The Missing Piece in Blockchain Puzzle: Decentralized Storage


Since its inception via the premier cryptocurrency, Bitcoin, to its deployment in the development and subsequent launch of non-fungible tokens (NFTs), decentralized finance (DeFi), and smart contracts, blockchain has captured the attention of the technology industry and beyond. The distributed permanent ledger has undeniable potential and capacity to disrupt hundreds of industries in a short time. However, like every other system, it has a few disadvantages, and to reach its true potential, these obstacles would need abrupt elimination. 

Problems of Traditional Blockchain Networks 

Amongst the several problems of blockchain technology are scalability and interoperability. Owing to the need for high computational resources required to process transactions, distributed ledger networks tend to be a tad slow and inefficient. As the number of network users grows exponentially, its ability to timely verify transactions declines. This is evident in traditional blockchain-based systems like Ethereum and Bitcoin. Their inability to seamlessly process thousands of transactions in the shortest time leaves ample room for improvement. 

Another significant problem of traditional blockchains is interoperability—the inability to communicate with other networks. Currently, there are thousands of blockchain-based projects running independently with zero means to connect with other protocols. This breeds Inefficiency as users would need to explore myriads of networks and tokens to communicate, and this fragmentation dispels innovation, collaboration, and impedes the smooth exchange of relevant information. As the distributed ledger continues to grow at an astronomical rate there is a need for interoperability—an essential feature needed to realize the technology’s immense potential. 

Besides interoperability, traditional blockchains are not well suited to store all kinds of data. Hence the reluctance of big corporations to deploy the technology for decentralized database use cases. Traditional blockchain networks are mainly characterized by inefficient operation, expensive storage, and the absence of a genuinely decentralized infrastructure to support decentralized applications (DApps). 

Decentralized Storage as the Future of Cloud Storage 

The inability to store all kinds of data on traditional blockchains has prompted the need for decentralized storage as the future of cloud storage. Decentralized storage stores relevant data across nodes instead of a central location. It ushers in the new era of Web 3.0 which leverages advanced technologies to deliver a user-centric experience. 

Unlike traditional blockchains, decentralized storage is scalable. More nodes are incorporated into the network, therefore guaranteeing faster transaction validation time. 

Over the years, tons of projects have been launched to provide decentralized storage solutions and the Stratos decentralized cloud network is one such that’s built for enterprises' hot data.  Designed on four main components—decentralized storage, computing,database, and blockchain—it aims to reinvent the existing market like the others. However, its scalable, self-balanced, and dependable storage and computation network is new to the industry. 

Stratos introduces 3 separate layers; Value, Resources, and Meta Service. To tackle the infamous blockchain trilemma, it incorporates unique consensus mechanisms for each layer, dispelling existing industry problems. The Meta Service layer utilizes the Proof-of-Authority (PoA) system which keeps it efficient; the Resource Layer adopts Proof-of-Traffic (PoT) algorithm which enables unending growth. The value layer leverages the famous Proof-of-Stake (PoS) mechanism to deliver increased levels of security to the network. 

Stratos, positioning itself uniquely compared to other storage projects, aims to introduce decentralized storage as the future of cloud storage, thus offering developers tools and grants to build and launch DApps on a robust and fully decentralized infrastructure. It is committed to reshaping the existing data storage industry. 

Decentralized Storage Adoption and Applications

While decentralized storage solutions offer clear technological benefits, an important question is whether these platforms are seeing real-world adoption yet. What are the main use cases and examples of decentralized storage applications today?

Adoption is picking up steam in certain industries and use cases like:

  • Digital media - For protecting copyrights and reducing piracy.
  • Medical records - To give patients control over health data privacy.
  • Financial services - Such as transaction histories in DeFi.
  • Public sector - Various pilots for citizen records and documentation.
  • Online communities - Including social sites and forums.

As developers build more decentralized apps, adoption of decentralized storage for data like documents, media, databases, and backups is poised to grow. But migration from legacy systems remains gradual.

Some of the major uses and examples of decentralized storage today include:

Permanent Data Archiving: The permanence and immutability of most blockchain-based storage makes it useful for crucial data requiring reliable long-term archiving without loss. For example, government records, financial histories, and medical documents.

Removing Central Points of Failure: Decentralized storage improves uptime and redundancy versus centralized servers. Use cases like databases for businesses and IT systems gain resiliency.

Enhanced Security and Privacy: The encryption of decentralized storage improves security compared to potential leaks with centralized clouds. For example, protecting user payment information and personal data.

Facilitating Ownership Provenance: In summary, while adoption is still growing, decentralized storage brings specific advantages to crucial applications around security, redundancy, permanence, and provenance. As the technology matures, usage will likely expand across more industries and use cases.

The Role of Consensus in Decentralized Storage

Before diving into the details of how decentralized storage works, it is crucial to understand the consensus mechanisms that enable these networks to function in a secure, decentralized way.

Decentralized blockchains and peer-to-peer networks have no central authority. To ensure agreement on the state of the network and validate activities like storage transactions, an algorithmic consensus must be reached between participants.

There are a variety of consensus models used in decentralized storage platforms, each with their own strengths and tradeoffs. The three main examples are Proof-of-Authority (PoA), Proof-of-Traffic (PoT), and Proof-of-Stake (PoS).

PoA relies on approved validators with verified identities to vote on the validity of blocks. PoT grants block rewards based on the amount of network traffic and data served. And PoS gives participants block validation rights proportional to staked token holdings.

Understanding these consensus algorithms provides insight into how decentralized storage networks can facilitate trust and cooperation between peers without centralization. The design of the consensus mechanism has critical implications for aspects like security, speed, efficiency, and governance.

As we explore the workings of decentralized storage in more detail, keep these consensus models in mind as key enablers. The ability to reach agreement on storage transactions and data in a decentralized environment depends heavily on the consensus system.

What is Proof-of-Authority (PoA)?

Proof-of-Authority (PoA) is a reputation-based consensus algorithm commonly used in permissioned blockchain networks. It addresses vulnerabilities of Proof-of-Work while offering faster transaction times. But how does PoA achieve decentralized consensus exactly?

With PoA, transactions and blocks are validated by approved accounts known as validators. These validators are chosen by the network starters and have reputations as trusted participants. Their identities are verified to be unique real entities.

To become a validator, an account must go through an identity verification process. This ensures validators are known and accountable, disincentivizing malicious behavior that could invalidate their reputations.

Validators take turns proposing and validating blocks in a Round Robin schedule. The order is agreed upon in advance, and each validator must wait their turn. This prevents randomness and uneven distribution of power.

Blocks proposed by validators are signed using their private keys. If the majority of validators sign and approve a given block, it is considered valid and added to the chain. Validator signatures are incorporated into blocks as proof of their authority.

Should any validator act maliciously, their reputation is on the line, and they can be quickly expelled through a governance mechanism. This threat encourages honest participation.

Some key advantages of PoA consensus include:

  • No need for computationally intensive mining with hardware or electricity. This makes it more eco-friendly.
  • Transactions confirm in seconds rather than minutes since no puzzle solving is required. This enables faster blockchain usage.
  • Higher scalability potential given the lack of mining bottlenecks.
  • Still decentralized but with known, reputable validators. This balances trust while avoiding sole dependency on one entity.

In summary, PoA leverages validator identities and reputations to efficiently enable consensus in a decentralized, trustworthy manner. It offers faster, greener consensus optimized for private networks.

Understanding Proof-of-Traffic (PoT) Consensus

Proof-of-Traffic (PoT) is a novel consensus mechanism optimized specifically for decentralized storage networks. Unlike Proof-of-Work, it does not rely on computationally intensive mining. So how does it enable trustless consensus?

With PoT, network nodes gain the ability to mine blocks and earn rewards based on the amount of network traffic they handle. The more data requests a node processes from clients, the higher its "traffic" score.

Nodes track forwarded data requests on the network and tally up bytes delivered. These traffic stats feed into a verifiable score for each node based on real provable bandwidth capacity.

The network algorithmically assigns mining rights and block rewards to nodes in proportion to their traffic score. This incentivizes nodes to maximize the data they handle and serve.

Unlike hashing power for Proof-of-Work, traffic is simple and inexpensive to verify. Nodes can easily audit one another's traffic stats by sampling forwarded data requests. This prevents cheating or manipulation of scores.

In addition, differing bandwidth capacities among nodes automatically prevents centralization. Large data centers cannot overwhelm nodes with less bandwidth because rewards align linearly with capacity.

Some key advantages of PoT include:

  • Requires no specialized mining hardware or energy expenditure like Proof-of-Work.
  • Mining process aligns with actual network storage and bandwidth usage rather than artificial computation.
  • Easy for nodes to verify each other's roles without central oversight.
  • Built-in mechanisms prevent centralization and ensure proportional decentralization.

Overall, Proof-of-Traffic provides a novel alternative consensus suited for distributed storage networks by aligning mining rights with bandwidth capacity according to real data flows. It offers an efficient, eco-friendly path to decentralized consensus.

Understanding Proof-of-Stake (PoS) Consensus

Proof-of-Stake (PoS) has emerged as an alternative consensus model to the mining-based Proof-of-Work used in networks like Bitcoin. In PoS, "forgers" validate transactions based on staked cryptocurrency holdings.

Under PoS, participants can become forgers by staking their coin holdings as collateral. The size of a user's stake determines the chance they will be selected to validate the next block. Those with higher holdings have higher odds.

When a forger is chosen to validate, they check transactions against protocol rules, sign off on validity, and add the block to the chain. The forger is rewarded with transaction fees for their service.

Should a forger act maliciously and approve invalid transactions, their entire staked deposit can be destroyed. This slashing disincentivizes cheating.

Staking coins essentially locks them until unstaked. This provides another anti-cheating measure - attackers would have to amass large long-term holdings to attack, which is expensive.

Some key advantages of PoS include:

  • No electricity-hungry mining required since forgers are chosen algorithmically. This is more eco-friendly.
  • Faster transaction confirmations since no time-intensive puzzle solving is involved.
  • Better scaling potential as there are no bottlenecks around mining.
  • More security incentives for validators with slashing risks.

Overall, Proof-of-Stake offers an intriguing alternative to PoW by tying consensus participation to verifiable staked deposits rather than mining. This changes economics and incentives in valuable ways.

Conclusion

In conclusion, decentralized storage solutions have immense potential to transform how applications store and manage data. Although adoption is still in the early stages, the innovation happening in the blockchain storage ecosystem is rapidly solving the limitations around transaction speeds, capacity, costs, and functionality. As decentralized storage platforms see continued advancement, they are poised to offer a viable decentralized alternative to traditional centralized clouds for a broad range of use cases. The next few years will be pivotal in realizing the paradigm shift that robust decentralized storage could enable.

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Makoto Takahiro
Makoto Takahiro

Founder of DAO Times news resource


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