Decentralized Cloud Storage: A Wealth Of Possibilities?

The cloud storage market has significant development potential. Forecasts by marketing, consulting, and research groups vary. According to the American research company Gartner, the market will be worth $383.36 billion in 2020.

A large portion of this market could be occupied by services offering decentralized data storage, known as the cooperative storage cloud. This young sector has only its basic contours in place, but has already attracted the interest of major corporations like Google. Certain media have reported that Alphabet is not just working on its own version of blockchain, but is also working on developing a series of cloud solutions based on it. This way, the search giant is looking to secure its position on the market and grow its competitive advantage.

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The Cloud Cooperative

Decentralized data storage, transfer, and exchange includes encryption and a noticeable, several-fold decrease in price for the end user. Given that a majority of Internet users live in developing countries, this is important.

In addition, distributed storage offers a source of income for “miners,” a broad category of network users who work on creating new blocks to verify transactions. We would like to focus on the following projects: Ethereum Swarm, Sia, Storj, MaidSafe, FileCoin, and Genaro. Currently, mining in these networks is, for the most part, a private endeavor. That was how it was back in the days for Bitcoin. As we know, as the system developed and significant cash streams were created, mining for the first cryptocurrency came to be monopolized by the major ASIC chip manufacturers. Naturally, the same fate is in store for decentralized data storage services and data processing centers. As demand grows, professional hosting companies will begin entering the sector.

Data security and integrity have traditionally been cited among the risks associated with using decentralized storage Today, that issue has been technologically solved: user-uploaded files are split into chunks and encrypted. As a result, each host holds only a fragment of the contents. The list of all the file’s pieces is stored on the blockchain, and only the private key holder has access to it. Data integrity is guaranteed by backup copies. In the Sia project, for example, the ratio of copies is 4:1. Even if three-fourths of hosts malfunction or are blocked, the user’s files will remain accessible.

The issue of paying hosts has been resolved in various ways. Currently, each of the enumerated projects has its own tokens that are used for payments within the network.

Nonetheless, there remain questions about cloud storage’s further development. For example, what will drive the new technology into the mass market of the consumer and business app sectors? Are there guarantees of stable growth in cash flows? What can attract professional hosting providers with high-capacity infrastructure, high throughput, and fast access speeds to working in the cooperative storage cloud? And under what principles could existing and new project members be united?

“On the Exchange We Are One”

The answer to this array of questions would be an open and decentralized exchange that could bring together clients and professional hosts for joint projects.

Thanks to the exchange, the transactions would be concluded without third parties, using only smart contracts. Payments within the network would be made in a single currency, which would help keep down volatility and maintain a stable exchange rate.

That was why I started thinking about creating some kind of marketplace with open access and complete transparency. While the exchange would allow hosts to open an additional sales channel for leasing out unused capacity, the marketplace would expand the field of participants and services, becoming an aggregator for hosting providers and a technological “store” for clients.

“Military Secrets”

People often ask me: how can projects like this be especially interesting and useful to businesses? First of all, by their high level of security due to deep encryption.

Maintaining confidentiality and safeguarding trade secrets often becomes a key factor in keeping assets secure. For example, this comes to bear when commercial documents need to be transferred. Due to the increasing frequency of hacker attacks, using email has been discredited. The likelihood of that a file encrypted by algorithms used in blockchain would be intercepted and replaced is practically nil.

Another business pain point is anonymity and maintaining copyright when sending text, photo, and video content from service provider to client. Deep encryption and splitting the file into chunks, as is done for decentralized storage, solves this problem. One practical example is sending a movie over to be shown in theaters. The full-feature film is split into tens or even hundreds of pieces, each of which is encrypted on the client side and uploaded to the servers of various hosts. Only the holder of the private key can assemble a full table of files. The theatres receive an encrypted file, and the key is sent over just before the premiere.

A rather promising direction in the operation of a decentralized exchange would be the distribution of copyrighted content. Using its own payment system, our project intends to provide the resources for direct distribution and sale of currently popular formats: audio and video, books, magazines, educational courses, etc. For each download of the content, the author would want to be guaranteed their commission without any middlemen.
Thus, the potential shown by cloud storage will be in many ways catalyzed by an aggregator-type platform solution. The market’s development has achieved a variety of subjects and objects, which requires a technological “gathering point” to take the next step up.

Guest Author: Alexander Rakhmanov is the founder of the next generation decentralized data storage service He is also the General Manager of, a file hosting service. He has extensive experience in the development of expert systems, cybersecurity, programming, planning and logistics.

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