomous Research, a financial research firm. But VideoCoin appears to be the first to really focus on using a cryptocurrency to create a distributed computing project focused on processing video, he said. That could be a big benefit, especially given how important video already is online and how much more important it’s becoming, he said.
“You have the components of a large global opportunity,” Sokolin said.
You have the components of a large global opportunity
Of course, even Minor acknowledges that VideoCoin has a long road ahead of it, including some major engineering challenges. And it’s not at all certain that video providers, particularly Hollywood studios, will feel comfortable sending their intellectual property to unknown servers operated by unknown people through a system that hasn’t been tested.
Video providers are already saving lots of money by using cloud services rather than processing and streaming video from their own data centers, noted Dave Bartoletti, a principal analyst at Forrester Research who focuses on cloud computing. Even then, it took years for AWS and other cloud service providers to convince companies such as the video providers that their systems were secure enough to store those companies’ most valuable data.
Even if such companies are tempted by saving even more by using VideoCoin, it will likely take a while for the service to earn their trust, Bartoletti said.
“Especially with Hollywood studios,” he said, noting that distributing their videos securely is fundamental to their business. “If they don’t get that right, they’re screwed. It requires a massive amount of trust.”
Meanwhile, there’s more to distributing video than just encoding, storing, and streaming it, said Greg Ireland, a video analyst at research firm IDC. Video providers need to be able to insert ads, be prepared for peak demand, distribute their video to different partners, and more. Companies that offer video production and encoding services already handle much of that, Ireland said.
“It’s not like there’s a shortage of solutions,” he said. “The question is whether they’re solving a valid problem.”
For his part, Minor’s convinced VideoCoin is solving a big problem. To convince video producers to try out the service, he plans on building into it easy ways for them to move some of their videos from AWS and other cloud services to it.
“We’re not going to have to hire an entire sales staff. They’ll just adopt it,” he said. “They’ll try it, and if they like it, they’ll adopt it.”