Storage and the Internet

‘Data is the New Oil.’ Data, just like oil, in its raw state may seem useless. However, refined Oil is a valuable resource. Data like oil also needs to be stored. In this report, we are going to focus on the storage of data. 

Initially, the Internet only consisted of read-only functions. Webpages were there to share information with anyone with access. Websites like MySpace were popular during this period. This era of the internet is called the Static Web Era.

After that came the Social web, which consists of your favorite Social media sites. The social web era gave the user control to create and read information. Users post text, photos, or videos to those following them to increase interaction with other people. 

The evolution continued to Web 3.0, which allows apps and websites to process information and use them to execute actions for humans. This era of the internet incorporates blockchain technology and Artificial intelligence and allows the use of a Decentralised System of Storage. 

Sector Overview: The Evolution of Data Storage

Concerning digital storage, we have come a long way and still have a long way to go. In the 1940s mainframe computers were only owned by large companies. Fast forward to the 1970s when the sizes of the huge computers shrunk and one could own a personal computer. Information was being stored on floppy disks and cartridges.

There was a breakthrough in the 1990s when Tim Bernes Lee invented the World Wide Web(WWW). He wrote the first version of HTML in 1993. This ushered in the social media era in the 2000s. In the Facebook, Google, and Twitter eras, data was kept in centralized locations. 

What does Centralized storage bring? Risk. ‘Do not put all your eggs in one basket,’ They say

What do we do to reduce the risk? Decentralized storage. They solve all the major problems brought by Centralized storage.

Centralized Storage

In centralized storage, data is attached to servers in a single location. Companies like Microsoft and Amazon have data centers for providing storage and backup services to their customers. The companies are referred to as  Centralized Cloud Storage Providers (CSPs).

Data stored in these centralized locations are usually encrypted during transit from the computer to data centers. Centralized data storage has some limitations in its use. We are going to explore them below.

1. Cost of centralized storage

It is expensive to create and manage data centers. The initial construction cost, electricity bills, and maintenance services all require a lot of resources.  A company still needs to hire skilled workers to maintain, repair, and secure the servers.

2. Security concerns

Unauthorized access to a single server or data center would mean the data security is compromised. If a power failure or a problem of such magnitude hits a single data center, you won’t be able to access your data.

3. Data Integrity issues

The company has control over your data. They are allowed to monitor the data they store. They can alter or sell your data to third parties without your knowledge. Such cases have happened in the past.

4. Slow speeds

Centralized storage may lead to slower transfer speeds. The speed of data transfers largely depends on the distance between the computer and the server. Most of these centralized servers are located in remote areas.

Such limitations are what prompted the rise of decentralized storage. Let us discuss how it solves these problems.

Decentralized storage

Unlike Centralized storage where all your data is stored in a single location, decentralized storage chops your data into smaller pieces and stores them in different computers. We will get to details about why they are preferred, let us first see how they work.

The protocol uses the blockchain system to store data in the hard disk spaces of users throughout the globe. The only condition is that they need have an internet connection with good bandwidth.

As we mentioned earlier, once you log in to upload a file into a network, the blockchain system generates a private key for the file. The file is encrypted then it is split into fragments and transferred to multiple computers referred to as nodes. The nodes provide space and computing power in exchange for money. The system makes this type of storage cheaper.

Some of the limitations solved by Decentralized storage include the following:

1. Decentralized storage is way cheaper than centralized ones. Decentralized storage doesn’t require one to build and maintain data centers. Utility bills like electricity are also out of the picture. 
2. The user has full control over the data stored.

No authority has the power to monitor and censor your data. Data is encrypted which means only the owner has access to it.

3. Security

No single node has complete data which makes it harder to complete the puzzle. Therefore, you need access to all nodes to hack the storage service. Difficult. Right? Additionally, data is encrypted in two different ways. During transit and storage.

4. Enhanced speed

Since distance is a huge determinant of the speed of the data, decentralized storage systems solve this problem by fetching data from the closest nodes. 

Storage Capacity

There has been an exponential growth in decentralized storage over the past few years. A report by coin gecko shows how decentralized storage wasn’t so popular before 2021. However, the capacity has increased by almost 400% by the end of 2021 according to the chart below by CoinGecko.

Price

Decentralized storage platforms offer affordable pricing compared to centralized storage protocols. According to Coin Gecko, Filecoin offers the cheapest storage of less than a cent/TB monthly. 

Investment

Decentralized storage is potentially the next biggest thing to happen in the tech and storage industry. Some Investors saw this coming and put their money where their mouth was. Juan Beret founded the Protocol Labs in 2010 which started working on decentralized storage. They managed to raise close to $205 million in an Initial coin Offering for Filecoin.

A report by Sammi Kassab shows that last year Filecoin storage increased by 128% to 16.87 exbibytes. That is a lot of storage capacity. People are starting to turn to decentralized storage because it is less costly. A Standard S3 account will cost you close to $23/TB monthly. That amount would pay for a whale year storage in FIlecoin which charges $16.25/TB annually.

Recently, we have seen companies including mainstream centralized storage investing in decentralized storage. Space and Time have received $10 million and an additional $20 million from Framework Ventures and Microsoft M12 fund respectively. The company uses proof of SQL protocol and has its sights on decentralized storage protocol.

In the year 2021, a Valencia-based startup called Internxt received $1M from a company called Angels Capital. The goal of the startup is to make decentralized storage accessible to anyone with an internet connection. Their main focus is using blockchain in cloud storage.

Top decentralized storage protocols

Filecoin

The decentralized data storage network was founded by Protocol Labs in 2014. It offers its customers a platform to sell excess storage

The Filecoin storage network is backed by the Blockchain and FIL tokens. Users pay miners to store files. The blockchain records the transaction and the proof of storage. Users pay miners to retrieve the stored files. 

The interplanetary File System allows users to store files and keep track of them on a distributed network. The only person with access to the files distributed in the systems has a private key. 

It is one of the largest decentralized storage networks in the world with more than 3800 storage providers. The total storage capacity for the network was around 17 million Terabytes in 2022.

There has been consistent growth in the amount of data stored on Filecoin. The storage network has recorded a growth of around 25% monthly. That is an impressive stat. We can credit the lower cost and reduced risk of data storage in the network.

Filecoin allows easy storage of NFTs

BitTorrent

It is one of the largest file-sharing protocols with over 20% of the internet traffic. I mean, who doesn’t know BitTorrent? It has close to  100 million monthly users.

The Bit Torrent File system uses p2p technology and is made up of four components namely TrlRON Network, BitTorrent network, BitTorrent token, and the TronGrid service.

The popularity of the File-sharing site was key to getting a new owner who bought it at $140 million. In 2018, they had a private/ pre-sale ICO where they managed to raise $19.3 million  

BitTorrent network uses Peer to peer technology to sync data between computers. Data is transferred efficiently through syncing different computers.

Different bots of data are stored on different devices.  The data is encrypted using 128-bit AES. Only the owner has access to the shared file.

The scalable decentralized storage system offers 2TB worth of space for only $100. The network uses its cryptocurrency called BTT.

Arweave

The decentralized storage protocol uses Blockchain to store data. Arweave just like other decentralized storage platforms stored data in nodes. The other unique feature it has is a permanent storage service for clients looking for long-term storage.

You can pay around $5/ GB every month. It may look expensive but remember you are getting permanent storage. The platform allows you to pay using AR tokens.

According to a report by Sami Kaasab from Messari, data stored in Arweave is projected to reach 462 TBs in 2023 and 2,950 TBs in 2026. 

SiaCoin

Sia is a decentralized storage system that uses Blockchain. It was founded by David Vorick and Luke Champine and was released in 2015.

The Blockchain system allows users to upload their files. The files are encrypted and different fragments are stored in nodes. This ensures that only the user has access to the file.

The pricing for their storage is affordable. Storing 1GB on their platform will only cost you around $2 monthly. 

The platform has an official coin called Siacoin. It did not have an ICO but was funded using independent resources.

Internet Computer

The Blockchain Based storage allows users to run web applications. Internet Computer was founded by a company called DFINITY in 2016 by a computer scientist called Dominic Williams.  

It allows the use of smart contracts and the standout feature is that it can allow you to run decentralised apps on the platform. It utilizes a limited amount of nodes to connect the network. 

Additionally, it allows you to use their crypto token called ICP. A market cap of close to $10 billion shows there is a lot of growth.

Writer’s take

The reality is that the market is still warming up to the idea of using decentralized storage rather than the traditional centralized ones. It will take time before the market makes the shift to fully using decentralized storage. 

It is an obvious prediction that the shift is going to happen since decentralized storage fills most of the gaps that centralized storage leaves.