An Overview of Decentralized Cloud Storage Services

Why Use Decentralized Cloud Storage Solutions?

The current standard for digital data storage is called cloud storage. With cloud storage, users looking to host data, applications, and websites on the internet are reliant on centralized providers like Amazon, Google, and Microsoft to provide storage services. This method of storage — for which user data is stored on the centralized server farms of cloud storage providers — is often cheaper, more scalable, and more readily accessible across geographic regions than the previous standard of storage on physical hardware.

Cloud service providers allow developers to launch their applications more quickly, without worrying about setting up and managing servers, but customers typically have limited options in terms of providers and functionality. The majority of cloud storage providers are subsidiaries of bonafide tech giants and dominate the cloud services market, accounting for about 70% of the total market share as of 2021.

Despite their popularity and widespread use, many centralized cloud storage providers have been criticized for their tendency to force end users into inflexible and expensive cloud services and storage plans due to a lack of viable alternatives. Studies have shown that many developers settle for fixed amounts of hosting space that remain underutilized. This often results in hefty — and in many cases, unnecessary — premiums paid for cloud services.

That said, perhaps the biggest concern with centralized data storage models is that users are required to place trust in the central authority of the provider to keep their data safe, keep websites online, and not tamper with or censor the content that the centralized data providers host. In response, blockchain technology and decentralized networks have fostered a whole new methodology for digital storage: decentralized cloud storage.

In contrast to centralized, permissioned cloud providers, decentralized cloud storage providers leverage infrastructure that is designed to mitigate undue control or influence. These providers typically also utilize a permissionless structure that enables developers to employ their services with reduced restrictions. Conceptually similar to a decentralized blockchain, decentralized storage models draw their security from their widely distributed structure. This overall architecture can help make these systems more resistant to the hackers, attacks, and outages that have plagued large, centralized data centers.

How Does Decentralized Data Storage Work?

In order to enlist the services of a decentralized cloud storage provider, a user typically enters into peer-to-peer (P2P) smart contracts on blockchain-based decentralized storage marketplaces. On these platforms, smart contracts determine how much data will be stored, how long it will be stored for, and at what price. Smart contracts also enable clients to ensure that multiple copies of their data are backed up via redundancy — the practice of storing multiple copies of a particular piece of data in multiple different locations. The smart contracts are then stored on and enforced by various blockchains and can thus benefit from the immutability and transparency provided by blockchain technology. The individual models of this system vary, though most rely on some type of Proof-of-Storage (PoStorage) consensus mechanism.

Many different decentralized cloud storage options are available today. These platforms target various sectors of the cloud services market and leverage different technologies and methodologies in doing so. Some platforms are tailored for individual consumers, some exist as B2B solutions, and some focus on specific use cases like privacy. Below, we’ll explore a few of the most popular decentralized storage providers in the blockchain space.

Akash Network (AKT)

Akash Network’s primary target audience is the decentralized finance (DeFi) industry and developers interested in building decentralized applications (dApps). At its core, Akash is a decentralized, open-source cloud services marketplace and self-described “DeCloud for DeFi.” Akash Network is a Cosmos-based Proof-of-Stake (PoS) blockchain built with interoperability in mind using the Cosmos SDK. The main goals of this project are to provide faster, cheaper, and more efficient decentralized data storage options for applications that run on the cloud.

Here’s how AKASH works: When traditional cloud storage providers have excess capacity, they can sell it on Akash Network’s blockchain-based marketplace to maximize the output of their unused resources. The Akash Network also strives for interoperability and boasts compatibility with major existing cloud infrastructure and cloud-based apps, increasing partnership viability for major cloud service providers.

Akash Network works closely alongside existing cloud service provider giants, while seeking to add equitability and efficiency to the cloud services industry. Eighty-five percent of Akash Network’s cloud services are leveraged from already existing and under-utilized data centers. By allowing existing cloud storage providers to sell their excess capacity on the Akash Network marketplace, providers can compete with one another for workloads, which can ultimately lower the costs for developers, as well as for the end users of the developed products and services.

Filecoin (FIL)

Created by the same team responsible for the Interplanetary File System (IPFS), Filecoin is an open-source, cloud-based storage network that aims to improve upon some perceived shortcomings of traditional cloud storage providers. These pain points include insufficient trust, unreliable security, limited connectivity, poor scalability, and heightened dependency on centralized systems.

Filecoin’s goal is to build a huge decentralized file storage network that can be adapted to meet the varying needs of different customers. Low costs, fast retrieval speed, and data storage redundancy are a few of the modifications that may appeal to customers who choose to use Filecoin. Filecoin also claims to be built with state-of-the-art cryptographic storage proofs to ensure data is being stored securely and precisely for a specified time period.

The Filecoin system is built to create an incentivized structure for miners to accumulate as much storage space as possible so they can, in turn, rent that storage to customers. The system also relies on dedicated data retrievers who are responsible for retrieving requested data when clients call for it. In this way, storage and retrieval of decentralized data on the Filecoin protocol are linked directly to the mining mechanism of the entire system — and are separated into two distinct components. The retrieval market exists off-chain, while the storage market is built on-chain.

Siacoin (SC)

Like Filecoin, Sia is a blockchain network that facilitates decentralized data storage by leveraging users’ excess hard drive space and renting it to those who need it. Sia storage providers are able to monetize their storage space using Sia’s data storage marketplace, and can earn rewards in the form of siacoin (SC) — the network’s native utility token.

Sia seeks to differentiate itself from competitors in the space by prioritizing the highly decentralized nature of its infrastructure above all other factors. Sia wants to give individuals not only exclusive control over their data, but also the ability to store it securely and autonomously without censorship. Sia’s general ethos of decentralization and autonomy is familiar in the blockchain space, but the extent to which the Sia crypto project has applied it to decentralized data storage is notable.

Sia uses open-source code, and its core software aims to eschew centralized architecture entirely. It does not depend on its own servers to keep the network afloat, nor does it automatically push updates to the network (as users must install them manually). However, Sia’s commitment to decentralized storage is achieved at the cost of a slightly higher barrier to entry as a user compared to traditional cloud storage providers, or even some of its decentralized counterparts. Sia crypto network participants must generally download a copy of the entire Sia blockchain, run a full node, transact using SC, and have a fair amount of technical knowledge to get up and running. These are tradeoffs that Sia is willing to accept in order to remain a highly trustless decentralized cloud storage solution.

Storj (STORJ)

Storj also takes advantage of latent storage and under-utilized network capacity by incentivizing users all over the world to contribute spare storage space to companies or users who demand ultra secure and private storage. Storj’s innovative, decentralized storage solution encrypts, divides, and distributes files to thousands of statistically uncorrelated nodes and ISPs around the world.

Though early versions of the Storj protocol were blockchain-based, the current iteration of Storj does not utilize blockchain architecture. Instead, Storj comprises a global network of independent nodes and a peer-to-peer communications protocol that allows the nodes to communicate. This means that, although the Storj network prioritizes decentralization and is somewhat similar to a blockchain infrastructure, it is not beholden to the transactional limitations of blockchain consensus mechanisms.

Storj incentivizes two parties to use the network — those with extra bandwidth and storage capacity on their computers, and those in need of decentralized file storage. While anyone can use the cloud object storage service, the platform offers the most utility for developers, start-ups, and large-scale projects with high capacity storage requirements. Storj uses the STORJ token, an ERC-20 utility token, as an exchange of value across the network.

Internxt (INXT)

Internxt is another notable decentralized cloud storage platform that has received significant amounts of seed funding as it continues to grow its user base. Like most other cloud storage solutions referenced here, Internxt allows users to upload their data, which is then encrypted, split into shards, and distributed amongst its network of decentralized cloud storage providers. This platform is geared more towards individual users who have photos and other personal data to store rather than developers looking to host entire apps or websites — although the platform is still technically capable of supporting more intensive data storage needs.

Because Internxt is a permissionless network, anyone can connect and sell their available storage space on the marketplace, including existing data storage centers. The primary medium of exchange on Internxt is the INXT token — an Ethereum-based ERC-20 token — which is designed to facilitate payments between data providers and clients on the network.

Internxt plans to differentiate itself from the competition by developing a suite of decentralized alternatives to familiar web services — like email, photo storage, file storage, and file sharing — that look quite similar to existing centralized product suites like Google’s G-Suite. In this way, Internxt hopes to garner more users by making its products highly familiar and usable, facilitating an easy transition from centralized to decentralized cloud storage.

The Future of Decentralized Data Management

Decentralized data storage marketplaces enable consumers to improve autonomous control over and access to their data. The demand for decentralized cloud storage is rapidly growing as a generation of new platforms increase the flexibility and security of cloud storage, while lowering costs for end users. Some decentralized storage networks aim to take on and replace the incumbent cloud storage giants, while others aim to work alongside them and expand and refine their offerings.

By storing data across a decentralized peer network, users can benefit from enhanced data security via redundancy. By eschewing the use of existing centralized storage providers, users may experience more flexibility in regard to their data storage needs — and they might also be less likely to get pigeonholed into unsuitable contracts due to a lack of viable alternative solutions. Decentralized cloud storage also enables essentially anyone — not just giant data centers — to become a storage provider, which may help drive further decentralization in the cloud storage space.