What Is Decentralized File Storage?

Cloud storage services such as Dropbox and Google Cloud changed how we store and share big files of videos and photos online. They let anyone store terabytes of data at a fraction of the price of a new hard drive, with files accessible on demand from any device. But there’s a catch: Users must rely on the risk management system of a centralized entity that could rescind their access to their account at any time, share their files with snooping government agencies or even go bankrupt, leaving customers scrambling to find another solution before their files disappear.

Web3 offers another alternative: decentralized file storage networks such as Filecoin, Storj and Arweave. Instead of storing data with a single cloud company, decentralized file storage protocols cut up your data into tiny pieces, then store packets on pseudonymous computers (nodes) linked up to a decentralized network. Decentralization means that files are protected by a network formed of lots of different stakeholders rather than a single company.

The decentralized network in question is often (but not always) a blockchain. Instead of processing transactions for crypto, validators process file space for crypto – usually the native token of the protocol’s file-sharing service. For example with Filecoin, FIL is used as a reward for participants providing file storage.

To earn that crypto, validators must prove they’re storing a file on their hard drive in a consensus mechanism often called proof-of-storage. This virtual money is designed to keep validators honest and trustworthy, providing those who run the nodes with an incentive to maintain your data.

Unlike centralized file-sharing services you pay for in fiat currencies, usually as a monthly subscription service, decentralized file services run on cryptocurrencies. Space is rented out and paid for in cryptocurrency – usually the native token of the decentralized file-sharing protocol. So once again, if you used Filecoin to store your files, you’d pay in FIL according to how much storage you needed.

Note that decentralized file storage networks are different – but similar! – to peer-to-peer file storage networks such as torrent services or Napster. Those work by having one group of people, known as seeders, host files and another group, known as leechers, download fragments of files from lots of leechers. This is how torrent sites like ThePirateBay operate. The benefits are similar: censorship-resistant file sharing. That’s why they became so popular as a platform for illegally downloading movies and music.

Pros and cons of decentralized storage

One benefit of decentralized storage systems is political – or more precisely, that it is designed to be apolitical. Files stored on a decentralized file service are resistant to the decisions of any centralized authority, such as a government who wishes to control and censor content. It also prevents having a private company enforce its own politics by refusing service or taking other action on the files it holds, such as sharing it with law enforcement.

With decentralized storage, there’s no single authority that can prevent certain kinds of files, even illegal material, from being stored on these networks, which is an issue to be aware of. These networks are also private. Data stored on these networks is encrypted before being stored on the network, and no single computer holds enough chunks of the file to piece together the puzzle and deduce what is contained within the file.

One big pro of decentralized storage is that it is often far cheaper than storing an equal amount of data on cloud providers like AWS or Azure.

Decentralized file storage networks in action

So, where can you find one of these decentralized file-sharing networks? One of the most popular such networks is called IPFS, short for the InterPlanetary File Network. It is used to host non-fungible tokens (NFT) and websites, too, with the claim being that these media are resistant to censorship and cannot be taken down by the creators of the protocol.

IPFS was developed by Protocol Labs and launched in 2015. Data on IPFS is stored in several locations, then pieced together whenever anyone needs to download files contained within its network. IPFS isn’t based on a blockchain, but its hashes can be contained within the metadata of a blockchain transaction.

Protocol Labs is also the creator of Filecoin, though Filecoin operates independently of IPFS while sharing several of the same ideas; indeed, all Filecoin nodes are IPFS nodes. The main difference is while IPFS is built for short-term retrieval of data, Filecoin is built for longer-term persistence of data. A rival called Arweave does much the same thing. One of the main differences is in the payment structure: Data is deleted from Filecoin if monthly bills remain unpaid while Arweave stores data permanently. Other competitors in the market include Sia, Akash and Storj.

See Also: What Are IPFS and Filecoin and How Can They Be Used for NFTs?