Cloud Data Storage With Blockchain: A Bright Future for Data Security Online?
The global market size of cloud services is expected to grow almost three times from USD 30,7 bln in 2017 up to USD 88,9 bln in 2022. Businesses of various sizes are significant consumers in this market, as they value the mobility, efficiency, relatively low costs and high reliability of cloud data storage and related services. Individual users are becoming increasingly interested in using cloud as their main data storage too, as it offers higher security, is user friendly and reliable.
North American clients remain the largest consumers of cloud data storage services, as enterprises there are rapidly implementing highly developed digital business strategies. The Asia-Pacific region is currently lagging behind, but promises to be the fastest growing market for cloud data storage providers in the coming years. As the Asia-Pacific region grows economically and technically, China and India in particular will experience large-scale computerization of their industries. Additionally, recently amended data sovereignty laws in Russia and China, which require companies to store the users’ personal data within the geographical borders of the country, create additional opportunities for cloud service providers. While large-scale companies can afford to move their servers to these countries, smaller businesses will continue to use cloud storage services.
Existing cloud storage options have a lot of advantages, but they remain quite expensive: the most popular option, Apple Cloud, charges private users up to USD 10 per month for content storage. Blockchain technologies provide vast opportunities in this industry, as they significantly reduce costs for data storage on top of providing an additional level of data security due to its decentralized nature. Also, blockchain makes it possible to circumvent data localization laws in certain countries, and makes international businesses more flexible and mobile.
Storj: a successful start-up and market leader, aiming to disrupt the world of centralized data storage
Storj was initially launched in 2014, based on a smart-contract platform primarily for financial applications. The project has gone through two rounds of crowdfunding campaigns, the most recent of which was a token sale of a STORJ token, based on Ethereum, which was conducted last year and attracted USD 30 mln of investment in a week. STORJ tokens are an internal currency on the operating platform, which can be exchanged for storage space in a decentralized cloud solution. At the moment, the project’s market cap is USD 162 mln.
Storj offers a well-established solution for data storage, based on an open source, peer-to-peer decentralized platform. The core of the platform is a community of its users or so-called “farmers” who serve as nodes, which provide data storage and bandwidth to the system. By using a decentralized data storage system, Storj addresses major problems of the currently existing cloud servers, namely the risk of data loss as a result of hacking, a network-wide downtime or a power failure of a centralized system.
Users’ files go through an encryption process once they are uploaded to the platform. The decentralized principle of data storage means that files are broken down into equal sized pieces and are stored within the data owner’s network of nodes. The information about the location of the nodes is stored on a server outside Storj’s blockchain. When its owner wants to retrieve a file from the system, a special node and owner identification scheme is applied, which de-encrypts and reassembles the data uploaded to platform.
At the moment, the project has successfully attracted over 25,000 users and about 18,000 “farmers”. Overall, Storj provides a total of 8 petabytes of storage space and is remarkable for it’s longevity – about four years on the market – due to a talented team of developers, who are regarded as blockchain and ICO industry experts.
Advantages: an established, decentralized solution with a great track record.
Disadvantages: Ethereum based payments are energy consuming.
Sia: a stable cloud storage platform with steady growth in market cap and in the price of its token
Sia was launched in 2015 and has been experiencing stable growth since then. The basis of its operations allows anyone to operate as a small-scale data center, by renting out free space on their hard drive. Sia provides cryptographic security of data and redundancy for reliable storage. Sia’s competitive advantage is also its low price for data storage: it costs USD 2 per month to store one terabyte of data on the platform. For comparison Google’s data storage services cost USD 5 a month, Apple’s cost USD 22 a month, and Amazon’s cost USD 3 a month for that much data.
Sia runs its on blockchain and relies on full decentralization. This is a significant difference from Strorj, which relies on Ethereum. The project did not run an open token sale. Instead, Sia attracted funding from private investors: Fenbushi Capital, a famous Chinese venture fund focused on blockchain projects; Procyon Venture, another investment fund of Chinese origin that specializes in tech start-ups; Raptor Group, a private equity investor based in the US; and Li Xiaolai, a prominent Bitcoin investor from China and the founder of BitFund, one of the most influential venture capital funds in China.
The low price for storage offered by Sia is the biggest advantage of this particular project. It is possible due to their fully decentralized, peer-to-peer structure of data storage. Data owners and data storage hosts engage in relationships based on smart contracts. Payments are conducted in SIACOINS, the project’s internal cryptocurrency, while blockchain serves to hold deposits: if a storage host meets the proof of storage requirement, then compensation is provided immediately; if not happen, then coins are returned to the data owner. Sia developers do not need to bear the costs of a centralized server and are able to maintain low price for data storage.
Overall, within Sia’s structure anyone can act as a data center if they have enough hard drive space. Smart contracts and proof-of-work protocols ensure the reliability of data providers, as they lose money if they are unable to provide required storage space.
Advantages: complete decentralization, reliable pool of investors.
Disadvantages: not enough attention paid to data security issues, risks of system failure.
Casper: a peer-to-peer storage ecosystem for the development of decentralized applications
Casper is primarily focused on big data storage for decentralized applications (DApps). The project’s whitepaper states that in 2017 alone over a 1000 DApps were developed, and this trend will continue to grow in the years to come. Casper’s developers claim that the existing data storage solutions based on blockchain are “expensive and cumbersome” and do not fit this “new, decentralized market segment”.
The project has a specifically designed platform, Casper API, which provides infrastructure for DApp data storage. Casper API, according to its developers, can compete with any blockchain-based platforms. The unique feature of Casper API is that it allows for data to be received from different blockchain platforms simultaneously. Due to its decentralized and peer-to-peer structure, Casper API provides increased resistance to DDoS attacks, which is crucial for business data storage. Moreover, the project offers backup storage possibilities by partnering with actual data-centers.
The project’s cross-chain solution allows new DApps to be created on the basis of it and its encryption method is based on zk-SNARK, which is used in Zcash, a well-known cryptocurrency with increased security and privacy. Casper’s use of the Content Delivery Network principle provides websites with stability even under the pressure of high user loads and allows clients to choose a provider network in a specific region.
Even though the project targets at a specific market-niche, it still remains quite small and it is hard to evaluate the scale of interest Casper will receive. The platform may still be attractive to standard users, but here Casper has many competitors with lower costs and more advanced technological solutions. The project’s ICO launches on June 30th, with a soft cap of USD 6.7 mln and a hard cap of USD 31.8 mln.
Advantages: provides a specialized solution for DApps’ developers.
Disadvantages: niche and unpredictable market, with questionable market positioning; not enough attention paid to data security issues.
FileCoin: a data storage provider and marketplace with blockchain
FileCoin was launched in 2014 by Protocol Labs, a California R&D lab specializing in network protocols and software systems. Protocol Labs developed the InterPlanetary File System (IPFS), which aims to challenge the existing Hypertext Transfer Protocol (HTTP) and underpins the FileCoin data storage platform. FileCoin’s ICO was conducted in 2017 in first-ever, regulated token sale: only verified investment funds, banks and wealthy individuals were allowed to participate in the token sale. The ICO strategy proved to be successful as FileCoin managed to attract a record high investment of USD 257 mln, making it the largest ICO of 2017.
The project uses a proof-of-storage protocol, which consists of proof-of-replication and proof-of-space-time, in order to ensure that the data hosts really store the amount of data promised in a smart contract. FileCoin is based on very “democratic” principles: any user, regardless of the volume of storage space they are willing to offer, can become a FileCoin miner and influence the price of tokens through the hard drive capacity they provide. The price, according to the marketplace set up by FileCoin’s developers, should be determined by the amount of available hard drive space and the physical proximity of the miner to the data owner. After a data storage request on the FileCoin exchange is made, storage hosts make offers to the data owner, and the bid with the lowest price wins. Thus, a marketplace is created, which is a unique aspect of the FileCoin project.
FileCoin’s most important feature is that it transforms the traditional market of data storage services. The truly open source nature of the project allows developing countries to reach higher levels of information access speed. Local FileCoin miners can create small-scale storage provider networks, which can benefit local economies instead of international players.
Advantages: well-developed, decentralized data storage architecture; a “democratic” nature of the token pricing system.
Disadvantages: not enough attention to data security issues, risks of system failure.
Cloudwith.me: Amazon and Google’s partner in promoting cloud services for businesses
Launched in 2016, Cloudwith.me soon became an important partner for Amazon Web Solutions (AWS), a famous cloud-computing platform offering a large variety of services; Google Cloud Hosting; and Azure Hosting, which is developed by Microsoft. The project aims to be a gateway for already established, traditional cloud services.
The service simplifies the process of upgrading a business’ infrastructure to fit AWS, Google or Azure standards. It claims to make it easier for enterprises to transition to cloud data storage with no tech expertise required. Cloudwith.me’s developers claim that this is the first stage of the project, which according to its whitepaper plans to create “a globally decentralized cloud hosting grid, allowing cloud-based applications to automatically scale across millions of cloud service providers who are in fact individuals contributing small portions of their redundant home/office computer resources”.
However, it is not clear what customer value the project is providing in its initial phase. For now, it is simply a setup platform for existing cloud networks with a slightly friendlier interface. The project’s team understands that this is not enough to compete in the world of decentralized data storage networks and aspires to develop another kind of blockchain-based service.
Having already a developed client base, the project’s team plans to create a Crowd Cloud – a decentralized, cloud storage system, and to offer its clients the advantages of a peer-to-peer blockchain-based network. However, it is unclear how the project is going to compete with similar systems and convince customers who already use Amazon, Google or Microsoft’s services to transfer to their system.
Advantages: partnerships with leading cloud market providers, developed client base.
Disadvantages: unclear value to client in the initial phase and marketing strategy.
IDM: a data storage platform aimed at providing the highest levels of data security
IDM developers argue that any existing data storage service in the world can be hacked or experience data leaks. The project’s developers envisage developments in the IT sphere and regard quantum computers to be the main threat to data security in the coming years. IDM claims that it can provide a level of data protection that was previously available only to governmental agencies and related entities.
A key advantage of IDM is its data protection algorithm, SIZE, which is different from traditional encryption that can be cracked. The service applies error-correcting codes as data modification to the algorithm, which results in packages of completely transformed data. To retrieve the original information, the data owner uses a particular metafile that describes how to assemble and restore the source. In this way IDM provides a higher level of data protection.
IDM has distributed data storage, which provides data resilience. Therefore, IDM cannot experience total data loss due to system failure. SIZE allows for data to be restored from the remaining pieces of information that are left. The project’s developers claim that with even 2% of the stored information, it will be possible to recover 98% what was lost for whatever reason. It is also important to note that the platform’s developers will not have any access to the information stored in the nodes of its system.
The SIZE algorithm is the main security guarantor of IDM’s ecosystem. Blockchain capabilities are not fully utilized as their role at the moment is reduced to a payment mechanism. In the future, it may become a complement to the existing security advantages of IDM.
Advantages: high level of data security with a uniquely developed data protection algorithm.
Disadvantages: blockchain is not fully utilized.
SONM: a global decentralized platform for big data calculations and scientific research based on computing
SONM is an acronym for “Supercomputer Organized by Network Mining”, which represents the whole idea of this project. SONM’s developers are working to create a global decentralized network for any kind of calculating system. The idea is to make it possible for any user to lease unused hard drive space for decentralized website hosting and complex scientific calculations.
Instead of a cloud system, SONM uses fog computing or “fogging” to carry out faster calculations, data processing analysis and storage. The main difference from cloud computing is that some processes within the network are managed outside of it by a device that has input and output to the physical world, while the rest of the network functions happen with the common cloud system. In other words, fog computing systems bridge cloud infrastructure and traditional hardware architecture.
SONM’s target consumers are scientific researchers who work with large amounts of statistical data that require fast calculations and data analysis. Also, SONM will provide a convenient environment for website hosting and gaming server placement within its ecosystem.
During its ICO in 2017, SONM attracted the hard cap of USD 42 mln in a record short period of time. It has already launched an alpha version of the service and is actively expanding the project’s team at the moment. But while the project’s team emphasizes the importance of fast data analysis, they do not cover issues of data security enough, which would be crucial for their potential consumers who deal with large amount of important information.
Advantages: developed rapid data analysis algorithms.
Disadvantages: not enough attention paid to data security issues.