Traditional cloud storage systems have become increasingly popular over the past decade, providing an alternative to storing data locally on a physical device or server. However, cloud storage also comes with many disadvantages, as data is stored centrally, usually by large corporations. This leaves them at risk of cyber-attack and local censorship. Also, technical issues and downtime can lead to a lack of service and access to their data for the duration of the problem for a large number of users.

An alternative approach which has been developed in the blockchain space provides another option: decentralized storage.

What is decentralized storage?

Several platforms offer decentralized storage networks with no central storage or monitoring facility. The data is stored across multiple locations, with the servers hosted by independent operators rather than large entities. Individuals or businesses can participate and rent out the unused storage space on their computers. Some platforms operate on their own independent blockchains, while others run on open public blockchains. This means that the function and operation of the platforms and their services can vary. Participants are usually incentivized using the native token of the platform, which is used to pay for and reward transactions.

Decentralized storage aims to address the problems in traditional cloud storage systems. In general:

• Because the data is spread out over a large network it is more difficult to attack or censor.
• Files are encrypted with a private key, keeping ownership of the data with the user
• Files are broken down into multiple pieces and spread across multiple nodes. This makes it impossible for any single node to read the file in its entirety.
• The efficient use of existing storage leads a reduction in cost
• Multiple copies are stored on different nodes, avoiding the bottlenecks on central servers and increasing download speeds.

Where are we now?

Several projects using blockchain to create decentralized data storage are already running or are under development. Among them are the following:

• Filecoin is a open-source cloud storage marketplace built on top of Interplanetary File System (IPFS), a peer-to-peer distributed network protocol. Filecoin allows anyone to participate in renting out extra storage space to “clients” and earn Filecoin (FIL) tokens in return. These storage providers or “miners” register with the network and can bid for storage requests. The Filecoin system breaks the user’s data file into smaller parts and encrypts it before sending it to the storage provider, who has no access to the decryption keys. The Filecoin service has been live since October 2020.
• Swarm offers decentralized storage and a communication service via a system of peer-to-peer nodes. Participants will be incentivized using the native token (BZZ), enforced using smart contracts.
  Built on Ethereum, the system has been under development for four years, with the mainnet expected to launch in the second quarter of 2021.
• Sia also connects users who need file storage with hosts worldwide offering underutilized hard drive capacity. Renters pay using Siacoin (SC), which can also be mined and traded. Sia encrypts and distributes the files across a decentralized network, with only the users of the data having access to the private encryption keys. In 2020, Sia launched Skynet, a decentralized file-sharing and content delivery platform for developers, built on top of the Sia cloud storage network. The Sia software has been downloaded over a million times since inception, with thousands of TB uploaded to the network.
• StorJ has been providing decentralized storage solutions for several years. Built on Ethereum, it recently evolved and launched Tardigrade, an enterprise grade, S3 compatible cloud storage platform for developers, running on the Storj network. Storj pays hosts in Storj (STORJ) tokens for their unused storage space, which is then made available for Tardigrade users.

Data files are encrypted on the client side before being uploaded to the network, The encrypted files are split into smaller fragments (shards) before being globally distributed. The private keys are the property of the data owner.