Will decentralized storage protocols overtake the cloud storage market?

According to IDC’s report “Global Enterprise Infrastructure Quarterly Tracker: Buyer and Cloud Deployment”, the global cloud storage market is expected to reach $ 100 billion between 2020 and 2025.

Although centralized cloud storage solutions are the main cloud storage technology, they have many drawbacks.

Frequent data leaks, server failures, centralized operational control, and hacking incidents have prompted more and more developers to think about how to store data in a secure, stable, and inexpensive way.

The development of blockchain technology provides a new opportunity for decentralized storage services.

What is a decentralized storage protocol?

Based on blockchain technology, decentralized storage protocols introduce an incentive system into their ecosystem with a tokenomic model to realize distributed and split storage of data across multiple network nodes.

There are two main categories of decentralized storage protocols.

One uses storage as an arithmetic force, and users ore by providing hard disk space. This consensus mechanism is comparable to Bitcoin-type projects, and a representative project is Siacoin.

The second is storage as a service, which provides adequate storage as an arithmetic force – the user completes a data storage service for mining. Representative projects are Filecoin, Arweave and BitTorrent.

Why are decentralized storage protocols needed?

Reliability

Blockchain is a simple digital transaction book that is replicated and distributed through a network of computer systems. Building on the blockchain, the cloud storage protocol has the characteristics of decentralization and encrypted storage and builds a reliable and decentralized storage mechanism.

In the decentralized storage protocol, all data blocks are checked. Workers must check all stored data, altered to prevent unauthorized alteration of data.

Distributed storage technology systems achieve load balancing and prevent traffic from being concentrated in one place, reducing data storage and retrieval speeds. Because they store multiple copies of the original data in different locations, users do not suffer data loss even if any machine breaks down or stops working.

Security

For security, each copy of the data is encrypted, cut, and stored with multiple redundancy at nodes across the network. Only a private key can retrieve data, decrypt it, and view it with digital currency. And because the data is stored decentrally, any intruder who tries to break into those storage nodes will get only a portion of the data, not the entire data file.

Scalability

The number of decentralized storage nodes is infinitely scalable, and each node can flexibly adjust storage capacity and quality according to its resources.

Honesty

With the emergence of millions of decentralized nodes, the market will be more competitive and open. Strong centralized storage providers cannot control the cost of data storage, which will allow for fairer prices for the entire storage services market and promote nodes to improve the quality of storage services.

Comparison of four decentralized data storage and performance protocol projects

Decentralized storage protocols are an effective complement to cloud storage. In the era of Web 3.0, where data security and ownership of user data are more critical, its reliability, security, scalability and fair market prices will continue to attract more and more companies, especially blockchain companies.

Footprint Analytics summarizes the comparative comparison using Arweave, Filecoin, BitTorrent and Siacoin as project representatives.

Comparison of decentralized storage protocols
Comparison of decentralized storage protocols

According to Footprint Analytics, the token market capitalization performance for the above four projects is as follows:

  • Filecoin still holds the leading position of decentralized storage protocols.
  • Arweave, which became the Solana blockchain storage protocol in August, experienced a rapid rise in the price of the token, with a market capitalization equal to the BitTorrent token BTT.
  • Siacoin, on the other hand, was a mediocre performer, unable to achieve a breakthrough.
  • In general, the development of decentralized storage protocols is still relatively slow.
Imprint analysis: Filecoin holds the number one position in decentralized storage protocols
Fingerprint analysis: Filecoin holds the number one position in decentralized storage protocols

Abstract

Decentralized storage protocols are an effective complement to cloud storage. In the era of Web 3.0, where data security and ownership of user data are more important, its reliability, security, scalability and fair market prices will continue to attract more and more companies, especially blockchain companies.

The curtain of the Web 3.0 revolution has just opened, and the popularity of decentralized storage still needs to be supported in terms of infrastructure, funding, talent, and social consensus.

Most decentralized storage protocols are still in the concept or development phase, and national policies will also influence industry development. Assuming different national policies and market consensus, centralized storage platforms will continue to be the main storage method over a period of time.

Disclaimer: The contents of this article represent the views of Footprint and are for informational purposes only and do not constitute any investment advice.

This work is the author’s original. Please indicate the source for reprinting. Commercial duplication requires author approval. Unauthorized commercial reproduction, excerpts or other uses will be investigated for related legal responsibilities.

This report was brought to you by Footprint Analytics.

What is Footprint

Footprint Analytics is a comprehensive analysis platform for blockchain data visualization and insight detection. It cleans and integrates data in the chain so users of any level of experience can quickly begin researching tokens, projects, and protocols. With over a thousand dashboard templates and a drag-and-drop interface, anyone can create their own custom charts in minutes. Discover blockchain data and invest smarter with Footprint.

Posted in: DeFi, Technology
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