Storage decentralisation, the future of digital infrastructure

In recent times, cryptocurrency has gained widespread attention to the extent that modern investment vehicles such as exchange-traded funds (ETFs) have entered the Web3 marketspace. However, even though large investments are being made, large-scale blockchain adaptations still remain off the charts. Blockchain has proven benefits for decentralized finance (DeFi) but also poses a large potential competitor to traditional cloud storage. This article is going to dive deep into the benefits of decentralization of digital storage providers.

What is the diffference between centralised and decentralised storage?

Centralized storage constitutes a network of servers that are owned by organizational entities. Such networks of services make cloud computing possible and, in turn, realize a serverless approach for customers, which means that servers are managed by the centralized storage providers. Decentralized storage constitutes a broad network of systems that communicate with each other. This network validates the integrity of the transactions upon the approval of the whole network. This is different from centralized storage as data can be retrieved from many different systems within the decentralized network.

Decentralized storage networks have proven benefits for customers of centralized storage providers. Businesses are increasingly relying on digital infrastructure to deliver services, but that puts third-party reliance and data security at issue. Decentralized storage networks let users benefit from storing large amounts of data without having to worry about having the need for solid service-level agreements with centralized storage providers.

Third-party reliance can prove a hurdle for companies that need to store valuable data for their business. Service-level agreements keep customers protected from unwanted actions being employed by their service providers but are also hard to implement. The difficulty comes from a lack of understanding of policies from centralized storage providers and requires huge efforts to know that your data is truly protected. Hence, censorship and lack of ownership of digitalized data are at issue. The centralized storage providers can be pressured by institutions to change jurisdictions, which can negatively impact the service level agreement made with the customer. Furthermore, vendor lock-ins make it hard for customers to move their data out of centralized storage providers when they are dissatisfied with the provided service. Centralized storage providers can keep customers locked in by enabling fees on data that the customer wants to get out of their storage system (i.e., data migration).

The competitive landscape of digital storage providers has left centralized organizations in a position where they can implement changes in their payment policy on short notice. These centralized storage providers have been competing with each other for more than a decade to obtain large market shares, which stimulates their leverage on forcing customers to increase their digital infrastructure costs. Decentralized storage networks deliver data on an economic principle of data storage competition. Storage providers within the decentralized network are competing with each other to store the sensitive data of customers on their storage units. This increases incentive to keep storage costs low, hence the customer can choose which storage provider they want their data to be stored on.

Another advantage of decentralized storage is how denial-of-service (DDoS) attacks can be kept at bay. Because decentralized storage makes use of a content delivery network, which reduces the strain on a content delivery system. Moreover, decentralized storage can be further protected by incorporating it into a blockchain where requests are dependent on transaction fees. The introduction of transaction fees makes DDoS attacks less economically viable. Additionally, centralized storage providers are prone to cyberattacks due to a high incentive for criminals to expose sensitive customer data. Data outages could also be further exposed through hardware failures, maintenance issues. Decentralized blockchain makes sure data is immutable so it cannot be tampered with and operates on self-executing so-called smart contracts that have a predefined set of rules.

Distributed content networks already exist and are incorporated by many large tech businesses such as Cloudflare, Chrome, and Netflix. Yet smaller companies tend to rely on centralized storage providers. First and foremost, many customers of centralized storage providers do not have the resources to configure a decentralized storage network in their current technology stack. Secondly, centralized storage providers are using aggressive marketing strategies to persuade the market into thinking centralized storage still provides all of the needs of potential and current customers.

Finally, this leaves the door open for startups that connect businesses that are currently reliant on centralized storage providers to adapt to the future of digitized storage. The onboarding process is not clear enough for most businesses to see change is technically viable and with the right marketing tactics strides can be made to make storage digitalization more secure and give businesses back the control over their data.