Decentralized Storage Networks are a Disruptor in the Making
Right now, the vast majority of the world’s data is stored on centralized servers, and much of this has little to no redundancy. This means something as simple as a server failure or power outage can cause irretrievable data losses.
This was recently seen when a fire in Strasbourg, France, destroyed 500 square meters of one of OVH’s data centers — leading to significant data losses for some of its users.
Decentralized storage networks, or DSNs, posit an attractive alternative to current mass-market storage options — including data centers and cloud storage providers — since they allow data to be split up and stored on a decentralized blockchain network.
As it turns out, this setup not only addresses most of the challenges currently facing the data storage industry today but also unlocks a variety of new use cases that were simply not possible before.
The Importance of Decentralized Storage
With decentralized storage solutions, accidental data loss could eventually become a thing of the past, as files won’t just be stored in multiple copies secured in the same data center. Instead, files can be broken down into encrypted chunks, which are then randomly allocated to a subset of nodes actively contributing their excess storage space to the network.
This solution doesn’t just resolve the redundancy issue, it also creates an entirely new economy — one in which users can be rewarded for contributing their unused storage space to a DSN. This is already being demonstrated by platforms like BitTorrent and Filecoin, which redirect the bulk of the fees storage users pay to nodes that store and serve file chunks.
Decentralized file storage systems might also be poised to dramatically reduce the cost associated with ensuring the permanence of files. By distributing these files as chunks over a large number of participating computers, and rewarding those that maintain adequate uptime and availability, users could see their costs decrease as they only need to pay for the exact amount of storage and/or bandwidth they actually use.
This is also a plus for the environment, since it puts pre-existing unused space to good use, preventing the need to manufacture additional storage drives (which are generally created using various rare earth metals and plastics).
The redundancy and resilience these platforms offer over traditional data centers and cloud storage solutions make them particularly well-suited for storing data that is prone to government censorship and interference. Because there is no central data host, DSNs will be able to serve data to those living under authoritarian regimes or a country-wide firewall — dramatically improving global access to important data.
Likewise, for incredibly significant data that must be stored permanently, decentralized storage networks are arguably the only practical solutions — since they not only protect against most known extrinsic threats but can also make that information readily available to anyone, anywhere. With this, DSNs could be poised to form a modern-day Library of Alexandria, helping to form an untouchable archive of all human knowledge.
The Current State of Play
Decentralized file storage networks have been around for more than two decades now, tracing back to the early 2000s with the launch of the BitTorrent Protocol — a solution that allows chunks of files to be distributed over a global network of computers (known as seeds).
But it wasn’t until relatively recently that we saw the advent of the first blockchain-powered DSNs, including the InterPlanetary File System (IPFS), Swarm, Filecoin, and a handful of others. These brought with them a number of innovations over the BitTorrent protocol, including the fact that they enable decentralized governance and incentivized participation.
The vast majority of these decentralized file storage networks incorporate a system that sees participants rewarded with a digital currency for committing their storage to the network. While others include a mechanism that allows pricing to be dynamically based on supply and demand. This helps to produce an economy that trends towards maximum efficiency — unlike current cloud storage solutions which generally feature inflexible pricing.
Filecoin is currently one of the leading decentralized storage networks, with just over 28 petabytes of data stored across almost 800 storage providers. In total, the platform has served more than 1.1 million storage deals. Sia is also picking up a great deal of momentum and currently has a total network capacity of 4 petabytes out of which almost half is used — thanks to more than 170,000 active storage contracts.
But despite these impressive figures, even the largest DSNs are still dwarfed by even lesser-known cloud storage solutions, which frequently have millions of users. While some of the larger cloud storage providers have a total network capacity of several exabytes and hundreds of millions of users.
There’s a number of reasons why DSNs haven’t yet caught up to cloud storage in terms of uptake and most of them relate to usability and visibility — they’re simply not as accessible as current cloud options. For one, users typically need to understand the basics of blockchain technology to understand how their files are stored, encrypted, and distributed, and generally need to pay for their contracts in cryptocurrencies — due to a general lack of fiat support.
However, we are also beginning to see the development of a number of aggregators which help users leverage the unique properties of different DSNs without so many of the usual hurdles. These include platforms like Coldstack, which allow users to take advantage of multiple file storage solutions (inc Filecoin, Storj, and BTFS) and tokenize their files through a single interface.
Nonetheless, given the rapid pace in development, and the increasingly obvious benefits of DSNs over traditional data storage options, there’s a strong chance that DSNs will be one of the major ways users leverage blockchain technology in the near future.
About Master Ventures
Master Ventures is a blockchain-focused venture studio helping to build the next generation of blockchain-based Web 3.0 system innovations within the crypto industry. Launched in 2018 by Founder and CEO Kyle Chassé, the company’s ethos can best be summarized in the acronym #BeBOLD: Benevolent, Open, Love, Decentralized.
Master Ventures co-creates with entrepreneurs and businesses worldwide to turn the best ideas into innovative and disruptive products. They do this by investing as strategic partners through offering advisory services to the projects they believe in. To date, Master Ventures has invested in over 40 crypto projects, including the likes of Kraken, Coinbase, Bitfinex, Reef, DAO Maker, Mantra DAO, Thorchain, and Elrond.
For any questions, please feel free to reach out to us on: