Decentralised Storage: An Introduction and How-To

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Decentralised Storage: An Introduction and How-To

Data is rapidly becoming one of the world's most valuable commodities. It is estimated that by 2025 we will produce north of 463 exabytes of data per day; this is the equivalent of 497,142,464,512 gigabytes. While all this data may not be important, a significant part of it will be, and finding a way to sustainably and securely store it becomes paramount. 

Our data storage solutions are currently monopolised by a select handful of service providers such as Google Could Platform, Amazon Web Services, Microsoft Azure, IBM Cloud, Oracle Cloud, and Alibaba Cloud. While these tech giants have done a tremendous job at lowing the costs around data storage and enabling the current web we have today, they still leave a lot to be desired. They centralise data, creating a single point of failure; from hacks to government interference, the data stored can be obtained by outsiders. We also have no absolute certainty that our data is stored in a way that strangers cannot view it; we just have to trust that the data is encrypted. While there are other problems associated with these networks, we will instead focus on what these new decentralised alternatives can offer. 

Decentralised data storage is going to become a significant part of the Web3 stack. If an application is to be genuinely decentralised, it will need to store the data necessary to operate in a distributed, secure and fault-tolerant way. Blockchains such as Ethereum excel at storing or replicating small amounts of data on millions of computers across the globe; however, storing vast amounts of data on-chain can very quickly become prohibitively expensive. Instead, we can leverage other decentralised, immutable storage solutions to store only the necessary data needed. 

Firstly though, where does the storage capacity come from? Well, it comes from you and me. Almost all of us have some spare storage space between our laptops, PCs or even smartphones. Using blockchain technology and these decentralised protocols, we can now actually rent out this extra space to other people, earning a passive income while doing so. 

As one can imagine, storing data and coordinating it between thousands of distributed computers across the globe is no easy feat. There have been different approaches taken by projects in the space to solve this problem. All use their own unique type of blockchain that all come with their own unique tradeoffs. However, two general approaches have been adopted: a demand and supply type model such as Sia or Filecoin (they keep the data as long as you are willing to pay for it to be stored) and a long-term or permanent solution such as Arweave (a little more complicated and involves using more complex economic incentives to ensure the data is stored forever). 

These decentralised storage networks, while building out rapidly, can still be considered in their infancy. The ability to use them to their full potential as an everyday person with no coding background is still somewhat limited. However, developer tooling is expanding, and more projects and applications are integrating them into their own network. Most of the time, we won't realise we are even using them. And just how we have seen projects like MetaMask abstract away the complexities associated with using the Ethereum network, we will see projects emerge that make it easier to use decentralised storage solutions, both centralised and decentralised. 

Decentralised projects like Filecoin and Sia have created hosting platforms in IPFS and Skynet, respectively. These platforms and their user interfaces can help people interact with their network and store data. We have also seen centralised companies like ChainSafe or Filebase emerge that focus on a specific project or can bundle several different protocols together at once. In this instance, one must bear in mind that even though the underlying technology is still permissionless and more robust than existing data storage solutions today, you still introduce another layer of trust within the process. 

In the How-To guide today, we are going to use Sia's Skynet, so let's dive in:

  • On a web browser, go to the following link:

You will land on the following page

  • Click Sign Up in the top right

You will now be prompted to set up an account

  • Create your account using a secure password that you won't forget

  • Click Sign Up

You will now be redirected to your dashboard

Here, you can view what you have uploaded, downloaded or even upgrade your account to a paid version to access additional storage space. They have a free option (up to 100GB) to incentivise people to come and use the network, however, bear in mind that because the people hosting your file are not being paid, they could stop storing the data at any moment, and it can be lost. For more details on exactly how Skynet stores the data and for how long, see their FAQ here.

  • Click Upload files toward the top of the page

You will end up back on the page you started on, scroll down until you see the following

  • Drag and drop your file or click the + button and manually select the file you want to upload

The upload should begin automatically; once uploaded, it should look something like this:

Congratulations! You have officially uploaded your first file to the decentralised web. 

You can now go back to your dashboard to view all your files.

As an example, we have uploaded the Etherbridge Fund's latest fact sheet to Skynet and here is the link:

*Please remember that the solution we have used today is one of the most simple and doesn't have any encryption. Therefore, anyone with the link can access the file you have stored, so please don't use Skynet to store any personal information. 

Decentralised storage projects still have a long way to go when it comes to challenging today's incumbents. However, these networks are rapidly innovating and finding solutions to the problems that currently exist. We are entering a world where not only can your digital resources work for you, but they can work for others as well — a truly free global market for digital resources. 

Notable Articles and News Stories This Week:

Wells Fargo and JP Morgan Launch Passive Bitcoin Funds for Wealthy Clients

On Thursday, both Wells Fargo and JP Morgan registered their own private bitcoin funds with the SEC. NYDIG and FS Investments are partnering with Wells Fargo on the offering, according to regulatory documents; the pair have worked together on bitcoin funds before. JP Morgan has also partnered with NYDIG to launch its new bitcoin fund. 

Read the full article here

Blackrock Has Almost $400M Invested in Bitcoin Mining Stocks

Blackrock, the world's largest asset manager, had nearly $400 million invested in bitcoin mining companies at the end of the second quarter, filings with the U.S. Securities and Exchange Commission (SEC) have shown. The SEC filings dated June 30 show Blackrock with stakes of 6.71% in Marathon Digital Holdings and 6.61% in Riot Blockchain, Forbes reported Thursday.

Read the full story here

Custody Firm Anchorage Launches Governance Voting With DeFi Giant Aave

Regulated cryptocurrency custody firm Anchorage is offering blockchain governance voting services, starting with decentralised finance (DeFi) major Aave. Institutions and token holders can use Anchorage's governance portal to participate in on-chain governance decisions critical to the Aave lending protocol. The system uses a separate voting key so that digital assets can remain safely in storage, the companies said Thursday. Moving cryptocurrencies, especially from "cold" or offline storage to online "hot" wallets, creates risk. Bringing offline digital assets on-chain in order to vote has been viewed as cumbersome and risky by many institutions holding governance tokens, despite the growing desire to participate in changes to a protocol, such as setting risk parameters, proposing upgrades and the like. 

Read more about Anchorage's announcement here

Whilst we all have the option to look, to seek to understand, it’s often easier not to. Bitcoin, Ethereum and distributed ledger technology are complex systems that require significant due diligence. At Etherbridge, we aim to lower the barriers to understanding this fast-growing digital economy.

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This is not financial advice. All opinions expressed here are our own. We encourage investors to do their own research before making any investments.