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A decentralized storage protocol is a type of data storage system that operates on a distributed network of computers rather than a centralized server. In a decentralized storage protocol, data is broken down into smaller pieces and then distributed across a network of nodes, where each node stores a copy of the data. As an alternative to the centralized storage system, the user is provided with enhanced security, privacy, and resilience. This ever-growing sector is estimated, in 2021, to be worth more than $70 billion. Despite the growth, the sector still needs to do more to beat the centralized storage industry. That is what protocols like Filecoin and the Ocean Protocol are doing. They are working towards making the decentralized storage win the interest of consumers.
Beating the conventional centralized storage systems will not be an easy task because this field is well dominated by them. Such storage system services include Amazon, Microsoft, Equinix, and Digital Realty. Users may have gotten so used to them that considering a different type of similar service platform may not be an attractive option to them. But because a decentralized protocol has a bit of an advantage over the traditional one, there may be enough reason to consider it as an alternative. It offers more security and greater control over one’s data at lower prices.
A notable advantage that decentralized storage has over centralized storage is its resistance to censorship and control by a central authority. It is difficult for any entity to shut down or manipulate a decentralized system. Moreover, decentralized systems are safer than centralized systems, because the data are spread among a larger number of nodes. This also makes it difficult for hackers to attack the stored data. The data are encrypted and distributed in bits of fragments to protect them. Also, these nice services are offered at a lower price, although the centralized storage protocols are not particularly expensive. With Filecoin, a terabyte of storage space costs less than a cent per month. Filecoin is the largest decentralized storage platform.
Top Decentralized Storage Protocol
As many investors began to recognize the potential of the decentralized storage protocol, they began to back it, and thus the protocol gained momentum in recent years. Major information technology companies like Microsoft have expressed interest in the area. Microsoft recently led a $20 million fundraising round for Space and Time, a Web3 firm that specializes in decentralized data storage, through its venture capital fund.
Filecoin (FIL)
This storage protocol was launched in 2020 and has since retained its status as one of the most popular and widely-used decentralized storage protocols.
It is an open-source cloud storage network designed to take on the role of the HTTP protocol and is based on the InterPlanetary File System (IPFS), a brand-new protocol for the decentralized web. Data is identified by its location in HTTP, such as the URL of the server hosting a web page. In contrast, IPFS uses the substance of the data rather than its location to identify it.
Filecoin allows its clients to pay for additional storage space in exchange for FIL (the system’s native token). This makes it possible for data to be stored over a peer-to-peer network in a trustless manner.
Filecoin has seen development across several industries. The number of storage transactions (agreements between storage clients and storage providers on the Filecoin network for the supply of storage services) increased, from 699,000 in January 2020 to over 1 million deals a year later, according to Filecoin’s report on network utilization. By the end of 2022, this number had increased to almost 16.7 million active transactions.
Internet Computer (ICP)
The Dfinity Foundation developed the Internet Computer (ICP) in 2021 to offer a decentralized, open Internet platform that supports smart contracts and decentralized applications. By running them on decentralized networks, developers can create websites and applications that are not governed by centralized authorities.
The project has been able to raise more than $190 million in investment thanks to the support of venture capital firms such as Andreessen Horowitz and Polychain Capital. Since its introduction, it has grown incredibly. It now has the largest market cap of $1.5 billion.
During December 2021 and December 2022, Dfinity reported a rise in new users of nearly 647%, from 4,079 to 37,224. However, since its release, the price of ICP has been declining and has finally stabilized at about $5.
Arweave (AR)
This project focuses on permanent storage. It aims to establish a new network where consumers can make one-time upfront payments and have their data stored indefinitely. Its business model is designed to encourage miners to guarantee the longevity, dependability, and accessibility of stored data.
Arweave was established in 2018 but did not really take off until 2021. The storage protocol saw an increase in sales throughout that year’s four quarters. Arweave reported up to 7,000 daily active users within the same time frame. Nonetheless, the protocol has been recording decreased daily active users and income in 2023 as their numbers have been declining throughout 2022.
Holo (HOT)
This storage protocol enables users to host and access decentralized applications (dapps) on a distributed network of computers. Those who contributed their computing power and bandwidth on the network are paid with the network’s native token, which is known as the “HoloFuel.”
Even though the idea is still in its early testing stages, it has raised over $20 million in an ICO. Despite this, during the past two years, the project has maintained its ranking as one of the top five decentralized storage projects by market cap.
SiaCoin (SC)
The Sia storage protocol allows users to rent out extra storage space to other people in exchange for Siacoin, the native token of the network.
Since the project started in 2015, it has amassed over $ 3 million and has grown to offer 4,660 TB of storage space, only 1210 TB of which is currently being utilized. This is a low number that offers us an idea of the usage of the storage service. Siacon only makes about $600 per month due to the network’s low activity, down from $12,000 just five months ago.
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