The world’s largest companies, such as Meta and Google, are storing more data than ever before. From communications to work files to vital documents and passwords, data has become a powerful and valuable commodity. For instance, every minute worldwide, roughly 500 hours of video are uploaded to YouTube and stored indefinitely in Google servers across the globe. Additionally, companies like Meta hold highly accurate predictive models of people’s behaviors and personalities based on their online activity.
Given the importance of data, let’s explore options for storing it, specifically decentralized data storage. One of the core visions of Web3 is decentralized control, which applies to data storage as well. Instead of relying on a central server owned and operated by a single company like Amazon or Google, decentralized data storage enables files to be distributed through a peer-to-peer network and stored by participants in this network. This incentivizes participants through cryptoeconomics. Protocols like IPFS (Interplanetary File System) and Filecoin provide the infrastructure for decentralized data storage.
IPFS
IPFS is a peer-to-peer network and protocol that allows content to be addressed and retrieved without relying on a central server. Unlike HTTP, which points indirectly to content stored on servers owned by a provider, IPFS assigns a unique fingerprint to each piece of content known as a CID (content identifier). The content can be retrieved from any machine in the network storing it. IPFS works on top of various storage solutions, including centralized servers, hosting local servers, and decentralized methods like Filecoin or Arweave.
An often overlooked challenge with NFTs is the immutability of the content linked to them. When purchasing an NFT on certain marketplaces, only your ownership of a link to the content (e.g., a JPEG) is immutably recorded on the blockchain. However, the actual content pointed to by the link can be changed or removed by the provider. To address this, marketplaces like OpenSea rely on decentralized, trustless protocols like IPFS to avoid the “link rot” that affects many NFTs, ensuring the link and the content remain inseparable.
Filecoin’s Role
While IPFS focuses on content addressing, the actual storage of data in many Web3 applications is facilitated by Filecoin. Filecoin is a decentralized data storage protocol and custom blockchain. In the Filecoin ecosystem, miners offer their storage space for other users to utilize, earning FIL tokens in return. The protocol verifies that miners are genuinely storing the data through a zero-knowledge proof and records this information on the blockchain. The more storage a miner provides, the higher their chances of mining the next block and claiming the block reward.
Users and miners interact in a live marketplace to establish algorithmic contracts that specify the amount of data to be stored, the duration, the payout, and whether additional collateral is required for data safety. The protocol regularly checks that miners are storing data and punishes those who fail to meet these obligations or violate contracts. As a result, the Filecoin protocol is optimized for reliable, long-term storage providers rather than individuals with spare hard drives and unreliable internet connections.
Final Thoughts
The powerful combination of IPFS and Filecoin offers a compelling alternative to cloud providers like Google, Amazon Web Services, or Microsoft Azure. By decentralizing data storage, users no longer have to depend on a single company with limited oversight of how their data is managed. Another significant difference is the cost. While AWS charges approximately $1.34 per 100 GiB per month for hosting, Filecoin charges only $0.00002 for the same amount. This means that storing data on Filecoin is roughly 0.0015% of the cost of using AWS. The abundance of storage providers compared to the number of users contributes to this cost difference. However, for most people outside of the industry, using Filecoin is still challenging compared to the streamlined and user-friendly solutions like Google Drive.
OpenSea has already implemented a feature that allows users to store the metadata associated with an NFT using IPFS and Filecoin. This decentralization enables users to protect their assets from scams and rug pulls commonly associated with NFT markets.
Filecoin is worth considering, even if the user experience may be initially challenging. Integrating Filecoin into businesses or personal life to store essential documents or datasets can be worthwhile. Powergate, an API, makes the process much more accessible. Even for those committed to centralized solutions like AWS or Google Cloud, keeping an eye on Filecoin and its growing ecosystem is advisable. The project’s economics and potential for user adoption will undoubtedly drive service quality.
How does decentralized data storage differ from cloud storage?
Decentralized data storage, such as that provided by protocols like IPFS and Filecoin, relies on a peer-to-peer network where files are stored by participants in the network. In contrast, cloud storage relies on centralized servers owned and operated by companies like Amazon or Google. Decentralized storage offers greater control, resilience, and potential cost savings compared to traditional cloud storage.
What is the cost difference between Filecoin and AWS for storing data?
Filecoin charges significantly lower rates compared to AWS. While AWS charges around $1.34 per 100 GiB per month, Filecoin charges only $0.00002 for the same amount. Storing data on Filecoin is approximately 0.0015% of the cost of using AWS.
How does IPFS ensure the immutability of content linked to NFTs?
IPFS assigns a unique fingerprint called a CID (content identifier) to each piece of content. Marketplaces like OpenSea rely on IPFS to store the actual content associated with an NFT, ensuring that the link and the content remain immutable and inseparable.
Decentralized data storage, powered by protocols like IPFS and Filecoin, offers a compelling alternative to cloud storage solutions provided by companies like Google and Amazon. By leveraging peer-to-peer networks and cryptoeconomics, decentralized storage provides greater control, resilience, and potentially significant cost savings. While the user experience may initially present challenges, integrating Filecoin into businesses or personal life can be worthwhile. As the Filecoin ecosystem continues to grow, its economics and drive for user adoption will further enhance service quality and make it an increasingly attractive option for data storage needs.