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Among the variety of business verticals already utilizing Blockchain technology, data storage and cloud computing is set to for it’s next evolution in just a few short years.

Instead of storing files and information on your own centralized server, such as a Google Drive, Dropbox, or Amazon S3, platforms like Sia or Storj have begun using Blockchain technology to decentralize data storage. By breaking up files into multiple pieces, encrypting, and sending them to hard drives located all around the world, individuals and private businesses can rent out their unused hard drive space to make money.

Advantages of a Decentralized Cloud

What are the main advantages of decentralized cloud service vs. private centralized cloud services offered by Amazon, IBM, Dropbox, etc.?

  • Decentralized data means more security and privacy. Decentralized cloud storage is more difficult to attack than traditional centralized data. On a decentralized network, files are broken apart and spread across multiple nodes, in a process called sharding. These files are encrypted with a private key which makes it impossible for any other node participating in the network to look at your file. Plus, due to sharding, the files are just a fraction of their original self, which means reading their entire content impossible.
  • Sia and Storj have launched their own cryptocurrencies (Siacoin, Storjcoin) in order to incentivize usage and to create a market for buying and selling decentralized storage.
  • File loss is prevented through redundancy in data. Extra copies are stored in case of an error when transmitting data.
  • Cost reduction due to more efficiency. Blockchain storage costs can reduce the price of cloud computing between 50% -100%.


Decentralized storage will also likely surpass most centralized services in terms of speed. Here is a short description of the most promising current projects :

  1. IPFS/Filecoin: InterPlanetary File System (IPFS) is a content-addressable; P2P hypermedia distribution protocol designed to create a permanent and decentralized method of storing and sharing files. Nodes in the IPFS network form a distributed file system that can be accessed in a variety of ways (for instance, via FUSE, and over HTTP). A local file can be added to the IPFS file system, making it available to the world. Files are identified by their hashes and are distributed using a BitTorrent-based protocol. Filecoin is the second layer of the project, the digital currency created to incentivize data storage on the IPFS network.
  2. Sia: Open-source software & company that provides decentralized cloud storage technology by splitting apart, encrypting, and distributing files across a decentralized network. Sia does not accept payments from customers but only provides a platform where providers run their own private decentralized cloud.
  3. Storj: Company based on Ethereum and P2P protocols that provides secure, private and efficient cloud storage. Storj utilizes file-sharding/fragmentation to store data and protect it with end-to-end encryption.
  4. Maidsafe: Company that aims to create a new backbone on which data can be stored, accessed, and exchanged. The network is made up of all the Upwork Blog post participants who contribute their computing capacity in peer-to-peer fashion. Decentralized Applications (dapps) can be built on Maidsafe.

Bottom Line

Decentralized storage projects could benefit individuals and businesses by protecting and securing their personal information at a much lower cost. Companies such as Siacoin and Storj can easily disrupt the space if they establish partnerships with the industry giants. If they manage to do so, Google and Apple could start using their services as back-end platform for storage in order to reduce costs and offer their customers more reliable and consistent uptime.

The entire cloud computing industry will be disrupted by blockchain technology in just a few short years. Everyone from clients, industry leaders, and blockchain companies have the potential to benefit from this kind of industry-wide change.

However, centralized cloud providers, like Dropbox and Amazon could see their margins decrease. They may even become overpriced and obsolete if they do not find ways to integrate with the advances of blockchain technology.