How will the decentralized storage market grow?

Google, Amazon, Apple, DropBox, FileCoin, Sia, Storj, DeNet divide the storage market among themselves, describe the history and enter the competitive race of decentralized services.

We also answer the question why an independent file storage created on the blockchain has no economic feasibility. And why is DeNet different?

• What problems has the distributed storage market created?
• Which companies are the market leaders?
• What are the competitive differences between market leaders?
• Why will the storage market continue to grow?
• What problems does each player in the decentralized market face?

The idea of ​​decentralized storage has been on the surface for a long time, but it began rather not with a way of storing, but a way of gaining access to content, heavy content.

July 2, 2001 — the BitTorrent Protocol was introduced on this day!

Main problem at the time was high cost of maintaining the server, which could provide access to thousands of users simultaneously for one file or a whole data archive. Torrent itself is a protocol, the protocols are not directly monetized and do not create a monetary economy. Torrent network’s nodes run on a “downloaded yourself, let download someone else” benefit principle.

But Torrent is, probably, not the first invention of a way to deliver content in a cost-efficient way. Torrent is a kind of limited, but at the same time safe, from the point of view of data spoofing protection by default, CDN.

End 1990 — when the term CDN (Content delivery network) was coined — thanks to this approach, YouTube videos can be downloaded by thousands of users without any delay. Unlike torrent, CDN nodes are run by private companies, which in turn, either directly or indirectly, monetize content.

Direct monetization of Torrent / CDN

Both approaches solve one problem — a way to deliver data to the end user, one does it as a shareware, the other is supported through the commercialization of content.

Definitely, projects such as Wikipedia also use CDNs, and do not commercialize content, but keep in mind that they still pay for its support — those who donate money to Wikipedia every year. You might think that many people on YouTube pay nothing, but YouTube itself pays for CDN services.

In fact, for a long time now, nothing gets into Torrent for free, often commercial “hacked” programs / games are equipped with viruses, movies leaked into the network are filled with ads — also paid. It is more complicated with music, since absolutely any user can already download it. Despite the fact that torrent seems like a free way to download data, it is still paid for, both by the one who distributes and the users who download — it’s just a payment for your Internet, even if it is unlimited.

From the first days of Internet existence, there was a need to store / transfer data having access to the network.

Timeline for the emergence of major storage companies

• 1983 — CompuServe began solving the problem of storing data in the cloud by providing an opportunity to upload files / documents to a server.
• 1994 — PersonaLink Services from AT&T — an online platform for personal and business communication and entrepreneurship.
• 2005 — MegaUpload entered the market
• 2006 — Amazon AWS S3 launched
• 2007 — OneDrive market launch
• 2008 — DropBox market entry
• 2011 — iCloud, Amazon Drive entered the market
• 2012 — Google Drive, Yandex Disk
• 2013 — Mega

These products can be called decentralized in terms of geography of data storage, companies have their own servers on every continent of the planet, and, at the same time, they are centralized in terms of access to this data. The current part is the most important for understanding what is happening and was happening in the market.

All companies have grown and scaled through direct monetization and stakeholder engagement. The strongest were those who were able to cover as many market segments as possible.

How did they do it and why did not everyone do it?

What’s the trick of each business model?

Google Drive

It is worth noting that Google Drive is an application from Google that uses its own data centers and, among other things, sells the capacity of its data center in other applications, both directly and indirectly.

iCloud Drive

iCloud Drive — as if for free, it gets new customers when they start using Apple devices, in addition, it offers users to store all data from the entire ecosystem in their cloud (documents, photos, device backups). First, users receive 5 GB for free, after a short time this storage space ends, and it becomes not very convenient to use the Apple ecosystem, at this moment the average consumer starts paying for all free applications through this service.

Apple

Apple doesn’t sell you Keynote, numbers, Notes, Contacts. And it seems like their cost is already included in your iPhone, mac, ipad, but it is not. Apple products released in 2011 can be used even today. And it is the moment you exceed the cloud limit when you start paying for all the “free embedded software”. This approach will allow the release of updates to all users who are already buying new devices. As a mini result — the user is forced to simply store at least some data in iCloud and sooner or later exceed the free limit.

Therefore, iCloud Drive should not be perceived solely as an independent product, it is, in a sense, a monetized node on which many of Apple’s user services are tied. The business model is thought out for many years to come.

Dropbox

DropBox — A stand-alone service that started to solve the cloud storage problem by giving users cloud access via webdav and their own client. The business model was relevant at the time of launch and subsequent years, until a dozen competitors appeared in this market. You are given free convenient storage, you run out of space — you pay. DropBox launched in the blue ocean, when competitors could be counted on the fingers of one hand.

Amazon Drive

Amazon Drive — like Google Drive, they use their own data centers AWS, and as an application for storing data, it does not carry anything unique. The business model is exactly the same as DropBox, Amazon also has custom services similar to Apple’s iCloud, but it doesn’t have the same powerful base of dependent users.

AWS S3

What did Amazon do to get into this comparison table? In fact, the same thing as Google, only a little earlier — AWS S3 is a file cloud, but not for ordinary users or entrepreneurs, but for applications. AWS S3 allowed the application developer not to think about maintaining their own servers for storing data, having received indirect monetization from all applications using AWS S3. This means that when someone uses an application from a private developer or a company that uses AWS S3, they increase the capitalization of not only the private developer, but AWS S3 in general. And if in iCloud Drive this required creating several applications and closing them within the Apple ecosystem, then AWS S3 had a different task — to gather as many developers as possible who will create applications within the Amazon ecosystem. When the number of users of a private developer or company using Amazon grows, the demand for Amazon’s services grows — and therefore the company’s capitalization. This is one of the reasons for Amazon’s continued growth, because when the Internet grows — Amazon grows, when all cameras start shooting in 4K and uploading more and more data to various applications — Amazon’s value rises. The cooler the devices, the more the data weighs, the more devices are created — the more data is stored on the network — the more expensive Amazon becomes as a company. For this reason at the moment the holders of the entire Internet — Amazon.

Along with that, similar services grow in a centralized environment. In addition to S3, Amazon has a bunch of services for developers that are provided according to the model — a little free — then pay, so Amazon takes over potentially gigantic in terms of the amount of stored data companies at an early stage.

It used to be convenient to just keep or rent a server, but the era of guestbooks is gone, with the advent of the Internet and the Internet of Things to the masses, it is necessary to divide the capacity consumption into microservices for modern applications. Storage and computing — in different places, often the computing done on the client side, and the correctness of the data is checked before storing where possible.

Ethereum

Similar to Amazon’s story, Ethereum blew up the blockchain market by providing convenient smart contracts. The capitalization of ethereum grows with each new application on the network, and just like in the beginning almost free access to the placement of your application (contract) was given. Today we see a picture of how the cost of one transaction has grown to such a level that simply placing an application on the Ethereum blockchain becomes unprofitable (not yet optimized). There is a big difference between Amazon and Ethereum in that the network was created on investment funds and does not have direct monetization for developers.

Why will the market continue to grow?

• The growth of IoT, the more IoT, the more different types of data generated every second
• Growth of memory in smartphones (the more data a person stores in a smartphone, the more data needs to be backed up in the cloud). 4K video, high quality photos and music have a decent amount of data per data unit, which in turn takes up more and more space
• Cloud storage is no longer just storage — it is an inevitable system node that closes everything on itself — working with documents has long become familiar to many in the “cloud”. Each new document increases the total capitalization of the cloud storage market
• Each new application increases the total capitalization of the cloud storage market
• Each new unit of content in any application increases the total capitalization of cloud storage

What are the challenges facing decentralized file storage now?

• Most data storage solutions implement their own blockchain, without the ability to work with third-party tokens, which makes the user as dependent on the value of the token as possible
• Ethereum network is mainly used for DAPP, which makes working between different applications more convenient, while independent networks cannot interact with the general ecosystem of Dapp applications, or require the creation of separate payment channels
• Storage market is a closing link to the overall application market. No solution can compete with an existing centralized solution just by having encryption on the client side — you also need to maintain communication between applications and lock the entire cloud onto itself
• In the Centralized world — large commissions for application developers (AppStore, GooglePlay) up to 30%
• The only way to monetize free or open source apps is through advertising / donations

Today in the blockchain market there are players such as Sia, FileCoin, Storj, basically they compete with DropBox, which makes little economic sense. The maintenance of their own blockchains, the high cost of entering the client as a user make these solutions difficult to grow and difficult to scale. And if DropBox was one of the first to enter the market, then one of the first to enter the decentralized market does not provide the same cost driver comparable to the time when DropBox, Mega, Google Drive, Yandex Disk and other centralized companies appeared. Perhaps at some point in time they will be cheaper, but at the same time inconvenient, since every Sia, FileCoin user depends on their tokens and requires a payment bridge between the networks.

For a decentralized storage, to enter the market and have a chance of success, it is necessary to solve the problems above, thereby providing a complete alternative in the free market.

In simple terms, DeNet is Amazon in the decentralized marketplace, DFILE (DeNet.Storage) is AWS S3. By attracting initial investment, we attract developers to the transition to a decentralized free environment. Any existing data centers can participate in our network, including as miners, and grow along with the growth of the Internet economy.

In DeNet, any application developer, including OpenSource, can monetize their application just like iCloud Drive does from each user and from each file.

We invite everyone to race with Apple, Amazon, Microsoft and Google on data storage, the real development of which is just beginning!

Site: dfile.tech

Email: dfile@denet.pro