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What is Decentralized Storage?

What is Decentralized Storage? Roof of Crypto Data

What is Decentralized Storage? Why is this considered an inevitable part of DeFi but still not receiving much attention? Find out now!

In this article, we will learn what Decentralized Storage is, how they work, the benefits they bring, current outstanding projects as well as investment projections.

What is Decentralized Storage?

Decentralized Storage is a system where each component is responsible for storing part of the data, these components work together and form a decentralized storage network.

Previously, when it came to data storage, we had the following ways:

  • Physical hard drives: Think of the HDDs and SSDs used to store data (videos, documents, music, …) in your computer, or the USBs that you use to carry data goes daily.
  • Centralized cloud storage: Data is hosted on a server and operated by one person or organization (Google Drive, AWS,…).

However, the above forms have limitations and Decentralized Storage or (decentralized storage) was created with the aim of improving the current data storage.

Current Situation of Decentralized Storage

I still vividly remember the Google Drive shutdown a few months ago, at that time users could not access it for a few hours and indeed at that time I was quite panicking.

Why is Decentralized Storage necessary?

Decentralized Storage is a necessity for both Crypto and Non-Crypto branches, some of the main reasons can be mentioned as:

The growing weight of decentralization

According to Cloudwards, currently, nearly 94% of businesses and organizations use Centralized storage services, of which AWS (Amazon Web Services) holds 31% of the market share, Microsoft Azure is 20% and Google Cloud is 7%.

The fact that power is mostly in the hands of technology giants has made them move beyond power and affect user rights.

Big names in the world (Facebook, google, …) have been accused of leaking user information in recent years.

It seems that “personal” data is not really as personal as we think. In addition, customers are also paying increasing storage fees, non-improved line speeds, and related issues.

Cloud computing and numbers – Source: Cloudwards.net

Centralized Storage is essentially servers located centrally in a few places, so when we depend on this service, there are many possibilities for data to be attacked, affected by natural disasters or incidents that make people vulnerable.

User cannot access like my example above.

Crypto is attracting more and more value

The amount of assets that Crypto is attracting is growing very fast, which means that on-chain data is becoming more and more valuable, and data storage is also increasingly interested.

The best example of this is the case of Solana and Arweave.
In December 2020 Solana developed a SOLAR bridge that allows data to be transferred from Solana to storage in Arweave and also to query data back from Arweave to Solana.
Since then, the charts of both tokens are almost identical.

Evidence for the important role of data in general and data storage in particular of Crypto.

The fact that DeFi (Decentralized Finance) is growing and attracting more values shows the real needs of users, and at the same time the Decentralized factor will definitely be put on top to meet that need.

Operation model of Decentralized Storage

Similar to a blockchain, Decentralized Storage is a network of many nodes, each of which plays a role in securing and storing data with the following operating model.

Store files on Decentralized Storage

File storage mechanism on Decentralized Storage

Steps to store files on Decentralized Storage:

(1) Upload: User uploads data to the network.

(2) Encryption: Data is automatically encrypted, only you and your authorized person can access the data.

(3) Splitting: When data is encrypted, they are broken down into several parts.

(4) Distribution: Each part will be stored in different nodes. Users will no longer need to trust the host because the host itself only holds a small part of the encrypted data, thereby greatly increasing security.

In addition, users won’t have to worry about network outages affecting data and access, which often happens in centralized storage networks.

Get files from Decentralized Storage

Steps to receive files from Decentralized Storage

Steps to receive files from Decentralized Storage:

(1) Collecting data: The pieces of data are gathered, note that for example data divided into 100 parts does not mean that we have 100 different parts, maybe only 20 different parts are left. duplicates and randomly distributed on the network (similar to exam paper mixing).

Therefore, when collecting data, only 20/100 parts are concatenated, then we have a complete file.

(2) Decrypt the file: The file is decrypted.

(3) Download files: This process is similar to downloading files from Google Drive, AWS,…

Looking at this model, we can see that the security and decentralization is very high, users will no longer need to trust the service provider and will no longer have to worry about data theft by bad guys as well as having to suffer from other threats.

The “break of the breaker” makes us unable to access the data.

Compare Decentralized Storage with Centralized Storage

Below are the advantages of Decentralized Storage compared to Centralized Storage as well as their limitations.


1. Confidentiality

With Centralized Storage, data is stored in centralized servers, which makes the database a good prey for attackers and is susceptible to the impact of natural disasters in general.

As for Decentralized Storage, data is distributed and stored at many nodes on the network, thereby creating a first layer of security, this data is divided and encrypted, thus adding an extra layer of security for Decentralized Storage. data.

2. Efficiency

With Centralized Storage, data is stored centrally in fixed servers, to store that growing amount of data requires a powerful server with large storage capacity. This also causes traffic to be congested at times due to too many visitors.

With Decentralized Storage, the data is divided and stored in many nodes will help reduce costs and increase storage capacity because one machine now carries less data.

Conditions for hardware and storage memory have since also been reduced, allowing more parties to participate.

Users consume data from multiple nodes, greatly reducing network congestion.

Since each node will set its own storage price, thus creating a competitive market and users will directly benefit from competing nodes’ storage prices.


Although there are many advantages, but currently Decentralized Storage is still in the early stages of development and has many limitations such as:

  • Technology: Although the purpose of Decentralized storage is to allow anyone to be a node, currently to be a node for a Decentralized Storage project is quite complicated and requires users to have a certain technical knowledge. art.
  • Safety: Although there are currently no reports of a major attack on Decentralized Storage, but because it is still at a new stage, it will take more time to prove.
  • Fee: In fact, at the present time, the storage fee of Centralized Storage is very low compared to Decentralized Storage. This is because the number of participating nodes is small and the operating model of each hosting network is not the same.

Amazon web service charges a monthly fee and additional fees for tasks – Details here.

Arweave Charges Once To Store Forever – Details Here

In summary, at the present time, the really outstanding advantage of decentralized storage lies only in security and will need to improve a lot in terms of costs and related technology.

Potential of Decentralized Storage

Traditional market

According to Fortune Business Insights, at the moment, the traditional cloud storage market is worth more than 70 billion dollars, with an average growth rate of about 26.2%, the market will have a price. over a hundred billion dollars in just the next two years.

Therefore, this is a very potential market for the Decentralized Storage array.

However, what makes Decentralized Storage potential lies not only in the traditional market but also in Crypto with “Decentralized” at the forefront.

Crypto Market

Taking the example of Ethereum, Ethereum itself can also be considered as a Decentralized Storage system, data is put on blocks then validated and put on the chain.

However, this is not what Etherem is designed to do, at the moment the Ethereum network is storing data in the range of 500GB – 1TB, and each node has to store all this data.

If the Ethereum network continues to expand at its current rate and store a lot of data (about 5TBs, for example), the network will prevent a large number of nodes from functioning.

At the same time, the cost to upload that pile of data to Ethereum is very expensive.

There has been a calculation for the cost to store 1GB of data on Ethereum (in gwei case 100).

And guess what that number will be? Over 60,000 ETH. That’s right, you are not mistaken, 60,000 ETH to store 1GB of data on Ethereum (About $210 million at today’s exchange rate).

Currently, Crypto data (DeFi, NFT, …) is still mostly saved off-chain, so in order to come to Decentralization, I believe there will be a transfer of Crypto data to Decentralized Storage networks in one near future.

At the present time, Decentralized Storage networks have also begun to thrive. Below is an example of an ecosystem of projects using Arweave’s hosting solution.

There are different groups of customers using Arweave – Source: The Block

Featured projects

With the potential that Decentralized Cloud Storage brings, a few names have pioneered the development of their own platforms.

Here are a few prominent names among the many projects participating in the above field:


The leading project in the current storage array is Filecoin (FIL). Filecoin is known as one of the first names in storage and is most prominent thanks to the application of the open source distribution protocol (IPFS).

I have tried to experience the storage apps built on Filecoin, there are apps that have to be recognized that give a great experience, uploading and downloading files is very fast, just like using Google Drive. 

Chainsafe, an app built on Filecoin with a simple interface and free 20GB storage


Arweave (AR) is an information storage project that uses the Proof of Access consensus algorithm to create the world’s first permanent data store. In other words, Arweave allows users to pay a one-time upload fee to permanently store data.

Arweave rose to prominence recently thanks to its partnership with Solana, which allows projects to store data through the Solar Bridge. Considering the role of users, applications like Ardirve give us the feeling of using quite simply similar to today’s cloud storage applications.

However, the disadvantage of Arweave currently is that the cost is quite expensive and is increasing due to the increase in the price of AR tokens.


Storj is a project focused on the Cloud Storage array, Storj for a good storage experience from a user perspective. The STORJ token is used to pay hosts that share storage.


One of the other top names is Sia. Originating from the 2013 Hackathon HackMIT, over the years Sia continued to grow with the goal of becoming the “backbone of Internet storage”.

With a very cheap price and large storage space and friendly user experience, this is a project that is well worth your attention.

Try Sia-UI at: https://sia.tech/


Similar to Filecoin, Maidsafe ensures that all files uploaded to their SAFE network are fully encrypted. Moreover, the files will not be stored on any server that prevents third parties from accessing your data.


Similar to Storj, Swarm is also focused on developing a decentralized data storage platform based on the web3 Ethereum.

Similar to other Decentralized Storage competitors, Swarm fully believes in a decentralized future and is building several base layer services for web3 to support that goal.

See more: Understanding Web3 – Internet controlled by users

Projecting investment opportunities with Decentralized Storage

In terms of products, I can say that Decentralized Storage for a product experience is not inferior to today’s cloud storage projects.

The storage fees are quite diverse, there are free projects and paid projects, but they are still expensive. very suitable for you to store personal data.

However, from an investor’s perspective, we will need to look at other angles to evaluate whether that storage project has potential, here are a few thoughts and observations from this angle. :

Grow and slowly attract traditional users

This is not something that Decentralized Storage can do overnight. Currently, the projects in the Storage segment are all too strong with low cost and good service quality.

However, with rising costs and concerns about data leakage today, we can completely hope for a shift in users.

As games become more attractive when the element of earn is added, it is possible that projects will have some incentive to attract users to use their products in the future.

Expansion of the on-chain ecosystem

This is the scenario that I find more appropriate and has been successfully tested with the Filecoin and Arweave cases.

Instead of trying to compete with the big players to attract traditional users.

Decentralized Storage projects can integrate directly with the projects of other blockchains, which will store their data.

without having to depend on centralized servers.

Did you know games like Axie Infinity store data mostly in centralized servers?

You may have unique NFTs, but if that server goes down, what’s displayed on your screen will just be a pure white image and your NFTs can suddenly disappear. momentarily becomes worthless.

Team Axie Infinity mentioned gradually moving data to Decentralized Storage in the near future.

This is an inevitable shift, because what does it mean when we move towards Decentralized that data can be easily controlled by centralized parties!

The example below is an image of the Filecoin ecosystem, above I also shared the Arweave ecosystem.

Projects are gradually moving towards the trend of decentralized storage, and the expansion of storage projects is happening very quickly.

Factors to evaluate a successful project

Understanding the development status of the project will greatly strengthen your investment decision.

Below are a few important evaluation criteria that I think you need to grasp when evaluating a storage project.

  • The growth rate of data stored on the network: This is the most basic criterion by which we evaluate a storage network, and should be given top priority.

Amount of data stored on Filecoin – Details here

Amount of data stored on Siacoin – Details here

  • The number of partners using the network’s storage solution: With the trend of shifting to storage on Decentralized Storage, this is an important criterion for us to evaluate the growth and expansion of the project. How many partners? Are there important partners? Imagine one day, a leading project like Axie uses someone’s Decentralized Storage solution, this will definitely be an explosion and create a trend for storage on decentralized networks.
  • Tokenomics: No matter how good the product is, remember we invest in tokens, not projects, tokens must have the effect of bringing value to holders. You can refer to Coin98’s tokenomics article to better understand the most important criterion in Crypto investment.

Learn: What is Tokenomics? A face-up game with a market maker


The Decentralized Storage array can be considered something that everyone needs, or will need, but has not really received much attention, and it is highly likely that we will see a shift to storage on Decentralized Storage in the near future.

Future is not far away especially with Crypto projects. Here is a summary of the three main points in the article:

  • Storage has the potential to grow both inside and outside of Crypto.
  • Storage is an important part for Crypto to truly Decentralized and the trend of transferring data to Decentralized Storage is happening.
  • There is a very fast development speed, but Decentralized Storage has many limitations compared to Centralized Storage and the transition will take place gradually, but cannot be completed overnight.

If you have any other questions or comments, please comment below to discuss with idolmeta.net!


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