Why Blockchain data storage is coming of age

Cloud data storage has swept the business world, promising remote access, cheaper storage costs, and near-infinite scalability. But with the rise of Web 3.0 and a push for decentralized solutions, there may be a competing technology ready to compete with the cloud.

Blockchain is, by design, an immutable ledger. This has made it the best solution for digital currency providers, but this ledger can store more than just encrypted financial data. Data of all kinds can be stored on the blockchain as a hash, and many companies are exploiting this use case.

While 2022 was the year of decentralized finance (DeFi) and non-fungible tokens (NFT), decentralized data storage may be the blockchain trend to watch in 2023. In this article, we will explain how blockchain data storage works, its benefits, and explore the companies that provide this service Today.

How does Blockchain store data?

The defining feature of blockchain storage is that it uses a decentralized network. In the case of public blockchains, the network is distributed across various nodes, storing files on unused hard disk space.

Data uploaded to the blockchain is dismantled in shards, each replicated to prevent file loss and encrypted with a private key so that only users with that key can see the original data. The scores are distributed across the network, and the transaction is recorded in the ledger. It is an immutable view of the data and its lineage.

When you request your data for download, the scores are put back together. Nodes are rewarded, usually in digital currency tokens, for storing and retrieving your data. Decentralized storage networks are p2p, so there is no centralized authority or single point of failure.

What are the benefits of storing data on the blockchain?

Decentralized data storage has many advantages, and many of these features distinguish the mechanism from cloud storage options.

Cost: One of the core benefits of storing data on the blockchain is lower costs. Cloud storage systems require expensive infrastructure to store data, even if this infrastructure is not a local responsibility of your organization.

While decentralized storage requires users to pay nodes, operating costs are reduced by such a margin that the blockchain alternative is significantly cheaper.

Security and Privacy: Centralized storage is vulnerable to attacks by cybercriminals, and that’s because there is a single point of failure. Decentralized architecture reduces the risk of a cyber attack because data is distributed.

Sensitive information, in addition to being secure, remains private on the blockchain. The only way to reassemble broken files is to use a private key known only to data owners or trusted colleagues. Ultimately, encryption keys are not stored on centralized servers by default.

File Integrity: Data stored on the blockchain cannot be changed because the ledger is immutable, meaning files retain their integrity. Traditional databases don’t work the same way, so files can be edited, updated and deleted, either accidentally or maliciously.

Furthermore, because your data is never moved to another server, you can always access it using the original path.

Key players

There are a number of companies operating in the decentralized data storage space, and the sector is expanding. Most recently, four major players in the blockchain space, Protocol Labs, Filecoin Foundation, AMD, Seagate and EY, launched the Decentralized Storage Alliance to raise awareness and encourage the use of decentralized technologies.

Filecoin: Filecoin enables users to store data on a p2p network built on the InterPlanetary File System (IPFS) developed by Protocol Labs. The network includes a reward mechanism for nodes, or storage providers. You can join the Filecoin network as a customer or as a storage provider. Storage fees are determined on an open market basis, and nodes are rewarded in Filecoin’s native cryptocurrency, FIL.

Sia: Sia has developed a trustless cloud storage marketplace that enables users to perform direct transactions regarding data storage services in the digital currency Siacoin. Storage providers are known as hosts, while users who upload files through the Sia network are called tenants.

WeSendit 3.0: WeSendit is an aggregator of decentralized data storage services, including Filecoin and Sia. It enables users to interact with different providers through the interface and transfer data from them via a decentralized network.

Exit

While decentralized storage offers many opportunities for companies in the acceleration economy, it is important to recognize some of the drawbacks. First, there is performance. Because decentralized data storage requires more operations than regular cloud storage, data retrieval can be slower.

And then there is data modification. Although one of the advantages of blockchain is that you cannot change data, this can also be a hindrance for organizations. So, should you move away from the cloud for your storage solutions? Let’s see what 2023 brings.