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Is Decentralized Storage The Future? Here's What You Need To Know!

By ampersandninja | What is...? | 23 Jul 2021

Taking storage out of the hands of centralized entities provides a safer and more stable network while rewarding users for participating.

Centralized storage platforms, such as Google Drive and Dropbox, offer quick and easy storage solutions. So why would we look into anything else? Security and reliability are two driving factors to why we need decentralized storage. Data breaches have been happening since the beginning of the Internet, but centralized solutions like this have the potential to be more prone to them. You can take a look at some of the largest data breaches of the century here. Although not all on this list are related specifically to storage, it does highlight the need for more security involving user data.

Having a single location for data to be located creates a potential point of failure. Whereas, if you use peer-to-peer protocols to handle your data, it no longer is watered to one potential point. At its core, that is what decentralized storage will fix.

It’s worth noting that a majority of storage crypto projects are more akin to an incentive layer than the solution itself. BitTorrent, for example, still utilizes the familiar BitTorrent peer-to-peer protocol but rewards users for participating with their native token, BTT.

So what are the important storage projects to keep an eye on?

Filecoin & IPFS

Filecoin, FIL, is the top ranked storage crypto right now. As mentioned before, it is an incentive layer for the Interplanetary File System.

IPFS is a peer-to-peer storage network that handles data a bit differently than is expected. IPFS provides a way to split data into multiple pieces and stores it at multiple nodes. This provides significant bandwidth savings and more efficiency when distributing files.

Content is regularly mirrored to provide more reliability and potentially host files forever. Rather than identifying content by location, it is addressed with a cryptographic hash. This increases security for the user downloading. Hashes help out here by verifying that the file is exactly what a user is looking for and not tainted by a bad actor in any way.

Filecoin comes into play here by combining IPFS with blockchain. It utilizes two types of proofs. In short, Proof-of-Spacetime verifies the file is stored unaltered for an agreed upon amount of time and Proof-of-Replication verifies the correct number of copies are being stored. A more in-depth look at both proofs can be found here.

Many people may argue the inclusion of crypto into IPFS. On its own, IPFS is a perfectly functional network for file storage. However, it doesn’t offer an incentive for those that are hosting files. That is primarily what Filecoin tries to fix by offering payments for file storage. The prices are decided by supply and demand rather than being a fixed amount.


I wrote previously about BitTorrent’s native token and how it ties into the well-known protocol here. So, I won’t be going too deep into it here, but we will look at the BitTorrent File System as it relates directly to this article.

For a quick summary, BTT builds upon the BitTorrent protocol to add incentives for seeding torrent files. There are a few different ways of earning, but it offers a good way to incentivize the protocol. One feature that it does add that pulls a little bit away from torrenting is the BitTorrent File System.

BTFS is a direct fork of IPFS, and functions pretty similarly. It creates a decentralized ‘server’ for file storage and uses BTT as its currency for paying for space provided by storage providers. To store data, the files are broken up into 30 shards and each stored on a different host. As long as the host is able to stay online and provide reliable storage, the file is safely hosted on the network.

It is worth noting, that Filecoin has been performing better than BTT in general since the launch. Although BTFS has a lower requirement for storage mining, it can take a while to get storage contracts which make earnings unreliable at the moment.


Storj Decentralized Cloud Storage, DCS, builds on the same theme we’ve been covering. All files on the network are encrypted by default, using AES-256-GCM symmetric encryption. Users uploading data always have complete control over their files and can revoke access at any time.

Much like the others, when files are uploaded they are split into 80 different files each stored on a different node. However, when a file is downloaded, only 29 pieces are required in order to retrieve it. The extra pieces being stored allows for more security and reliability.

Currently, the network has over 10,000 nodes across close to 100 countries. But how are nodes selected? Largely they are selected by random, but they are then weighted by overall network diversity. Once it selects a pool of nodes, an attempt to upload to them is made and the fastest in the pool are chosen to store the file.

Pricing for the platform is reasonable. There is a free plan that allows up to three projects, up to 150GB storage and bandwidth. The standard plan ups those numbers to 10 projects, $4/TB a month and $7/TB in bandwidth a month. These fees can be paid either with a credit card or STORJ tokens.

The next important aspect is network reliability. When too many pieces of a file go missing, usually from nodes going offline, the network will kick into action and begin the repairing process. This kind of file repair is where having 80 nodes hosting one file is important. Although individual nodes can go offline, the beauty of decentralization makes losing 51 out of 80 of the nodes incredibly low. As a result, the chance of losing an entire file is minimal.

Final Thoughts

With Web3 in the works, decentralized storage is the obvious next step. Cloud storage provided by large corporations often creates a single point of failure for data. This can be witnessed by servers going offline or costly data breaches occurring on those servers.

Filecoin is by far the highest-ranked crypto in the storage space, with BTT up next. Having said that, there are still plenty of other projects beyond the ones I talked about here. Decentralized storage is truly the future, so it is worth keeping an eye on them so you don’t get left behind in Web3.

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