A Deeper Dive Into Blockchain and Storage Capabilities: A New Frontier
Over the past decade, we have seen an exponential increase in demand for digital storage. Every day, consumers and enterprises are using more data, saving more applications, and consistently uploading more data to the cloud. This existential demand for more online storage has resulted in centralized platforms, where some of the world’s largest players led by Amazon and Microsoft are driving this massive transformational shift to the cloud. We believe overall cloud workloads are set to exponentially increase looking ahead as we are forecasting cloud workloads to go from 35% of the overall landscape today to 45% by the end of 2021 and 55% by the end of 2022. However, as the enterprise/consumer environment shifts more to the cloud environment, skyrocketing data storage demand is sending developers, consumers, and applications to look for cheaper forms of storage. To this point, data is becoming increasingly expensive to store and some security concerns are driving a new focus on decentralized storage capability especially with blockchain technology coming to the forefront. Over recent years, blockchain technology discussions have become more pervasive across the enterprise landscape. In an environment where technology companies are consistently pushing the boundary forward, decentralized storage technology is clearly on the horizon around this area, as we dive deeper into this topic and highlight one of the leading private technology vendors driving this new technology paradigm. Snapshot of Decentralized Storage Decentralized cloud storage is a process of storing data on a decentralized network. Data is stored across multiple locations with multiple users and groups, to create a network hosted by many individuals & organizations as opposed to a single company. From a consumer’s perspective, a decentralized network will not look much different to how an individual interacts with websites today. Navigation, downloading, and habitual processes on the web will look almost identical, adding familiarity to this completely new technology. The critical innovation seen with blockchain is what occurs on the back-end. As opposed to traditional centralized storage methods where large corporations are storing critical data on their servers, storage capabilities are completely unlocked, creating an ecosystem of data. Individuals have the capability to store data, while increasing overall speeds and lowering the price of storage, heightening security metrics as well. We believe there are a number of private companies and overall business models attacking this new market opportunity with privately held Filecoin one of the more impressive strategies we have seen in the market. Filecoin – The Airbnb of Storage Founded in 2014, Filecoin was developed by Protocol Labs with HQ out of Palo Alto. It is a decentralized storage network design to store critical information and is one of the most complex offerings developed to this day. The company’s goal is to become one of the largest back-end providers for the next generation of the Internet: Web 3.0. With Filecoin, users pay to store their files on storage miners which are computers responsible for storing files and proving they have stored the files correctly and securely over time. The platform facilitates open markets for storing and retrieving files and is accessible to essentially everyone with access to an electronic device. As a result, the price of storage is lowered across the platform, data can be transmitted more quickly, and data storage is evolved from the traditional centralized platform in an iron tight secure process. How Filecoin Works; A Snapshot of the Future for Decentralized Storage Filecoin started their platform by building an IPFS (Interplanetary File System), effectively decentralizing the web. In our technology world today, there is a massive amount of unused latent storage with many devices not meeting storage capacities. Utilizing a structure and transaction method very similar to Airbnb, Filecoin is able to create and monetize a decentralized cloud storage network, where all unused storage can be sold on the market. With this platform, resources are optimized dropping the overall cost of storage and providing a more efficient market. Utilizing a similar incentive structure to bitcoin, users spend Filecoin to hire the network to store their files, and storage providers get paid in Filecoin. An IPFS is a protocol and peer-to-peer network for sharing and storing data in a distributed file system. The platform must rely on other peers to store data or on a centralized pinning service which must be trusted as IPFS does not have built-in provisions to verify data is being stored and correctly. IPFS works very well for organizations where there are incentives to sync and store data in multiple nodes, and for situations where strong social contracts can be used to ensure the content remains hosted and maintained long-term. Working hand in hand with the IPFS, clients make storage deals with miners to store data. The network then verifies that the miners are correctly storing the data and payments are made on a regular basis for the duration of the storage deal. Content retrieval can be offered by either storage miners directly or by specialized retrieval miners with Filecoin’s platform offering an incentive for commerce on the IPFS. IPFS the Foundation Utilizing the IPFS, the Filecoin ecosystem essentially enables entrepreneurs, application developers, and businesses to build their own platform. The market for blockchain is currently a jump ball with many companies attempting to create a sustainable platform. Filecoin has emerged as one of the potential winners going after this multi-billion dollar market in our opinion, although it’s still early days with many more entrants and winners likely on the horizon. Current Filecoin Ecosystem Miners 550+ miners on the network ranging from individuals to large data warehouses. This has grown the network power from 0 to ~600PiB, enough to store 170 million HD movies. Power is very distributed, with no miner having more than ~7% of network today. Applications & Clients 90+ professional organizations engaging in Filecoin. Applications are providing a tremendous amount of use cases and more applications are developed every day. Ex: Fleek – a decentralized, peer to peer version of Dropbox. Community 4,500+ project contributors and collaborators contributing to