The Future Will Not Be Centralized - Understanding Blockchain Storage

Joel S.
January 08, 2019
Read time: 
8 minutes

The current demand for cloud storage is evident with large tech companies like Amazon and Google offering widespread solutions. Centralized solutions are popular, but many think that decentralized options could provide a more competitive market for consumers in the long term. So, does the blockchain storage have the potential to revolutionize the digital storage industry? Let's find the answer.

The current demand for cloud storage is evident with large tech companies like Amazon and Google offering widespread solutions. Centralized solutions are popular, but many think that decentralized options could provide a more competitive market for consumers in the long term. So, does the blockchain storage have the potential to revolutionize the digital storage industry? Let's find the answer.

Impact of Blockchain on Digital Storage

How familiar are you with Google Docs? What about Amazon Drive? Large tech companies have built empires on cloud-based data storage services. Can you imagine the internet without massive server farms? As more data is created, having enough storage space for all of it is an ever-increasing challenge. Both individuals and businesses demand that their data can be shared quickly and stored in easy to access places.

Increasingly centralizing data farms put limits on the speed at which users can access their data. They also charge more for users to store larger data files. As the internet continues to grow, larger file sizes are becoming the new normal.

Enter decentralized cloud storage.

Think of it like Google Cloud on the Blockchain. Instead of relying on 3rd party companies to store data, users can access a decentralized storage network just as robust as the Bitcoin protocol.

Decentralized File Sharing Already Has A Successful History

The easiest way to understand the impact of blockchain storage is to compare it with past and current technology operating for the same purpose. I am talking specifically about torrent file sharing. Remember LimeWire? These services were based on similar principles as blockchain storage, but they did not provide the security that comes with blockchain.

blockchain storage

The demand for P2P file sharing is enormous. The open source and decentralized nature of most storage protocols makes them almost impossible to shut down. The tokenization aspect creates an incentive for the network to stay operational around the clock while the encryption aspect creates privacy features for individuals using the protocol. It’s the next step in evolution for file sharing. And you can invest in it!

Comparing Blockchain Storage With Centralized Cloud Storage

Cloud storage is a relatively recent solution. As more and more companies went digital, it became painfully obvious that the demand for storage greatly outstripped the ability of individuals to host their own data. High demand coupled with the relatively low cost of storage made it an easy investment for tech firms. For the moment, blockchain storage solutions seem almost too costly and confusing to compete in the market. However, society’s demand for more and better storage is insatiable.

4k video is here and will drastically increase storage demands. Google’s algorithm already favors videos by featuring them at the top of search results. As the quality of videos continues to improve, so do file sizes. Content creators are working overtime to fill the new video demand that has exploded in recent years. The file sizes are huge. Cloud storage prices for these large videos will increase, which will push users to blockchain solutions.

Cost of Centralized Storage Vs. Decentralized Cloud Storage

The following price comparison only uses the two most popular companies in each category.

blockchain storage vs centralized storage

While pricing is slightly less expensive on decentralized protocols, there is more to this story than the bottom line. Without a drastic price difference between the two, the success of each option will come down to consumer preference.

Comparing Centralized Storage and Blockchain Storage

Decentralized cloud storage companies are still in their infancy. They’re exciting and experimental.

  • Centralized storage is faster, for now.

When users retrieve their data from centralized cloud servers, the process is painless. Excellent user interfaces streamline the process. The speed at which downloads and uploads happen are restricted only by local ISPs.

New decentralized storage companies are burdened with testing unproven protocols while also building their user interfaces. Theoretically, as more farmers participate in hosting decentralized networks, data transfer speeds should quicken. The current problem is building the network to a large enough size while also attracting enough users.

  • Fiat currency is easier for most people.

Paying for a month or a year’s subscription with a centralized service is as simple as typing in your credit card number. Centralized cloud services maintain the upper hand in user acquisition based on this alone.

Cryptocurrency-based subscription models require knowledge of the crypto industry and how it works. Each protocol has its own token which is used to facilitate data transfers. This in itself is still confusing for most people. The lack of understanding surrounding the industry as a whole is preventing many users from jumping aboard.

  • Centralized Servers Still Maintain Trust

Even though stories of data being hacked are more prevalent than ever, the mainstream still trusts massive tech companies. Companies like Dropbox and Amazon are household names. Paying them a few hundred dollars a year to store data seems like a no-brainer.

Brand new crypto companies are still struggling with earning and maintaining trust in the market. There are instances where protocols becomes unworkable or an update renders basic features unusable. If people have sensitive data they wish to protect, using a blockchain storage company seems like a risky move for many.


cloud storage


Blockchain technology provides better solutions for storage than existing technologies can: robust security, privacy, and a network that never goes offline

Why Decentralized Cloud Storage Can Beat Services Like Google Cloud

If you read through the previous section and think that it’s all bad news for decentralized services - it’s not. In the short term, centralized, established companies have the upper hand on blockchain storage. The tech is still being built and there is little, if any, mainstream recognition of the few companies providing a decentralized service. However, I fully expect the balance of power to shift in the near future. Here are three reasons why decentralized cloud storage solutions will beat centralized cloud storage.

1. Privacy Issues
When you pay a company to store your data, they don’t encrypt it. All of that juicy intel can be mined for value. This isn’t just a conspiracy theory. Businesses that house proprietary information are exposing themselves to the risk of having that data stolen by a 3rd party. Even if Google or Amazon aren’t peeking into the data stored on their servers, other people can. From federal agencies to nefarious individuals, there is no mystery as to where the data is stored. If someone really wants access, they can find it.

Decentralized storage solves the privacy issue by encrypting every piece of information and spreading it among various nodes. The only way to gain access to the information is by having the correct key phrase. The key phrase is impossible to hack if it’s written on a piece of paper or memorized. It also prevents data mining. No one knows what’s being stored in the protocol - not even the network hosts.

2.  More Videos
Our demand for videos is quickly going to limit out cloud storage capabilities. 4k quality is the hot format at the moment but eventually, it will be 8k, and then even higher definition. Every iteration of video technology takes up more and more storage space. As storage prices increase, more data farmers will join decentralized networks, helping to keep prices stable. Compare this natural supply and demand mechanism with a centralized company. As their own storage capabilities continue to get more expensive, more users will seek out cost-effective options.


3. Censorship Proof
Like all file sharing options, the issue of piracy and government censorship will rear its head. The tragedy of MegaUpload is a strong example of when governments shut down file sharing websites. As a decentralized file storage platform, crypto-based solutions are safe from seizure by centralized power structures. The encryption of files prevents anyone from knowing what’s being shared while the decentralized network of hosts prevent a single actor from shutting it down.


Analyzing Current Blockchain Storage Companies

The impact of blockchain on everyday life is going to enormous. The coolest thing about blockchain cloud storage is that it’s not theoretical; there are companies with working products right now. Here are my top three decentralized blockchain storage companies to watch out for.

1. Filecoin
In its ICO stage, this protocol has already generated massive amounts of attention. Using blockchain technology, data is stored immutably on a distributed ledger. The data is encrypted and spread across storage nodes. What makes this protocol unique is its “retrieval nodes”. Their job is to access the data. Each retrieval node is incentivized to work faster than the other nodes to win a reward, which is paid out in Filecoin tokens.

The free market is encouraged as users and miners alike bid on the cost they want to pay and conversely how much to charge for data storage. The goal of creating this style of an ecosystem is to keep prices low as the network grows.

The consensus mechanism uses hard drive space to prove data exists instead of expensive CPU, such as with Bitcoin. Ideally, this will reduce electrical costs for the protocol.

2. Siacoin
A working company with real users, this protocol is hoping to fill the storage niche before their competition can. The data is encrypted before hitting the network which provides absolute privacy for users. A contract is made where the user puts the payment in escrow and the storage provider is paid when they fulfill the time requirements of the contract.

Source: Sia Tech YouTube Channel

This makes pricing dynamic; every host of the network can set their own fee. The free market will raise or lower prices according to demand. When a file is uploaded, it is split apart and stored across many different nodes. This provides access even if part of the network goes down. The theory behind this network is decentralization. It’s incentivized every step of the way.

3. Storj
This project started as an ERC-20 token, built on top of the Ethereum blockchain. Storj incorporates client-side encryption which means only the person uploading the file has access to it. Sharding is used to split up data among several nodes. This creates redundancy in the decentralized networks, maintaining access even if nodes fall off the network. Even if a local farmer (network host) was able to decrypt a file, they would only have a small piece.

Farmers are continually “audited” with an automated algorithm that checks they have the files they claim to have. Storj uses a similar UI to Amazon with hopes of attracting new users with a familiar look.


Get Ready for the Impact of Blockchain on Your Life

Cloud storage has a massive impact on how you interact with the internet. Companies like Facebook store your data on massive servers. Cloud services advertise relentlessly, providing solutions for your data needs. However, blockchain technology provides better solutions for storage than existing technologies can: robust security, privacy, and a network that never goes offline. It’s only a matter of time until everyone uses decentralized cloud storage.

As the world continues to change, the blockchain storage revolution is highly technical with lots of incorrect information online. I highly recommend checking out our start investing guides, created by our team of handpicked cryptocurrency experts, so you can get started investing today.

Posted by Joel S.

I believe in cryptocurrency for its privacy aspects and for the autonomy it gives individuals from centralized banks. Cryptocurrency is also fun and exciting: there is always something new to learn.


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