Why Store Tokens are the Future of Tokenized Data & Data Storage

Tokenized Data

The dynamic world of digital storage, like store tokens, has been undergoing a rapid revolution for some time, further accelerated by the emergence of Amazon S3 and similar services. More businesses than ever before are migrating from local storage to global online storage, in order to take full advantage of “going to the clouds” and offloading on-site data storage requirements.

To date, all major online storage services have been provided by a handful of major international corporations, operating huge centralized data centers in countries around the world. But when looking to the future of data storage, all indications point to decentralized storage networks – aka peer-to-peer (P2P) cooperative storage – becoming the next big thing.

Several major decentralized storage protocols (IPFS/Filecoin, Sia, Storj, Arweave, DeNet etc.) have already made their marks on the scene, spurring the move away from reliance on intermediaries.

In the same way that cryptocurrency could one day replace conventional banking systems, decentralized storage protocols replace conventional cloud systems with extensive P2P storage and data transfer networks.

What is Decentralized Storage?

A decentralized storage protocol works by encrypting an entire file and breaking down the data into smaller pieces, which are then distributed to several different computers (aka nodes) spanning the network. This is a process known as ‘sharding’, and can offer a level of privacy and anonymity that goes far beyond anything a conventional centralized network is capable of.

Through the process of sharding, even those who own and operate nodes within the network are unable to read or retrieve entire files, as just a few tiny encrypted pieces of the file are stored on their hardware. It is only the individual with the private encryption key who can retrieve and decrypt the file in full.

Whereas a centralized server is owned by a single organizational company, nodes in a decentralized storage protocol are hosted by different people.  Anyone wishing to do so can participate, offering up a proportion of their storage space and bandwidth to other users. Tokens are used to incentivize people to take part, which can be used to purchase goods and services within the store or platform that issued them, often with discounts or special promotions.

What Are the Advantages of Decentralized Storage?

The appeal of decentralized storage as an alternative to conventional centralized systems lies primarily in the following:

  • The sharding process makes it practically impossible for anyone other than the holder of the private encryption key to access files distributed across multiple modes.
  • Decentralized storage is highly resilient to cyber-attacks such as Ransomware, Denial-of-Service (DoS), and data breaches.
  • Ownership of the data remains with the user at all times, with no reliance on intermediaries.
  • Potential for lower storage costs compared to conventional cloud storage, complete with the possibility of limitless scalability.
  • The distribution of broken-down encrypted files across multiple nodes avoids network bottlenecks, provides faster download speeds, and eliminates a single point of failure.

In addition to the above, decentralized storage protocols uphold the key principles of Web3, regarding transparency and the avoidance of reliance on centralized service providers.

Specifically, decentralized storage protocols support the spirit of Web3 in the following ways:

  1. Resistance to censorship – Decentralization ensures that no single entity has the capacity to remove or censor content, as the network architecture does not lock data to a single provider.
  2. Enhanced Resilience – Data safety and integrity our enhanced with an open market approach, providing greater protection from potential attacks, loss, or corruption than centralized cloud storage.
  3. Lower Cost – Open-market competition can and should pave the way for lower prices, and more cost-effective storage solutions for individuals and businesses alike.

Enormous Market Potential

Projected values for the total addressable market of decentralized storage vary wildly from one analyst to the next, but some studies indicate that the TAM for public cloud computing could hit a staggering $10 trillion. Even the more conservative estimates come in at around the $2 trillion mark, suggesting the consensus points to enormous market potential.

Interest in blockchain-enabled decentralized storage has been growing rapidly since early 2021, coinciding with interest in Web3 and the rapid expansion of the commercial NFT market. Increasingly, developers are exploring new and innovative ways to reduce their reliance on centralized servers and services for processing and storing data.

Blockchain-enabled cooperative storage clouds have also the potential to be technologically advantageous over today’s conventional centralized networks.  Some early examples of these protocols are already demonstrating what’s possible – Filecoin being perhaps the most standout example right now. 

Ultimately, all decentralized storage protocols aim to achieve the same two basic goals as any other data storage service:

  • Availability of data – ensuring that the data stored can be accessed and retrieved reliably, quickly, and as conveniently as possible.

Integrity of data – safeguarding the consistency and accuracy of data stored for its entire lifespan.