Filecoin, decentralised data storage & Web 3.0

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Data security has long been an issue. Even before the digital age, landowners needed a safe place to store their legal documents proving their right to the property. More recently as PCs became widely available, households needed to worry about whether their floppy disks, hard drives and CDs (holding personal data) were safe. In the 2020s, with the advent of The Cloud, data is now largely stored online; often in large data centres across the world, owned and run by large companies such as AWS. Whilst this has revolutionised data storage there are still worries about data security. What if one of the centres goes down or is compromised? 

Enter Web 3.0 and decentralised data storage. These concepts arguably bring us back to what the internet was originally supposed to be about – the mass ownership, storage and secure transfer of content and information. Below, our team at Bure Valley Group articulates more of the substance behind this vision, shows where trends are leading in 2021 and looks at the case study of Filecoin to illustrate.

We hope you find this content useful, but please note that it is not financial advice.To find out more about our EIS and other investment opportunities, visit our portfolio page here. To enquire regarding our latest projects and funding, you can reach us via:

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Data storage & Web 3.0

Since its introduction to the wider public in the 1990s the internet has moved through at least 3 stages of development. Web 1.0 – the first – was defined by only a few content creators and a huge number of content consumers looking at static pages. This started to change in the late 1990s and early 2000s, when Web 2.0 started to describe the proliferation of more interactive websites – particularly social media – which allowed more user-generated content. Although this was more participatory than Web 1.0, Web 2.0 became defined by the emergence of a small number of large businesses which ran the platforms and stored the data in a very centralised network (e.g. Facebook and Blogger). 

Web 3.0, however, seeks to fundamentally change this digital landscape by decentralising data storage and control. Rather than storing data in large centres run by big companies, it rather is placed in the hands of ordinary people on phones, computers, appliances, sensors, vehicles and more. Three core principles underpin Web 3.0:

  1. Permissionless. A governing body is not needed to participate in the Web 3.0, whether that be a large company or authority. A good example of this is blockchain technology which underpins most of the world’s cryptocurrencies.
  2. Open. Open source software is used to build applications and developers can construct publicly in collaboration. 
  3. Trustless. A trusted third party is not needed for participants to interact on the network, either publicly or privately.

 


Trends in 2021: Filecoin

Readers will undoubtedly be aware that, even in 2021, major global companies still dominate a large part of the cloud data storage market (e.g. Amazon’s AWS, MS Azure and Google Cloud). Yet there are encouraging signs that many worldwide consumers are inclined towards the Web 3.0 vision of the internet, and that businesses are moving to meet this demand. In the realm of browsers, for instance, startups like Gener8 Ads are offering ways for users to keep their data private whilst surfing the web (removing cookies which track them); or, they can choose who to share their data with – earning rewards in the process, such as Tesco Gift Cards.

The main internet “giants” have certainly made big strides in bringing their content closer to the user. In 2016, for instance, 25% of web traffic moved through the “priority access paths” these companies had established by building their own underwater internet cables. Today, the figure is 64%. This allows streaming services like Netflix to be loaded very quickly and puts up a massive barrier to entry for new competitors. Yet the vision of decentralising the internet has not died. In 2021, a range of growing companies such as Filecoin, ThreeFold, Solid and Dfinity have risen up to try and “redistribute the cloud” and grant users more “data sovereignty”.

Each of these companies works slightly differently towards the same goal. Solid, for instance, lets users store their data in secure, decentralised “pods” which lets them control which people and apps can use it – even if the pod is hosted on a platform like AWS. ThreeFold offers users a serverless cloud infrastructure, enabling a P2P (peer to peer) grid comprising a global network of independent farmers. Filecoin describes itself as “a decentralized data storage marketplace, protocol, and cryptocurrency” – allowing for cooperative digital storage and data retrieval based on blockchain technology. This decentralised model of data storage makes data both easy to retrieve and difficult to censor – potentially making it a powerful force for democratic change.

 

Invitation

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