Decentralized storage is a storage business model that utilizes distributed storage technology to shard files or file sets onto disk spaces provided by different suppliers. It advocates strong privacy protection, low storage costs, redundant backup storage, high-speed equivalence, open-source applications, and algorithms. It is beneficial for avoiding single points of failure and value transmission of data. Decentralized storage differs from centralized storage in multiple dimensions, such as storage space source, bandwidth source, security, usage, and industry development status, resulting in its scale and performance far inferior to centralized storage systems.
Market Size of the Distributed Storage Industry
According to statistics, the global market size of the distributed storage industry was approximately 62.9 billion yuan in 2021, an increase of 26.5% compared to 2020. Influenced by factors such as the growth of data storage scale and the increase in the popularity of application scenarios, the global distributed storage market size is growing rapidly. By the end of 2022, the overall market size continued to increase, reaching around 74.2 billion yuan, an increase of approximately 18% compared to the same period of the previous year. According to forecast data, the global market size of distributed storage is expected to exceed 100 billion yuan by 2025, with an average annual growth rate of 11.6% during the period of 2022 to 2025.
Market Pain Points of Centralized Cloud Storage
Despite the rapid growth in the scale and users of the cloud storage market, centralized storage markets have four major flaws: inability to guarantee copyright, inability to ensure data security, constant risk of service provider shutdown, and lack of data value realization. Whether it is third-party centralized storage from companies like Amazon or companies storing user data themselves, users do not have the expectation of them not disclosing data information from a legal perspective. Especially in the era where data is king, precise data will reconstruct various industries. Enterprises that control data sources or obtain data at lower costs than competitors will have significantly higher competitiveness. Therefore, competitors often try every means to obtain data, and the act of leaking or selling user data can often bring huge profits to data storage service providers. After user data is collected, centralized storage exposes user data to significant risks (leakage, hacker attacks, etc.). CSO has recorded the 18 most significant user data leakage incidents since 2000, especially in the past two years, and the magnitude of data leakage has also increased exponentially, whether due to external factors such as hacker attacks or malicious internal factors of centralized storage providers. For example, the Aadhaar database of 1 billion Indian citizens was exposed to a cyberattack incident, the Facebook Cambridge Analytica incident, etc.
Value Proposition of Decentralized Storage
Decentralized storage represents a fundamental transformation in the efficiency and economics of large-scale storage. Its value proposition is mainly reflected in the following aspects:
(1) Enhancing security and user privacy. Decentralized storage encrypts data not only limited to users and software terminals but also encrypts data at all levels of the storage network, and protects user privacy through methods such as private network access keys and zero-knowledge proofs.
(2) Storage platforms or networks' algorithms and codes must be open source. Since the storage services of the 2C end have been mostly occupied by centralized storage, and the entry threshold for open-source projects is high in the early stage, most of them are concentrated in the 2B end. Only open-source code can enable effective positive and negative feedback effects for communities and applications. If algorithms and codes are not transparently open, the storage network will be effectively centralized.
(3) Prevent data loss through redundant backup. Data is stored on different nodes to prevent data loss by redundancy (storing additional copies when there are errors in data storage or transmission).
Governance Tokens for Decentralized Storage
Storage tokens are a type of cryptocurrency project focused on blockchain-based cloud storage solutions, aiming to provide a more secure, decentralized, and cost-effective alternative to traditional centralized cloud storage services. The design concept of storage tokens is to leverage the decentralized nature of blockchain technology to establish a node network that can securely and efficiently store and manage user data, thereby providing users with greater control over their data, enhancing data security and privacy, and reducing costs.
One of the most famous storage token projects is Filecoin, which aims to provide a more efficient and cost-effective way of storing and retrieving data. Its unique approach allows users to securely store, share, and transmit large amounts of data in a decentralized manner. With the rise of big data, there is an increasing demand for decentralized storage solutions that provide secure and reliable storage while reducing costs. Filecoin is widely welcomed for its innovative application of blockchain technology and its ability to provide alternatives to traditional centralized storage solutions.
Potential Use Cases of Governance Tokens for Decentralized Storage
Decentralized Data Storage: Storage tokens have the potential to completely change the way data storage and sharing are done, thereby achieving a more secure and decentralized approach. For example, using storage tokens can securely store medical data on the blockchain, allowing patients to have full control over their data and provide access authorization to healthcare service providers as needed.
Decentralized Content Delivery: Storage tokens can be used to create decentralized content delivery networks, enabling faster and more reliable content delivery. This approach can deliver content more efficiently without relying on centralized servers, which is especially useful for areas with limited internet services.
Decentralized Cloud Computing: Storage tokens can support decentralized cloud computing platforms, enabling more efficient and cost-effective computing power. This is particularly useful for small businesses and individuals who cannot afford the high costs of centralized cloud computing services.
Decentralized File Sharing: Storage tokens can be used to create decentralized file-sharing networks, enabling secure and efficient file sharing without relying on centralized servers. This is particularly useful for enterprises and individuals who need to securely share large files.
Decentralized Backup and Recovery: Storage tokens can be used for decentralized backup and recovery, providing a more secure and reliable way to backup and recover data, ensuring data security and reliability for enterprises and organizations in the event of disasters or cyberattacks.
Popular Ecosystems of Decentralized Storage
Internet Computer
Internet Computer (ICP) is a blockchain-based decentralized network used to run smart futures, support tokenization, and create decentralized applications (dApps). Unlike traditional cloud storage solutions, ICP aims to provide a scalable, secure, and cost-effective platform that can run decentralized applications and smart futures at high speed without the involvement of third-party intermediaries.
ICP is built on a unique consensus mechanism called the Internet Computer Protocol (ICP), which enables the network to process a large number of transactions in parallel across multiple nodes, thereby improving the efficiency and scalability of the network. This technology, by providing a decentralized solution alternative to traditional cloud storage, has the potential to completely change cloud computing.
One of ICP's significant advantages over traditional storage solutions is its higher level of security. ICP uses encryption methods called "threshold relay" to maintain network security, ensuring that only authorized nodes can participate in the consensus mechanism. This makes it almost impossible for attackers to disrupt the network, providing a higher level of security and reducing the risk of data leakage.
Another advantage of ICP is its greater scalability compared to traditional cloud storage options. ICP can run smart contracts and decentralized applications in a fully decentralized environment without the involvement of intermediaries. This means that ICP has the potential to support more users and transactions than traditional cloud storage options without compromising performance or security.
Filecoin
Filecoin is a blockchain-based storage network designed to create a decentralized storage market where individuals and organizations can rent out their unused disk space. Launched in 2017, Filecoin aims to provide a more secure, affordable, and efficient alternative to traditional cloud storage solutions.
Unlike traditional cloud storage solutions that rely on centralized servers, Filecoin uses a decentralized node network to store and distribute data. Therefore, data is not stored in a single location but distributed across the entire network. Because there is no single point of failure, it is difficult for hackers to attack the system.
In addition to providing a more secure storage solution, Filecoin is also more cost-effective. Traditional cloud storage providers typically charge monthly fees based on the amount of data stored, while Filecoin charges based on usage, allowing users to pay only for the actual storage space used, saving significant costs for individuals and organizations needing to store large amounts of data.
Another advantage of Filecoin is its built-in incentive system, which rewards users who provide storage space. Users can earn FIL tokens by renting out their unused hard drive space to other users on the network, thus incentivizing contributions to the network and maintaining its security and reliability.
One of Filecoin's key features is its ability to provide long-term storage solutions. Traditional cloud storage providers may delete data after a certain period or when a user cancels a subscription, while data stored on Filecoin can be preserved for a long time. Therefore, Filecoin is particularly suitable for organizations that need to store data to meet compliance or legal requirements.
Filecoin offers high flexibility and scalability. Users can store data in various formats and easily increase or decrease the required storage space according to their changing needs, making it popular among enterprises with uncertain data storage needs.
Arweave
Unlike Filecoin's pay-as-you-go model, Arweave's most prominent feature is its ability to permanently store data. Users only need to pay a one-time fee when adding data to the blockchain. Arweave believes that data storage costs are similar to Moore's Law and will gradually decrease. The interest generated by overpayment by users will help with subsequent storage, so a one-time payment is sufficient to cover the cost of permanent storage on the blockchain. To achieve permanent storage of data on the blockchain, some form of preservation mechanism is required. Permanent storage also brings some problems, as the chain may become too large to maintain and store all data effectively.
Considering that all data is stored in blocks, as data grows, individual nodes may not be able to store complete block data. Therefore, Arweave introduces the RadomX algorithm in mining to evaluate the completeness of blocks. The more blocks a node stores, the more likely it is to gain the right to package blocks. The project also incentivizes miners to store historical blocks forever through Proof of Access (POA). When miners receive rewards for new blocks, they also receive rewards for storing random old blocks. That is, miners are not required to store all block data, but the more blocks they store, the more likely they are to receive block rewards, and the more block rewards they receive.
Storj
Storj is a distributed storage protocol based on Ethereum, developed by Storj Labs, with Ethereum founder Vitalik being a core contributor to the Storj v2 whitepaper. Storj aims to enable nodes to offer idle storage space and bandwidth, allowing other users to access distributed storage services at more favorable prices. Currently, according to official comparisons, storing and downloading 1 TB of data using Tardigrade, developed by Storj Labs, costs only $55, whereas Amazon S3, Google Cloud, and Azure require $108, $146, and $105 respectively.
Before being uploaded to Storj, files are encrypted within the client to ensure secure data storage. Encrypted files are divided into smaller fragments distributed across various nodes. Data blocks are dispersed among 80 nodes, and as long as 29 nodes are online, users can download the data. If nodes attempt malicious actions to gain access to stored data, they must collude with over 20 other nodes, incurring high costs, thereby ensuring data privacy and security.
Technically, Storj achieves compatibility with other storage formats like Amazon S3 through the Bridge client and avoids significant fluctuations in storage costs by pricing in US dollars. Its storage costs are much lower than centralized storage platforms, and it optimizes retrieval modes through the Kademlia algorithm, significantly reducing data redundancy and resource waste.
Crust
Crust provides a distributed storage network for the Web3.0 ecosystem, supporting various storage layer protocols including IPFS. The storage interface is exposed to application layer programs, allowing developers to build cloud storage applications and peer-to-peer content delivery networks (CDNs) using Curst/IPFS.
Crust builds a distributed ecosystem for privacy and ownership using Trusted Execution Environment (TEE) technology. Sensitive data operates within a trusted execution environment, ensuring hardware security. The Guaranteed Proof of Stake (GPoS) consensus mechanism enables more users to participate in network security maintenance, allowing users to stake tokens on high-quality nodes in exchange for rewards.
Swarm
Swarm is a distributed storage platform and content distribution service protocol, serving as a native service layer for Ethereum Web 3.0, primarily responsible for storing on-chain data for Ethereum and providing bandwidth. Swarm, along with smart futures and Whisper (encrypted data interaction), forms the three pillars of Ethereum Web 3.0. BZZ is the functional token issued by Swarm, serving as the fuel for decentralized storage and bandwidth usage.
For a long time, the Ethereum network has faced issues of centralized data storage. To address this, the Ethereum Foundation has supported development teams in utilizing distributed storage technology to develop the Swarm project, aiming to provide ample redundant and decentralized space, as well as sufficient, substantial, and stable bandwidth for storing data and facilitating information exchange for various DApps in the ecosystem. It is a decentralized storage and distribution system built on the Ethereum ecosystem. It is worth noting that it not only provides storage but also distribution, requiring each node to have substantial bandwidth, which is the biggest difference from other distributed storage projects.
Summary
The core of distributed storage projects lies in addressing storage needs in real-world application scenarios, essentially balancing supply and demand for storage. On one hand, there are demand-side entities requiring storage for data and files; on the other hand, there are supply-side entities capable of providing storage services. While distributed storage technology has the capability to address challenges faced by centralized storage, it still needs to tackle issues such as data redundancy, file data quality, and legal regulations, which are still pressing matters awaiting resolution.
For more analysis, please follow Aibit's media account for real-time updates! This article is for reference only, does not represent any position, and is not intended as investment advice. Investment is risky, caution should be exercised.
Facebook: https://www.facebook.com/aibitcom
X: https://twitter.com/aibitcom
Telegram (CN): https://t.me/aibitcom_cn
Telegram (EN): https://t.me/aibitcom
Telegram (Announcements): https://t.me/aibitcom_announcements
Discord: https://discord.com/invite/aibitcom
Medium: https://medium.com/@aibitcom
Youtube: https://www.youtube.com/@aibitcom