Decentralized Storage Systems and How They Work

We live in a largely connected digital world, with data as an effective tool. Data is not just important; it is critical for making better personal choices, impactful business decisions, creating effective policies, reducing business costs, achieving KPIs, and making better decisions, whether for governments, corporate entities, or individuals. This is why businesses, governments, and individuals go to great lengths to use data storage platforms to acquire, store, and retrieve data as needed and to preserve their data for future use.

Data storage platforms have evolved to meet the needs of the times. Initially, data was stored using traditional methods. This involved storing physical records in an office or a secure location. This method is vulnerable to disasters such as fire outbreaks. Also, it wasn't sustainable, especially for expanding organizations. Organizations then turned to centralized systems, which were an improvement over traditional methods. However, these systems also presented their own unique challenges. These challenges paved the way for the advent of cloud storage solutions like Dropbox and Google Drive.

While cloud storage platforms offered improvements over existing systems in terms of cost, speed, sustainability, efficiency, and effectiveness, they were not without drawbacks such as security breaches, system failures, and privacy concerns. These shortcomings, coupled with the vast amount of data produced daily, have paved the way for a more sustainable solution: decentralized storage systems.

What are decentralized storage platforms?

As the name suggests, a decentralized storage platform is a system where data is distributed across multiple servers in various locations around the world. In a decentralized storage system, data is broken into fragments and then stored on multiple servers, rather than on a single server. This distribution of data across servers helps to ensure that no data is lost if one or even several servers fail, a robustness achieved by leveraging blockchain technology.

Notable examples of decentralized storage systems include Arweave, BitTorrent, Filecoin, Sia, Storj, IPFS, IONIAN Storage, Swarm, Filebase, and Anima. For a comprehensive list, please refer here.

Features of Decentralized Storage Systems

Distributed storage system: In a distributed storage system, data is not stored on a central server managed by a single organization. Instead, data is distributed among several servers or nodes located in various parts of the world.

Data Splitting/Breakdown: Data stored on decentralized storage platforms is split into chunks following encryption. Consequently, the data is not localized to a single place, enhancing its security against loss during outages.

Encryption Use: Decentralized storage systems employ encryption to safeguard data, ensuring that sensitive and private information is protected from unauthorized access. The central tenet of decentralized storage platforms is user sovereignty over data management and ownership. Access remains strictly private and under the user’s control. Through encryption, access is limited exclusively to authorized individuals.

Why Decentralized Storage Are Important?

Decentralized storage platforms are crucial due to the enhanced data privacy, security, reliability, accessibility, and cost-effectiveness they offer. As internet usage grows and people become more technologically literate, concerns about unauthorized data usage by major tech companies are escalating. Consequently, there is an increasing public demand for personal data management. Decentralized storage platforms are instrumental in fulfilling this need.

The costs associated with running and maintaining a successful business can be prohibitive, especially with the use of cloud storage platforms for data storage. Companies are seeking cost-effective methods to acquire, store, and retrieve data.

Security, accessibility, and availability are crucial, particularly in emergencies or when a company must shut down for significant reasons. Power outages or shutdowns can be more than just frustrating and stressful; they can also result in the loss of critical information for companies or individuals.

How Do Decentralized Storage Work

There are no uniform step-by-step instructions or a standard operating procedure for decentralized storage systems due to the variety of consensus mechanisms and the particular challenges they address. For example, Arweave employs the Proof of Access consensus mechanism, while Sia uses the Proof of Storage consensus mechanism.

Despite these differences, all decentralized storage platforms generally adhere to a four-step process: encrypting data, splitting files, distributing them across different nodes, and enabling retrieval.

These steps will be illustrated using Storj, a widely recognized decentralized storage platform that leverages unused storage space within a global network. Initially, data is secured through AES-256-GCM encryption to ensure user ownership. The encrypted data is then divided into fragments. For Storj, each file is split into 80 shards, with each shard independently housed on diverse nodes globally.

In the event that a substantial number of nodes go offline due to power outages or similar incidents, the data is not compromised. The network compensates by repairing and replicating each affected piece onto operational nodes.

Regarding Storj, files, and data stored on the platform are secure from unauthorized access. The company itself cannot access user data, ensuring privacy. Access is under the user's control, with permissions that can be modified at any time.

To retrieve data, it's only necessary to have 29 of the 80 encrypted shards. The network leverages these to reconstruct the full dataset.

Pros of Decentralized Storage Systems

Cost-Effective: Decentralized platforms are generally more affordable than traditional storage systems, making them an ideal choice for organizations with limited budgets.

Incentivized Participation: Contributors to these platforms, such as storage miners on Filecoin, are rewarded for their efforts, for example with FIL tokens.

Censorship Resistance: The distributed nature of data storage on decentralized platforms means that no single entity, including governments and large tech corporations, can access or control a user's personal data without the necessary authorization.

User Empowerment: Decentralized platforms empower users by eliminating the need for third-party management. This direct control and ownership enhance data safety and reduce potential risks.

Enhanced Security: Decentralized storage platforms generally offer improved security over other storage methods. They employ encryption, adding a robust layer of protection to data, which helps safeguard sensitive information from malicious intent. Moreover, these platforms are designed to avoid complete shutdowns, ensuring continuous access.

Reliability: Decentralized storage systems store data across multiple locations, eliminating single points of failure. Platforms like Storj are designed to mitigate power outages, ensuring that data is preserved, thus enhancing the system's reliability and resistance to outages.

Ease of Access: With decentralized storage systems, users enjoy convenient access to their data. The architecture prevents a single point of failure, and without the need to rely on third-party management, users retain full control. This autonomy ensures data is accessible whenever needed.

Speed: Decentralized storage systems often offer faster performance compared to traditional storage solutions. Utilizing blockchain technology, data is spread across numerous nodes, which can streamline retrieval and update processes.

Cons of Decentralized Storage Systems

Potential Risks: Blockchain technology and decentralized storage platforms are still in the development phase. Although they hold immense potential, they are somewhat experimental, which could pose risks for businesses.

Vulnerability to Attacks: Even with data encryption and decentralized distribution, these platforms can be susceptible to hacker attacks, leading to security concerns.

Possibility of Hosting Illicit Content: The privacy offered by decentralized storage systems means users can store data without much oversight, which could be problematic if used to harbor illegal content, hindering government action and potentially risking public safety.

Conclusion

The future looks promising for decentralized storage platforms. Although the technology is in its early stages, it already has a substantial market and potential for widespread adoption, particularly as our world increasingly revolves around technology, and there's a growing need for efficient and effective data management.

People may increasingly favor decentralized storage due to the rising costs of cloud storage, the global economic downturn, data privacy breaches by well-known tech entities, the unreliability of cloud storage systems, and the superior assurances offered by decentralized platforms.