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Four Decentralized File Storing Cryptocurrencies that Everyone Needs to Know

Decentralized solutions are making their ways into almost every industry. While the past few decades have been mostly about centralized solutions, which were oftentimes cheap (or free), easy-to-use and very convenient, currently, the digital world is becoming more concerned with the idea of decentralization.

Through this, many people want to reclaim the ownership of their data back. One example of such solutions are decentralized storage files, which have been in the cryptocurrency world for some time. While at first most of these solutions were very difficult to use, especially for non-technical people, the current situation has seen a lot of improvement, which is why we are going to introduce to you the key players in this field.

Difference between centralised and decentralised storage files

Decentralized storage projects are platforms or cryptocurrencies that allow their users to store their data in almost any digital form to be placed on a decentralized network such as the cloud. It is thus a technique for storing data that does not use traditional servers. On the contrary, it usually uses distributed networks with countless entities providing storage capacity.

Thanks to this very basic difference between the centralized and decentralized file storage solutions, the decentralized projects can offer several benefits:

  •  Lower fees: some of the projects in the decentralized storage industry are offering pretty decent deals compared to their centralized counterparts. This is often the case mostly because the rewards are fairly redistributed around the network, which is not the case in the traditional settings. Thus, the users can benefit from cheaper solutions.
  • Security: decentralized storage platforms increase the security of the given users, since the failure of some nodes in the decentralized network does not affect the overall network, contrary to its centralized counterparts. This also means that decentralized networks are much harder to attack since there is not a single point of failure, which is often the case in the centralized entities.
  • Economic incentive: cryptocurrencies that are in this subsector often offer financial incentives for users to join. Through this, the participants in these projects are able to capitalize on their unused hard drives via tokens native to their platforms.
  • Censorship-resistance: one of the biggest benefits of the cryptocurrency sector is that many of its solutions are censorship resistance. The same applies to decentralized storage projects, which, due to their distributed nature and absence of centralized entities, allow for resistance to censorship.

The table below shows many other comparisons between the centralized and decentralized storage solutions. However, now that the difference has been made between the centralized and decentralized file storing solutions, the question remains, which decentralized solutions in this industry are worth following or using?

 

Centralised vs Decentralised Storage

 

Centralised Storage    

Decentralised Storage

Single Storage Provider

No dependency on a Single Platform

Subject to censorship

Censorship resistant

Pricing decided by a centralised authority in an organization

Pricing decided by free market + democratic protocols

Limited redundancy

High redundancy

Relatively expensive

Typically cheaper than centralised solutions

Profits are largely accumulated at the top and trickled down.        

Funds generated via fees are used to incentivize storage providers directly and to develop the decentralised ecosystem

Network information and source codes not publicly shared.                                                                                                      

Network information and source codes are open sources with incentives for developers to contribute to the network

1. Filecoin (FIL)

Filecoin (FIL) is probably the best-known cryptocurrency project in this subsector. Filecoin is a peer-to-peer (P2P) network that allows storing files thanks to blockchain technology. It produces a decentralized and open market, in which the users pay to store their files. On the other hand, the providers of the storing space are rewarded for their service in the form of FIL token.

Filecoin uses two different consensus mechanisms, namely Proof-of-Replication and Proof-of-Spacetime. The Proof-of-Replication mechanism verifies that the miners have been storing the data that they claimed to have on their drives. The second mechanism, Proof-of-Spacetime ensures that the miners continue to store the unique pieces of data on the network. Due to the combination of these two consensus mechanisms, Filecoin allows for a fair and transparent market, in which the users as well as the storage providers can enhance their file-sharing experience.

The nodes in Filecoin, also known as clients, are syncing the blockchain and validating messages in every block. On average, the Filecoin storage providers execute deals and mine new blocks on the blockchain about every 30 seconds, for which they receive the reward in the form of FIL token.

2. BitTorrent (BTT) 

The second cryptocurrency project in this field that we will introduce is BitTorrent (BTT). BitTorrent is a file-sharing protocol that was created before cryptocurrencies, more specifically in the year 2001 by Brad Cohen. In the year 2018 it was acquired by Justin’s Sun Tron Foundation, just so a year later, a BTT token could have been introduced.

BitTorrent File System (BTFS) is a decentralized ecosystem in which the users can easily and securely share their files between one another. This is done in a P2P way, thus, without the need to rely on any third party or a centralized counterparty.

What is different with this solution is the fact that people are not uploading or downloading files onto the network. Instead, they join the network of computers running the software. This then allows them to exchange files with one another, with BTT token powering the decentralized applications built on top of BTFS.

BTT is a TRC-10 standard token built on the TRON blockchain and is used as an incentive for the users to store files on their computer. Once the users do that, they receive a reward in the form of BTT, which essentially means that the users can earn this token for having a copy of any files such as a book or an album, on their computer.

Thanks to its features and uniqueness, BTFS has become a cornerstone for the decentralized entertainment sector. It is very popular mostly in the software and gaming industries and in sectors where large datasets are shared.

3. Siacoin (SIA)

Another interesting project in decentralized file storage is Siacoin (SIA) . Siacoin was in fact one of the first projects in this industry, being created in the year 2013 by David Vorik and Luke Champing with backing of Fenbushi Capital, Procyon Ventures or Xiaolai Li.

Siacoin is a decentralised cloud storage platform that incentivises people all around the world to capitalise on their unused hard drive space. Siacoin is aiming to build a data storage marketplace by using the idle hard drive capacities of computers all around the globe.

People who decide to join the Siacoin network by allowing others to use their computers are known as hosts. The hosts are paid in SIA token for their services. The renters, people uploading the files onto the other users, can benefit from the decentralized nature of the project as well as the marketplace, which allows for competitive offers. Typically, however, Siacoin quotes the price of about $2 per 1 TB per month for the renters.

It is important to note that once the files are uploaded onto the Siacoin platform, they are encrypted and can only be accessed by the renters, ensuring the security of the data. This is thanks to splitting and encrypting of the data once they are uploaded to the network.

It is estimated that since its inception, the users have saved over 4 Petabytes of data on the network, utilising around 1 million smart contracts. This only highlights how successful Siacoin was in creating a P2P marketplace for decentralized data and files storage.

4. Storj (STORJ)

The last project that we will look at is Storj (STORJ). Storj is an open-source, decentralized cloud storage that enables developers to build applications that are not only protected and secure, but also private. 

One of the key components of Storj is a solution called decentralized cloud storage layer (DCS). The users of this platform can upload their files to the DCS. After that, the data is encrypted and split into 80+ pieces. These are later distributed around the network to provide a diverse, distributed and safe solution.

The nodes of Storj are currently in more than 100+ countries, which allows for safe geographical distribution. This ensures that there is also no single point of failure, protecting the users from data breaches, hacks, outages or downtimes. Even if several nodes go down, the file can be reinstated from less than 30 pieces. 

The splitting process, in this case also known as sharding, which happens after the data is uploaded, ensures the safety and privacy of the data. This means that no third parties are allowed to access the information that has been uploaded onto the network. This is a rather unique approach as most of the decentralized file storing solutions are using a replication method, instead of the fragmentation.

Other competitors to consider

This subsector of cryptocurrencies is, however, packed with other solutions and new, emerging projects. If you are interested in learning more about this part of the cryptocurrency world and go beyond the most popular platforms, we suggest that you also look at projects such as Ocean Protocol (OCEAN), Bullit, Arweave (AR) or MaidSafe Coin (MAID).

As always, the fact that any industry attracts a lot of attention means not only that it has a huge growth potential, but also the fact that the individual projects will have a lot of competitors. However, since cryptocurrencies should be the flagship to the open and free market, this means that the best project, providing the best solutions to the problems of its users, should be able to make it to the top no matter the size or number of its competitors.

Conclusion

The decentralized file storing is just another subsector of cryptocurrencies that wants to solve a specific problem for two types of users. While the hosts are usually incentivised to use these solutions due to monetisation, the renters can benefit from a more distributed, safer and decentralized way to file storage. Thanks to the solution of two problems at once, it is very difficult to imagine the future without decentralized file storing projects.

 

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