Blockchain developers have caught a decentralized interest in cloud storage – will it shake up the industry?

The cloud data storage industry was valued at US$80 billion in 2022 and is projected to reach over US$180 billion over the next five years, according to a 2022 report by Markets and Markets Ltd, indicating that it has a winning formula for companies seeking a lower – Inexpensive, secure option for storing huge amounts of data on the Internet.

Cloud storage is dominated by heavy, centralized players, such as Amazon Web Services, Google and Microsoft, but with such revenues at stake, blockchain developers are looking to disrupt the sector with decentralized storage solutions to unseat the incumbents.

The Interplanetary File System (IPFS), powered by the Filecoin blockchain, saw the amount of data stored on the network increase x15 in the year to December last year. Matt Hamilton, lead developer at Protocol Labs, the company behind Filecoin, predicts cloud storage is headed for a decentralized future.

“I see it growing quite significantly in 2023,” he said, “[this year] we will see much more use as a front-end [solutions] get around to make it easier for individuals to participate in the network.”

Proponents of decentralization claim that the model offers advantages such as security, cost and privacy. That last point is a hot button amid the debate over the control giant tech companies have over vast amounts of personal information and the sale of that data to advertisers.

Shine me up

IPFS was created eight years ago as a decentralized way to store data based on its content. The current method of data storage is usually based on location.

“The idea is that even if you were trying to communicate between different planets, you would be able to refer to a piece of content and it could be retrieved from a local server near you, not necessarily having to make an interplanetary round trip to retrieve it.” Hamilton said.

The Filecoin system is a sister protocol to IPFS, which adds a financial incentive for storage providers on IPFS to be compensated with the network’s native cryptocurrency, FIL.

This is similar to how miners on the Bitcoin network are incentivized to maintain the network and validate transactions by being rewarded with Bitcoin, a model used by many Web3 projects.

Hamilton told Discard that IPFS has added over 4,000 storage providers over the past two years, and the network is currently up to 16 exabytes of total storage capacity – about 1% of total data center storage capacity worldwide.

Wikipedia

Some large projects are already turning to this system. OpenSea, the world’s largest non-fungible token marketplace, stores its NFTs on IPFS.

Wikipedia, the online free encyclopedia, also stores some of its data on IPFS, a decision that saved possible information loss when it was blocked by the Turkish government for three years until 2020.

“One of the big overarching goals of what Protocol Labs does is to store humanity’s data,” Hamilton said.

“As we’re in a much more data-centric world these days, the ability to be able to store data, retrieve data and be able to verify the veracity of the data and ensure that the data has not been tampered with is key. .”

Mars will also see the Filecoin Virtual Machine (FVM) deployed on the network. Like the Ethereum virtual machine that runs on the blockchain of the same name, FVM will expand the scope of use of the Filecoin network through smart contracts and larger Web3 tools.

Proponents say this will allow the full range of decentralized finance (DeFi) functionality on IPFS, allowing storage providers and clients to engage in the lending and borrowing marketplaces, increasing the flexibility of data storage arrangements. However, not everyone is convinced.

Catches on

Athreya Ramadas, CTO of cloud technology company Rapyder Cloud Solutions Ltd., said Discard that decentralized storage solutions have existed for quite some time, but have not caught on. He cited the early days of the internet and the use of torrent sites for decentralized storage.

“I’m not sure whether businesses or customers will be happy with the decentralized storage, because you never know where it’s going to be stored; you are not in control of your data, he said.

“When it comes to health care or [other sensitive business] data that I’m responsible for as a fintech provider for the customer’s data, I don’t think it will ever go into a decentralized storage, he said.

Andrew Lokenauth, technology analyst and founder of Fluent in Finance, said he sees the future of cloud storage as a combination of centralized and decentralized offerings.

“It is important to note that decentralized solutions are still in the early stages of development and may not yet have the same degree of reliability and scalability as centralized solutions,” he said in an interview.

“Centralized solutions will continue to be the best option for many businesses and individuals because of their established infrastructure and proven track record of reliability and security,” Lokenauth said.

“However, decentralized solutions will also play an increasingly important role in the industry, offering an alternative option for those looking for a more secure and transparent way to store their data.”