Kim Dotcom reveals plans for MegaUpload 2.0 and BitCache

Internet entrepreneur Kim Dotcom recently launched a fundraising campaign for MegaUpload 2.0 (MU2) and BitCache. The pitch includes many new details about the two upcoming products.

The campaign is being run on BNKToTheFuture, Bitcoin angel investor Simon Dixon’s tech startup fundraising website. Other bitcoin and blockchain companies have successfully raised money through this platform including BraveNewCoin, Factom, Unocoin, BitPesa, and Uphold.

Investments are restricted to accredited investors, and payable in bitcoin. The site normally accepts Bitcoin, various other digital currencies, and several national fiat currencies. However, Dotcom and BNKToTheFuture are accepting bitcoin only investments for this campaign.

With a minimum goal of US$1 million, Dotcom has already raised 5% of the campaign’s $5 million target. This places MU2’s value at $100 million, according to Dotcom.

“The valuation includes both MU2 and Bitcache. Our goal is to have 80-100m users within 3 years. Most of my previous cloud startups had over 50 million users and all my know-how is going into this venture.”
— – Kim Dotcom

Dotcom’s original Megaupload was the world’s largest file sharing cloud service. At its peak in 2011, the platform was responsible for 4% of the internet’s traffic, averaging over 50 million visitors per day. The service was shut down when Dotcom was arrested for copyright infringement in January 2012.

Although the service had been hosting 12 billion unique files, Dotcom told the New Zealand high court that he had no control over what they were uploading. Unfortunately for him, they had been uploading mostly pirated movies and software.

The flamboyant German expat swore that the service would return one day, bigger and better than ever. He soon launched a successor company named simply MEGA, in 2013, which followed the Megaupload business model, but with improvements in privacy added.

Although the website claimed to have 35 million registered users, who have upload a combined 12 billion files, Mega’s fate was no better, at least for Dotcom’s sake. The company had a string of bad luck, including serious security problems and another government seizure.

The platform was later sold to a Chinese investor, in spite of Dotcom’s objections. After announcing to users that he doesn’t think data is safe on the platform anymore, he washed his hands of the service and began planning the next iteration of Megaupload. In July 2015, he announced a competitor that’s completely open source and nonprofit, “similar to the Wikipedia model.”

“With monetization via Bitcache we aim at being profitable within 3 years.”
— – Dotcom

The campaign describes MU2 as a privacy-centric file sharing and storage platform. “Think Dropbox,” Dotcom explains. “But without the ability for Dropbox to read your files or hackers to steal them from our servers simply because we cannot read or steal them.”

Dotcom had been planning to launch his latest project on the five-year anniversary of the notorious 2012 raid. According to BNKToTheFuture, he now plans to launch a Beta version in January 2017.

Rather than host users’ files himself again, the platform uses cryptocurrency-enhanced file sharing platforms such as those offered by Storj, Maidsafe, and Sia for file storage. By giving these separate file storage platforms a “consumer friendly layer on top,” with a single interface, and Bitcoin as a unified payment medium, Dotcom says the platform will be a faster, more private, more secure, and cheaper way to store data in the cloud.

“To enable such file storage and sharing with even more privacy, we aim to use Bitcoin and Blockchain as the glue,” the pitch states. “We aim to utilize Blockchain based storage services such as Storj, Maidsafe and others for file storage and our own custom technology built on top of Bitcoin that allow micro-transaction to be attached to every file.”

The serial entrepreneur says that MU2 needs a payment platform that can accommodate vast number of tiny payments. “Rather than messing with Bitcoin, which is doing what it is meant to do very well,” Dotcom explained, “we can build technology that allows companies like MU2 to use Bitcoin on a scale that was never designed by Bitcoin itself.”

“There are many cases where a company wants to monetise millions of tiny transactions that are smaller than a card processing fee and therefore cannot be served by legacy payment systems, MU2 is one such company. In the offline world we have pennies and coins to make micropayments, but what if you want to pay in even smaller bits and to pay online?”
— – Dotcom

BitCache is Dotcoms version of a Lightning Network, which are designed to move transactions off of the bitcoin blockchain. The design opens and closes a single transaction between two parties, allowing any number of transactions to occur while the channel is open.

Each lightning network that has been designed so far has proposed that trustless smart-contracts be used by the holders of bitcoins, such as at exchanges, banks, and payment networks.

Using a such a network is widely regarded as a scaling solution for bitcoin, and would greatly encourage the use of micropayments as the fees can be further reduced. However, it’s somewhat controversial in the Bitcoin space. It makes bitcoin more dependent on services like BitCache, and removes the fees that support bitcoin miner operations.

Dotcom’s lightning network will also be an open protocol, allowing other websites to run the exact same micro-transaction service. The entrepreneur says that he wants to enable websites to charge microscopic Bitcoin amounts using Bitcache, but hasn’t released how much he will be charging for the ability to use his network.

Although the platforms fees are still unknown, Dotcom reiterates the extremely low costs throughout his crowdfunding presentation. He feels that the two products will enable “billions of users to create an ocean of wealth,” while charging the individual cloud storage customer “almost nothing.”

“Bitcache has the goal of growing the global use of Bitcoin microtransactions and working with top notch companies in the Bitcoin and Blockchain area to expand the pool for everyone.”
— – Dotcom

MU2’s competition is hard to pinpoint, because it is either competing with many different kinds of companies, or none at all. As a cloud storage provider, MU2 is up against Google Drive, Dropbox, Apple’s iCloud, and Microsoft OneDrive. As a privacy-centric storage solution, MU2’s competing more directly with Spideroak and Tresorit.

To complicate the matter further, there are many software solutions that customers can use to encrypt their cloud accounts with externally, like Boxcryptor. To compete with any of these services, Dotcom will need to undercut their costs, provide better privacy, or provide a better user experience. He claims MU2 will do all three.

As a competitor to existing Lightning Networks for bitcoin, BitCache will be competing with projects from some of the best known development companies in the space, such as Blockstream and Bitfury. However, since Lightning Networks are still being developed, it has yet to be proven that they even compete at all. Many theorize that different networks can work together in complementary relationships.

As a competitor to services that decentralize storage and use bitcoin to incentivize storage hosting, MU2 will have no competition at all. The closest thing to MU2, according to Dotcom, is the digital currency driven cloud storage solutions that he plans to use as the backbone for MU2. “Other projects in our sector are more likely to be our partners,” he tells investors.