Web3 Storage: Understanding IPFS & Filecoin

Web3 is often discussed within the various cryptocurrency and NFT communities across the internet, but is typically misunderstood as a blanket term for anything related to crypto when in reality it is a decentralized model of the world wide web that allows users to keep their data private from major web2 companies like Google and Meta. 

Further, it allows developers to create and host their own content on decentralized platforms that do not hold total control under content policies that can be changed without little warning such as the way YouTube did at the tail end of 2022. 

In response, companies that work in the blockchain industry are looking for more ways to leave the constraints created by web2 companies for more open-ended platforms that can provide better data storage. 

Lomads, a web3 business that is developing tools and a dashboard to improve workflow efficiency, is the most recent business to hop onto the web3 train by partnering with IPFS because of the benefits from decentralization. 

The Drawbacks of Centralized Storage

One of the major issues with centralized data storage is that there are only a small number of companies that offer data storage solutions which is driving up an increased amount of reliance on their systems, but also giving major web2 companies a massive amount of control over the types of data that are stored online. 

Further, by signing up with these web2 companies, users are forced to hand over private and personal information that is often sold for marketing and advertising purposes. 

However, the biggest issue created by top web2 companies is that their services are not as reliable as originally thought. Lomad’s announcement also contains information from a survey that came out in 2022 by the International Data Corporation that shows 60% of enterprises suffered from outages on cloud storage and 22% experienced data loss as a result. Over 40% of customers also experience high/unexpected egress costs that are unsustainable for small and medium-sized businesses. 

The Advantages of Web3 and Decentralized Storage

Web3, on the other hand, solves many of the issues surrounding centralized web2 companies because of blockchain technology and its ability to host data and information on-chain where companies have no control of it. 

By spreading information across a large number of computer nodes across the world, web3 networks are able to create peer-to-peer networks that do not need to rely on a single source of authority. Instead, they are given access to a blockchain which anyone can interact with using a private key. 

This leads to a platform on web3 that does not require personal or private information from customers, meaning that their information cannot be sold to unknown individuals. 

However, there are better benefits because blockchains are immutable, meaning that data cannot be lost once put on-chain; and with blockchain developers constantly being tasked with upgrading and improving networks, there is the fact that storage on-chain can become more scalable as usage grows. 

The Benefits of Web3 Storage for Customers

Protocol Labs, the team behind IPFS and Filecoin, were chosen by Lomads because of their success as a leader in web3. IPFS, which began in 2015, has gained recognition within many cryptocurrency communities for its data storage abilities, especially with NFTs, where the majority of token metadata is stored.  

Unlike web2 models which locate data by address, IPFS instead uses content data that requests what the data in question is. This allows data to be broken up into smaller bits and sent to different nodes until it's needed, reducing the amount of storage needed. Their filecoin is then used as an incentive layer on top of the IPFS protocol to reward nodes for storing data. 

Lomads, through their partnership, plans to use these services to store customer data off-chain in nodes that keep customer data encrypted; and, because the data is broken up across nodes, is not able to be sold to web2 companies. Subsequently, Lomad customers will have the assurance that their data is secure, private, and immutable because of web3.