Blockchain Technology 4 min, 54 sec READ

by Mike Dalton

Emerging blockchain platforms offer new ways to store and transfer files. Can these services compete with their traditional counterparts?

One of the advantages provided by blockchain technology is its ability to distribute tasks and duties across a vast network of nodes. For example, Bitcoin has each miner on its network carry out transactions and generate coins. Meanwhile, Ethereum has its nodes execute smart contracts and other code.

Despite its potential, blockchain technology has not become widely recognized for its ability to handle file transfers on a decentralized network. Indeed, blockchain technology does have plenty of potential in this area: common operations such as cloud storage, web hosting, and file sharing can all be facilitated quite efficiently by blockchain technology.

Part of the reason that blockchain technology has not been widely recognized in this area is the fact that existing file sharing/storage services are ubiquitous. Storage services like Google Drive and Dropbox provide plenty of space and offer both free client and paid enterprise solutions. Meanwhile, networks such as BitTorrent provide a decentralized file sharing platform that is already widely used.

As such, if they are to gain a footing in this space, blockchain platforms will have to go beyond data storage, transfer, and retrieval in order to differentiate themselves from traditional solutions. One of the primary ways that blockchain data services are accomplishing this is by providing users with compensation. Additionally, these services will have to provide extremely secure and reliable platforms. Here's a look at three realms related to file sharing and storage and an assessment of the likelihood that blockchain will have an increasing impact.

Cloud Storage

Some blockchain services directly challenge traditional cloud storage platforms by offering competing services. In this case, blockchain technology is used to distribute hosting responsibilities to – and compensate – nodes who provide disk space. Blockchain platforms like Storj and Sia allow anyone to rent out their hard disk space to users who need cloud storage.

This provides a few benefits over centralized cloud storage services like Google Drive. Whereas Google can access and take down user files and arbitrarily suspend services, most blockchain platforms make this impossible. Storj and Sia encrypt user data so that peer storage providers cannot view anyone’s data, and they use redundancy to ensure that user data will not be lost even if several nodes decide to stop hosting data.

This model has already gained plenty of attention, partially because Storj and Sia provide crypto tokens to users who rent out space. Renting disk space may seem to be a lucrative option in the face of ever-decreasing mining profitability. Unfortunately, the rewards on hosting platforms are unpredictable and are not very profitable for the average user. Since the economics of storage is always changing, the future of these platforms is not clear.

P2P File Sharing

Peer-to-peer (P2P) file sharing has been active for nearly two decades, and BitTorrent is the gold standard in this area. Unlike cloud storage sites, BitTorrent has been resistant to most attempts to control it. This is because BitTorrent already relies on a decentralized network: peer users upload and download data without the need for any central servers.

As such, a blockchain-based file sharing service would be only minimally different from BitTorrent in many ways. However, blockchain technology may be able to improve on P2P file sharing. Since acquiring BitTorrent, TRON has introduced plans to integrate the BitTorrent protocol with its own blockchain. TRON's upcoming Project Atlas will issue tokens to compensate users who dedicate bandwidth and seed files. Another project called Tribler similarly uses a token system to allow BitTorrent users to pay for faster download speeds.

Although blockchain could improve file sharing incentives, the limitations of P2P file sharing should be noted. As the word “sharing” might suggest, file sharing is not particularly useful for private data backups. P2P file sharing is most effective when files with mass appeal are in high demand. As a result, BitTorrent is largely used to transfer pirated media, especially recent and popular media. Although blockchain platforms that enter the file sharing realm may technically improve the system, these platforms may encounter legal issues if they are not cautious.

Web Hosting

One other area in which the blockchain could make its mark is decentralized web hosting. IPFS is a blockchain-adjacent file system that fills this niche: peer nodes host web data, and a blockchain (or more accurately, a DAG) is used to verify the authenticity of transferred data. This essentially allows regular websites and other web content to be uploaded to a decentralized network and accessed in any standard web browser.

Like cloud storage systems, IPFS provides secure hosting and file access. It allows files to have permissions: although websites can be accessed by the public, some web files are not public. IPFS is also like BitTorrent in that it does not necessarily aim for persistent hosting, meaning that users may have to organize their own networks if they want their data hosting to last.

However, this lack of persistence may change thanks to FileCoin, a blockchain-based incentive layer for IPFS. FileCoin will introduce a market for data hosting and will incentivize IPFS hosts. IPFS has already been successfully used to host popular dApps, block explorers, and messaging systems, and FileCoin’s compensation model will likely promote further use of the IPFS protocol.

Conclusion

File management on the blockchain may involve many different approaches. One unifying feature is the need for each platform to provide a compensation model that successfully attracts and incentivizes hosts. Additionally, compensation alone may not be enough: blockchain services must also offer secure and effective hosting.

However, blockchain file services may need to fill a niche. The systems listed above occupy just a few possible roles: other approaches involve Casper's dApp data storage system and IBM's enterprise-level file transfer system.