Decentralized Cloud Storage: The Future of Data Storage?

It’s inevitable that centralized cloud storage systems will be replaced in the near future. They pose security and privacy concerns, but right now, they’re all we’ve got.

Or are they?

Decentralized cloud storage technology is being built, tested and applied as we speak. As the world becomes more and more digital, we will all need secure and private digital spaces for data storage. A decentralized cloud storage system provides exactly that.

What are the current centralized cloud storage systems?

The main player in the cloud storage game is Google Drive. You may have heard of it. It has over 1 billion users, but it’s not nearly as private or secure as it could be.

Despite the growing security concerns, over 94% of businesses store data in some form of cloud storage. It’s far easier to store data in the cloud than to do so physically or on your own hardware. However, this makes cloud storage providers big targets for hacks. They contain a gold mine of data that can and have been breached numerous times. With all our data in the same centralized location, we’re almost asking for a disaster.

During the COVID-19 era, national lockdowns forced many people to work online, contributing further to the dominance of centralized cloud storage.

The downsides of current cloud storage reach beyond just privacy and security however.

Pitfalls of centralized storage

  • You do not own your data – When you use centralized storage providers, you are essentially giving your data away for somebody else to look after. It’s all well and good to say you trust Google or Dropbox, but do you trust them more than you trust yourself? If their centralized servers get breached, there’s nothing you can do about it. They own your data, not you.
  • Expensive – Cloud service providers charge extortionate prices for bandwidth transmission and data security. It’s also costly for a client to transfer from one centralized cloud to another.
  • One central point of failure – As centralized storage systems store everyone’s data together, they become a target for hackers. If their security systems are breached, which has happened a handful of times (read: countless), then your data is forfeited.
  • Low transmission speed – As the central server is likely located far from you, it can take longer to send and receive data. The greater the distance, the slower the speed.

So how does blockchain data storage solve these issues? What is decentralized cloud storage exactly?

What is a decentralized storage system?

Let’s break the phrase down.

Decentralization is the act of transferring authority from a central entity to a distributed and more democratic group. In essence, it’s giving power to the people. You can read more about the advantages of decentralization here.

Storage, on the other hand, is retaining retrievable data on an electronic device of some sort. What used to be floppy disks and CDs has now transformed into an illusory cloud made up of servers run by paid storage providers.

A decentralized storage system then empowers users to store their files (large or small) without becoming reliant upon massive centralized silos of data. The call for decentralization in regards to data storage is gaining traction due to the current centralized authorities undermining the importance of values mentioned earlier: privacy and security.

Decentralized storage is fundamental to the concept of web 3.0, or web5 as ex Twitter CEO Jack Dorsey likes to call it.


How does decentralized storage work?

A decentralized cloud storage system breaks your data into small, encrypted chunks. By taking advantage of a peer-to-peer network of nodes, with each node holding a fraction of the overall data, you get a robust framework for data storage and sharing. At its core, it’s not limited to blockchain technology; rather any peer-to-peer network will do.

You can compare it to the early days of P2P torrenting services like Limewire in which you could download music, videos or other files. The way the system worked was simple: participants would keep copies of the file and seed (send fragments of the file) to users on the network. The downside to this was that there was no incentive mechanism for the network participants to remain active or online.

A decentralized storage network would follow a similar path, only with more advanced cryptography and encryption, as well as the much-needed incentive mechanism. This lowers the overall cost of storage for both business and regular users. If a hacker were to breach one of the seeders, they would only have access to a small piece of the jigsaw, not the entire puzzle.

It’s important to remember that blockchain-based storage systems never store data directly on the blockchain. Instead, each and every user can participate by storing and hosting servers. Even small entities that join the network will provide computing power and extra space to store data.

So what makes decentralized storage better than centralized?

Decentralized storage solutions enable you to trustlessly keep your data safe and ensure you stay in control. 

Through a decentralized network of storage nodes, data breaches are nearly impossible. To access one person’s data in a decentralized cloud, you’d have to decipher the cryptographically encoded data from multiple storage nodes around the world simultaneously.

Advantages of decentralized cloud storage

  • Reliable – Multiple hosts simultaneously distribute and store the data in a decentralized storage network. The system saves a copy in case of any hardware failure. The data remains protected against intruders by encryption techniques and unique hashes.
  • Cheaper – A decentralized file storage system reduces both hardware and software costs. You also do not need high-performing machines to use it efficiently. More importantly, there could be millions, or even billions, of nodes in a decentralized network. This creates a significant increase in the amount of available storage space.
  • Faster – Using peer-to-peer technology, a decentralized file system cuts out the middleman. This notably speeds up transmissions, especially when compared to peak times as everybody will be using the centralized cloud at the same time.
  • Load balancing – Making the process more efficient, blockchain-based decentralized storage systems reduce burden on the servers and ease network traffic by allowing the host to cache repeatedly-used data. This means hosts don’t have to continuously access the server to retrieve what they want.
  • Fair pricing – With potentially millions of nodes in a network, no node can charge a premium price. The user will simply go to one of the others. This guarantees that only high-quality nodes survive.
  • Increased security – Due to sharding your data into tiny fragments and encrypting them, it is nearly impossible for bad actors to get access to your files. It creates truly decentralized data.
  • Increased privacy – As the data is encrypted, nobody can access it without its unique hash. You can store personal and sensitive information trustlessly.

Disadvantages of decentralized cloud storage

  • Lack of Accountability – It may be difficult for new users, customers or businesses to trust a peer-to-peer network that has no single point of accountability. Theoretically, the code will work flawlessly, but if something goes wrong with data transmission, there is no one designated to fix it.
  • Complex to develop – If it was easy, it would already exist. The consensus mechanism, Proof-of-Storage, is tricky to implement and requires a solid dev team with experience in the field.
  • Migration issues – As decentralized data storage is relatively new, there may be problems encountered when transferring data over from current cloud storage platforms.
  • Security – While far more secure than centralized storage, nothing is entirely safe forever. As tech evolves to protect data, it also evolves to steal it. Technology can always be used to do good or to act maliciously. While it may seem bullet-proof now, who knows what the future holds?
  • Not Widely Accepted – Like with all new technologies, it will take some time before it goes mainstream. It’s still in its infancy and businesses won’t just pile all their data into a decentralized network right away. It will be a slow trickle, and then all at once the dam will break. The benefits are too hot to miss.

As you can see, none of the disadvantages are deal-breakers, and many of them will resolve themselves with enough time.

Current decentralized storage solutions

There are a handful of crypto projects on the market that are already working towards a decentralized solution to cloud storage. Here is a non-extensive list of seven of them, ordered by market cap at the time of writing.

1. Filecoin (7.6b)

Filecoin is a decentralized storage network based on the IPFS protocol. It aims to utilize unused data storage space globally, creating a market for users to buy low-cost storage.

What is IPFS?

IPFS, or Interplanetary File Storage, is a protocol that creates new ways to serve information online. Instead of location-based URLs that work with IP addresses, IPFS serves information based on what it is.

How does IPFS work?
  • Each file and every block within it is given a unique hash, also known as an IPFS hash.
  • IPFS removes duplicates and tracks the version history of every file.
  • Each IPFS node only stores information in which it is interested, and some information that makes it easier to index and organize data.
  • When the user looks up files, they’re requesting the network to reveal nodes that store a unique hash.
What are the benefits of IPFS?
  • By hashing addresses, it makes the data immutable.
  • It saves bandwidth by retrieving content from multiple IPFS nodes instead of one server.
  • It’s highly resistant to censorship and almost impossible to shut down entirely.
  • It’s decentralized, therefore more secure.
  • It allows content to be accessible offline.

2. BitTorrent (2.5b)

BitTorrent is a peer-to-peer protocol that enables users to share files around the world. The token enables the sharing and trading of storage resources on the TRON blockchain.

3. Siacoin (989m)

Siacoin is a decentralized cloud storage platform that aims to compete directly with centralized storage solutions like Dropbox. Instead of the user renting storage space from a centralized entity, they rent it from their peers, and use blockchain to facilitate transactions.

4. Ocean Protocol (399m)

Ocean Protocol is an ecosystem for sharing data. It provides a tokenized service for decentralized storage.

5. MaidSafeCoin (234m)

MaidSafeCoin serves as a token for the SAFE network, a decentralized network that consists of extra hard disk space, processing power and data connectivity of its users. It’s a sharing economy for digital resources.

6. Storj (216m)

Storj is an open-source decentralized cloud storage platform that provides end-to-end encryption using blockchain technology. Like Siacoin, it relies upon a peer-to-peer network of users that share their data storage space. It intends to be faster, cheaper and more secure than traditional platforms.

7. Opacity (29m)

Opacity is a decentralized cloud storage provider that specializes in privacy. Unlike other data storage providers, Opacity doesn’t require any personal identification information and allows for anonymous and private data storage.

Where does Elastos fit in?

Elastos (111m) is not a direct competitor to decentralized cloud storage providers—decentralized storage is just one small cog in the Elastos machine. While Storj, Filecoin and Sia are focused solely on creating decentralized cloud storage that can challenge the likes of Google Drive, Elastos is building an entirely new internet infrastructure, of which decentralized storage is just one small, but necessary, function.

Elastos’ decentralized storage solution is Hive. Hive technology is open source and integrates with the other components of Elastos, such as Carrier (P2P network), DIDs (Decentralized Identities), and the Elastos Smart Chain (ESC). Elastos also has its own DAO which means the community itself determines the direction of development. And don’t forget, Elastos is merge-mined with Bitcoin so it gets the security of the big daddy itself.

Hive offers developers an all-inclusive package, empowering them to build their entire platform in the Elastos ecosystem. New projects can utilize all aspects of the Elastos Smartweb—all aspects of web 3.0. For example, imagine an app like LinkedIn, where you can use your DID to verify your credentials, the peer-to-peer network to communicate and send data back and forth without a middleman, and the decentralized storage from Hive to store your data securely.

Every single step of the way, your data will be yours and yours only. Nobody else will be able to access it. Nobody else will be able to steal it by hacking into a centralized server. Nobody else will be able to monetize your data and profit from your digital identity. It will all be owned by you.

Oh, wait. That’s called Profile. Try it now.

Read more about Hive and how it works here.

This article was written by Matt Leppington