In This Article
Dropbox (2007) and Amazon S3 (2006) popularized online file storage, followed by centralized solutions from Google, Microsoft, and other cloud storage providers. However, decentralized file storage projects predate Bitcoin’s launch, with the SAFE Network, now Autonomi, beginning development in 2006. Today, blockchain file storage system projects abound, with several well-established projects leading the field.
Blockchain storage differs from traditional online storage providers in the way the files are managed. Centralized storage providers offer convenience, but often at the expense of privacy, and potentially create a single point of failure.
By contrast, a blockchain storage system stores data across a network of distributed nodes worldwide. Access to decentralized storage is also permissionless, meaning anyone can access the platform to store data, with blockchain technology securing access.
Key Takeaways
- Blockchain file storage systems offer enhanced privacy, censorship resistance, and tamper-proof access compared to centralized cloud providers.
- Projects like Filecoin, Arweave, and Storj incentivize data storage through native tokens and decentralized consensus mechanisms.
- Data is split into encrypted shards, stored across global nodes, and verified through blockchain-based metadata and hashing.
- Blockchain storage is often more affordable—Filecoin can cost less than $0.20 per TB per month versus over $20 on traditional platforms.
- Use cases range from Web3 hosting and NFT storage to supply chain management, digital identity, and censorship-resistant publishing.
Blockchain File Storage Systems Explained
A blockchain file storage system uses a network of storage nodes (individual computers) to securely store data. This data is typically stored in shards or pieces, with multiple copies of these bits mirrored across the network.
The blockchain itself doesn’t hold the data. Instead, a distributed ledger tracks file metadata, file pointers, and ownership records, in addition to managing access. Redundancy helps ensure data integrity, and consensus mechanisms like proof of stake or proof of space ensure data availability.
These distributed networks allow users to access the network using a supported crypto wallet, which can then authorize transactions or validate ownership using a private key.
Most also use a token specific to the platform as a currency to pay for storage. For example, Arweave users pay for permanent storage using the Arweave (AR) token. These platform tokens also act as an incentive for node operators to ensure data integrity and availability.
How Is Blockchain Revolutionizing Data Storage?
Amazon AWS, Microsoft Azure, and Google Cloud comprise two-thirds of the cloud storage market share. By some estimates, the industry collectively holds more than 60% of corporate data in the cloud. While the industry has evolved to provide a polished product and related services, the basic structure introduces several potential drawbacks, including vendor lock-in, as well as ongoing storage costs.
Primary among these potential drawbacks is a single point of failure. Outages, data breaches, natural disasters, weather events, and hacks can all render data inaccessible or make it accessible to unauthorized individuals. Centralization, even with redundancy, creates risks to essential data and could jeopardize access to the data.
Other risks center around censorship. In the early part of the decade, crypto debanking efforts put promising projects and businesses at risk of failure. Similar measures could impact cloud providers, particularly regarding companies and projects that are legally compliant but politically unpopular.
Decentralization addresses the availability problem by distributing stored data across a worldwide network of nodes, with blockchain technology at the core. Blockchain storage also addresses censorship concerns. While each blockchain storage system has its own Terms of Service, they are effectively permissionless. Any person or business can access the platform to store content using a crypto wallet to authenticate access or authorize transactions.
How Blockchain Storage Systems Work
Let’s look at the basic anatomy of a decentralized data storage network.
- Shredded and encrypted files: Data stored is broken into shards and encrypted to prevent unauthorized access.
- Distributed shards: The protocol distributes these shards throughout the network, with no single node holding a complete copy of a given file.
- Blockchain Metadata: While file shards are stored on nodes, the metadata lives on the blockchain or a similar structure, like a BlockDAG. This distributed ledger tracks ownership and access for the files stored on nodes. Similar to other blockchain technologies, cryptographic hashes are used to verify the data’s integrity and track payments for storage. Typically, payment is made with a token used specifically for a given network.
- Distributed consensus: Rather than a centralized entity managing data, a decentralized network of nodes validates stored data using a consensus mechanism such as Proof of Space or Proof of Replication. This process ensures that data is available and hasn’t been tampered with.
- Incentives: Node operators typically earn a fee for providing storage space and access bandwidth, paid in the project’s native token.
- Key-based access: Users utilize a cryptocurrency wallet that holds private keys, which prove ownership. A public wallet address acts as a pseudonymous identity on the network, while private keys are used for authentication and authorization.
Each platform delivers unique features, but most share a structure similar to that described above. At the core, immutability, key-based access, and censorship resistance make blockchain storage a better option for many applications. Next, let’s explore some common uses for blockchain file storage.
What are Blockchain Storage Systems Used For?
Unsurprisingly, early adoption centered around blockchain-based applications. Several key use cases make a distributed network the optimal choice, including Non-Fungible Tokens (NFTs), front-end code for decentralized applications (dApps), and even storing copies of external blockchains to sync new nodes.
However, blockchain storage systems have proven invaluable in real-world applications as well, such as supply chain management that requires immutable records and trustless data storage.
Blockchain Storage Use Cases
| Use Case | Description |
|---|---|
| dApps and Web3 Infrastructure | Many Web3 projects already use decentralized storage from solutions like IPFS, addressing censorship concerns and ensuring access from anywhere. |
| Permanent Data Storage | Solutions like Arweave are designed for permanent storage, with mechanisms that guarantee perpetual storage with a one-time payment. |
| Censorship-Resistant Content Distribution | Decentralized storage ensures content remains available even if politically unpopular, avoiding the limitations of centralized Terms of Service. |
| Private Data Storage | Only decentralized storage can ensure private data storage by preventing any one server from holding the full version of a file. |
| Supply Chain Management | Blockchain-based storage ensures no party in the supply chain can alter stored data, preserving immutable records. |
| Digital Identity | Decentralized storage offers sovereign control over digital identity data, reducing reliance on centralized corporate or government systems. |
| Gaming and Metaverse Assets | Blockchain storage protects NFT-based assets from deletion or modification by central entities, ensuring true digital ownership. |
| Decentralized Social Media | Decentralized social platforms store data on blockchain file systems to avoid censorship and preserve user-generated content. |
Key Advantages Over Traditional Cloud Storage
A distributed file system delivers several advantages over traditional cloud storage, including lower cost in many cases. However, the common drivers that make businesses and individuals choose decentralized storage are often privacy, censorship resistance, redundancy, and tamper resistance.
- Security and Privacy: Typically, a username and password secure access to traditional cloud storage providers. A recent compilation lists 16 billion passwords leaked online, including those from Google and other platforms. By contrast, a decentralized storage platform grants access based on private keys held in a secure crypto wallet. Only someone with key-based access can view restricted content.
- Lower Costs for Users: A 2023 study by Coingecko underscored the potential cost savings of decentralized storage. The cost to store one TB of data on Filecoin was less than $0.20 monthly, compared to more than $20 for Google or Amazon’s centralized storage.
- Passive Income for Hosts: With a little technical know-how, storage can become a revenue stream. Leading blockchain storage systems incentivize node operators with a platform-specific token.
- Redundancy, Resilience, and 24/7 Access: Leading cloud storage providers offer redundancy, but that does not ensure access. Splitting files and distributing them to multiple nodes provides better resilience and ensures better availability.
- Data Integrity and Tamper-Proof Records: Many applications, including those in the supply chain, depend on immutable data. User A needs to know that User B has not modified the record. The hash algorithms used in blockchains ensure the data has not been corrupted or tampered with. A minute change in the data will produce a dramatically different hash value.
Popular Blockchain File Storage Solutions
The blockchain-based storage space is still evolving, but several well-established projects compete with newer projects. Let’s explore some of the most commonly used protocols.
1. IPFS
Many of the most popular Web3 apps utilize the Interplanetary File System (IPFS), which uses content-based addressing to serve content via a peer-to-peer (P2P) network. The platform uses content pinning, allowing storage nodes to select specific content for hosting, typically focusing on dApps used by the node operator.
Unpinned content may be deleted during “garbage collection.” Each piece of content receives a hash value called an IPFS CI, which acts as a pointer to the content and ensures no changes have been made.
While the IPFS protocol is free to use, to ensure persistent access, users may have to use a (paid) pinning service that is always online and ready to serve content.
2. Filecoin
The Filecoin protocol borrows heavily from IPFS but incentivizes storage providers to provide ongoing file availability. Under the hood, IPFS provides the addressing (CID) and P2P functionality, while Filecoin provides an incentive layer (payment via FIL token) while also ensuring data integrity and availability.
Two consensus mechanisms work in tandem: Proof of Replication (PoRep) and Proof of Spacetime (PoSt). PoRep verifies that the storage provider stores a copy of the content, while PoSt ensures availability throughout the contract term. Failure in either proof can result in penalties for the storage provider.
In many cases, Filecoin offers the most affordable solution for long-term decentralized storage while ensuring data availability (per contract length).
3. Storj
Targeted at business users and developers, Storj provides Amazon S3-compatible file storage at a fraction of the monthly cost. The platform uses the same Application Programming Interface (API) as Amazon S3 (Simple Storage Service), allowing easy migration and ensuring compatibility with existing tools and apps built for S3.
A global network of storage nodes, comprising servers and individual computers, utilizes spare drive space to generate passive income for storage providers. Files are encrypted at the client level before being split into 80 shards, making it impossible to view the complete file without authorization. However, similar to Shamir’s Secret Sharing, only a subset of these 80 pieces is needed to assemble the complete file.
As Storj works toward a more decentralized consensus, Storj Labs operates “Satellites” to manage metadata and ensure nodes behave honestly. Users pay for storage using the project’s STORJ token.
4. Arweave
The Arweave protocol centers on permanent storage using a one-time fee. The logistics behind this are based on expected decreases in storage hardware over time (Kryder’s Law), combined with an “endowment” that incentivizes miners (storage nodes) to store data.
Although Bitcoin heavily influenced Arweave’s tokenomics, the protocol uses a blockweave rather than a blockchain to store metadata. In addition to linking to a previous block (like a blockchain), each new block also links to a random recall block, which incentivizes miners to store a larger amount of data.
Arweave uses Succinct Proof of Random Access (SPoRA) to ensure data availability. Storage fees are paid in AR tokens, with the proceeds split between miners and the endowment.
5. Sia
Sia enables hosts to earn passive income by renting spare drive space to “renters.” Similar to other protocols, Sia encrypts the data before splitting it into multiple shards and storing the shards redundantly across the network. S3 compatibility is available but requires configuration, allowing this decentralized storage protocol to be used by Web3 projects, individual users, and businesses alike
Hosts provide the protocol’s native token, Siacoin (SC), as collateral to ensure that hosts behave honestly and store data in accordance with the smart contract agreed to by the host and renter. Hosts, in turn, earn SC tokens for providing the agreed storage, and Sia’s marketplace structure fosters competition while giving hosts the freedom to set their own rates. Sia itself is a non-profit organization.
How to Choose the Right Decentralized Storage Platform
While blockchain storage is growing and evolving, specific platforms may be better suited to a given use case. Let’s look at areas in which each of the solutions above outperforms.
- Long-term storage: Arweave’s permanent storage uses a well-considered economic model that ensures ongoing data availability with a one-time payment.
- Cost structure: Filecoin’s low-cost decentralized storage model can save 80% or more compared to cloud storage providers like Google and Amazon AWS.
- Developer tools: Storj’s native S3 compatibility and programmatic access make it well-matched to business needs.
- Redundancy: Sia’s customizable smart contracts enable renters to configure their storage contract, including redundancy options.
- Web3 hosting: IPFS offers a proven solution for hosting Web3 UI elements and dApp front-end code through its peer-to-peer file-sharing protocol.
Conclusion
Blockchain storage promises enhanced privacy and security, along with censorship resistance and often lower costs compared to commercial alternatives. The space is still evolving with multiple projects offering features compatible with leading cloud service providers, such as Amazon S3.
Storage costs also compare favorably. Some solutions cost up to 80 to 90% less than the most popular centralized cloud storage providers. These benefits make blockchain storage a viable solution for many individuals, businesses, and industries as crypto adoption continues to grow.
References
- Cloud infrastructure services vendor market share worldwide (statista.com)
- Crypto and Trump gang up on FDIC over debanking (cnbc.com)
- Data breach compilation lists 16 billion compromised passwords (axios.com)
- Centralized vs Decentralized Storage Cost (coingecko.com)
- What is Shamir’s Secret Sharing? (wikipedia.com)
- Storage Density & Kryder’s Law (networkcomputing.com)
- Succinct Proofs of Random Access (arweave.net)
Frequently Asked Questions
What is the file storage system using blockchain?
Several blockchain-based file storage solutions exist. These range from peer-to-peer protocols like the Interplanetary File System (IPFS) to commercial-ready platforms like Storj that offer compatibility with Amazon S3.
Which blockchain is best for data storage?
Platforms differ in features, cost, and other factors. Arweave is often seen as the best solution for permanent storage. Storj and Sia offer impressive features for business users. Filecoin’s low cost makes it well-suited to budget-conscious use cases.
Can you store files in blockchain?
Yes, blockchain file storage systems can store a wide range of data, ranging from web UI elements for decentralized applications to business files to personal photo or music collections, or even entire copies of other blockchains. However, the files are stored outside of the blockchain, with blockchain technology managing the access and ensuring data integrity.
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