What is Decentralized Storage and How Does it Work?

Blockchain technology has changed the way we understand the world around us. The decentralized concept it brings has affected various industries, including the file storage industry. This article will discuss what decentralized file storage is and how it works. Also, we will discuss the benefits and drawbacks of this disruptive technology.

What is Decentralized Storage?

Decentralized storage is a file storage system that relies on a distributed network instead of a single centralized entity. The distributed network (usually blockchain) relies on peer-to-peer nodes that collect, store, and secure the data. These nodes sustain the network and get rewarded with tokens as incentives.

Therefore, decentralized file storage applications are designed to be resistant to censorship. In that way, users completely control their data, and data security mechanisms are not subject to isolated points of failure. On the other hand, centralized storage platforms hold data in single large servers, which can easily be focal points for attacks. They can also decide to withhold your data for any reason whatsoever.

How does Decentralized Storage Work?

Like centralized file storage, decentralized storage also requires that users upload their data once to store it and then download it whenever needed. However, all they have in common is that. Storing data on decentralized networks follows a path different from centralized servers. We can divide the path into five steps as follows:

Encryption

Data uploaded to decentralized storage platforms is first encrypted to boost its privacy and confidentiality. This encryption is done with cryptographic algorithms that scramble the data, so you can only unscramble it if you have the corresponding decryption key. This ensures that even if the data is intercepted or compromised, it remains secure and inaccessible to unwanted parties.

Sharding

Data sharding, or partitioning, is splitting large data sets into smaller pieces known as “shards” or “chunks.” The partitioning enhances the dataset’s scalability, flexibility, security, and overall performance.

Distribution

Once the data has been sharded, it is distributed among multiple network nodes. This ensures that no single node has access to the entire information. Even if one node is compromised and the data is somehow decrypted, the attacker would not have access to the entire data set.

Redundancy and Replication

This is an additional security measure to ensure the data is always available on the network. Thus, the network creates multiple copies of each shard and spreads them among even more decentralized nodes. It’s like making photocopies of an important document and storing them in different places.

Retrieving The Data

When the user successfully uploads the data to the decentralized storage system, he can call for it whenever he wants. When he is ready to retrieve the data, he sends a request to the network and presents his decryption keys or other identification credentials. The network then retrieves the necessary shards from the various nodes that have housed them. The shards are reassembled and presented to the user as a complete dataset.

Three Types of Decentralized Networks

Storage Network

Decentralized storage networks are designed to distribute data across multiple nodes, which can enhance data availability and redundancy, but also require users to take ownership of their data’s security and durability in the network. In a decentralized storage network, users typically have the ability to select the specific nodes that will host their data.

Marketplace

A decentralized marketplace acts as a platform that enables users to discover, compare, and select different storage options from decentralized storage providers. A decentralized marketplace may also have additional features such as pricing, availability, and performance metrics to aid users in making informed decisions. It acts as a bridge between users and decentralized storage providers, facilitating the interaction and integration between the two parties to enable storage services in a decentralized ecosystem.

Distributed Storage

In a decentralized network designed for distributed storage, data encoding is utilized to segment data into smaller fragments, which are then distributed across multiple storage nodes. This approach ensures the security and resiliency of the network, as data is protected and stored redundantly across different nodes.

Distributed storage uses erasure coding to allow for the recovery of lost or corrupted data fragments by using redundant fragments. This means that even if some of the storage nodes or fragments are unavailable or damaged, the original data can still be reconstructed from the remaining fragments and the redundant fragments.

Decentralized Storage vs. Cloud Storage

Decentralized storage is different from cloud storage. The key difference between both storage models is “trust.” Decentralized models require zero trust, which means that storage node operators, regardless of who they are or what hardware they use, cannot see or access the data stored on their node.

Within a distributed network, independent storage nodes store data without having access to complete files. The data and applications are encrypted, encoded, and split into fragments, which are then stored across the distributed nodes. This approach ensures that data remains secure and private, as it is fragmented and distributed across multiple nodes, making it difficult for any single node to have access to the complete data or usable information.

Decentralized storage is like keeping copies of your important documents or files in different safe places, such as your home, a bank, and a friend’s house. You have control over where you keep each copy, and even if one place has a problem, you can still access your files from other places. It’s like having multiple backups to make sure your data is safe and accessible.

On the other hand, cloud storage is like keeping all your documents or files in a single storage facility run by a company. You can access your files from anywhere using the internet, but if there is an issue with that storage facility, you may not be able to access your files until the problem is fixed. Unlike decentralized storage, information stored on cloud storage platforms can be accessed by the cloud storage host.

Benefits of Decentralized Storage

Security and Resilience

Decentralized storage methods are generally more secure than centralized counterparts. This is because the data stored on them is spread across various nodes in different locations. This eliminates a central point of failure. It also makes the system more resilient to outages or downtime.

Privacy

Since decentralized storage platforms leverage the principle of blockchain technology, they provide users with a high degree of anonymity. Thus, they are ideal for storing sensitive or confidential documents.

Affordability

Many decentralized storage options are more affordable, especially for large files or data sets. Users can also leverage spare storage space on their computers and offer it to other users to make money.

Limitations of Decentralized Storage

Complexity

Some decentralized storage options are difficult to implement for newbies because of the complexity that they come with. This is a potential barrier to adoption.

Legal Issues

Authorities have always been skeptical of decentralized initiatives. The fact that decentralization means people can do whatever they want without being censored does not sit right with them. The same applies to decentralized file storage systems. BitTorrent sites, for example, have fought many legal battles based on copyright infringement and piracy issues

Examples of Decentralized Storage Systems

InterPlanetary File System (IPFS)

Source: IPFS

IPFS was one of the earliest decentralized storage solutions. It was invented in 2015 by Juan Benet, a computer engineer. The solution was designed as a decentralized, peer-to-peer protocol for storing, accessing, and sharing data.

Regarding its operating mechanism, the IPFS system uses a content-addressing method to search for information. This differs from the location-based URL systems used by centralized systems (like HTTPS). It is also a more scalable system and can allow for large-sized transfers of data through its decentralized network.

However, the IPFS is not a blockchain system, neither is it a cryptocurrency platform. But it is based on the same protocol that drives crypto technology - decentralization and distribution. Therefore, some crypto platforms have been built on top of the IPFS that combine the best features of decentralized storage and cryptocurrencies. One such project is Filecoin.

Filecoin

Source: Filecoin

Filecoin is a decentralized data storage provider built on the IPFS protocol. It launched in 2020 after raising about $257 Million in an ICO (Initial Coin Offering) done in 2017. Interestingly, Juan Benet (the creator of the IPFS protocol) was one of the major developers of this crypto project.

As a decentralized protocol, Filecoin is run entirely by its users. These users presently fall into two categories - Storage and Retrieval miners. Storage miners are users who have excess storage space on their computers and make it available to other users. They then add new blocks to the network and reap the rewards.

Retrieval miners act as intermediaries between the final consumers and the storage miners. They retrieve the information stored by the storage miners and pass it securely and directly to the end users. This direct transfer reduces the need for data to be transferred across all the nodes in the entire network. This reduces delay and improves the efficiency of the network.

Both storage and retrieval miners get paid in FIL, the native token of the Filecoin network. It is also used for governance purposes. The total supply is capped at 2 Billion tokens, with 395 Million currently circulating.

Arweave

Source: Arweave

Arweave is a blockchain storage solution that provides users with low-cost and permanent data storage. It was launched in June 2018 and used a unique consensus algorithm known as Proof-of-Access (PoA) to ensure the longevity and availability of data stored on the network. This PoA mechanism rewards users with AR tokens as incentives for long-term data storage.

The Arweave protocol was built on top of another decentralized web infrastructure - the permaweb. The Permaweb was built on top of the IPFS to be an avenue to store data indefinitely on the blockchain. To store data on the Permaweb, users pay a one-time fee in AR tokens. Once they pay, their data becomes permanently stored without renewals or subscriptions.

BitTorrent

Source: BitTorrent

BitTorrent is a decentralized protocol that allows users to share and download large files easily. It was introduced in 2003 and quickly became popular because of its unique approach to the file-sharing system. Instead of directing users to download large files from a single server, BitTorrent allows users to download chunks of the file from multiple peers. As a result, downloads are faster and individual servers have less strain.

In 2019, the BitTorrent platform introduced its native token, BTT, through an ICO. Built on the Tron ecosystem, this token can be used to make payments and subscribe to premium features on the platform. It is also used as a governance token and given as a reward for uploading files on the network.

Conclusion

While centralized giants like Google and Microsoft still control a sizeable chunk of the data storage industry, the world has started to move on. The advent of blockchain technology means that users can now control how their data is stored and shared. This decentralized alternative is even more enticing when you realize you can get paid for doing so.

Therefore, more users are embracing decentralized storage methods. Are you one of them? If not, consider the various options discussed in this article and start your journey to the world of decentralized file storage.