The Intelligent Insurer #78: Decentralized storage powers Web3 but flaws hinder mainstream adoption
The Web3 promise of enabling users to have complete control over their data is currently driving massive interest in the industry. However, existing data storage solutions are concentrated in the hands of a few big tech companies, creating centralized ownership of data. Taking storage away from centralized entities will create a safer and more reliable network and that is what decentralized storage solutions are doing.
In the latest Intelligent Insurer, we will analyze the current state of traditional storage solutions and how Web3 storage protocols are setting up to disrupt the market. We will also consider the flaws of Web3 solutions that are hindering adoption and how users can continue to protect themselves. First, let’s look at some exciting updates from our development team.
Insured Finance software development update
Our vision of a world-class digital asset insurance platform is closer to becoming a reality than ever before. We remain committed to pushing the development of features on our platform ahead of mainnet launch.
We are excited about the progress we have made thus far, including a few upgrades targeted at boosting user experience. Over the past week, we conducted the final testing on all the features of our digital asset insurance platform and we are pleased to inform you that everything works great.
The final audit of the updated smart contracts is in progress and it is currently under review. These contracts mainly address the holding quantity of INFI. We can confirm that the contracts are fully updated and operate flawlessly. The adjusted contracts ensure that INFI holders have a minimum of 2M for voting. There is one last audit to be completed before the highly-anticipated mainnet launch which is currently in progress.
The mainnet launch of our next-gen insurance platform is lining up to be a game changer for the digital asset industry, providing investors with products that will give them the confidence to participate in the market. We are confident that our commitment to security will ensure our community members have a seamless experience on our platform.
Demand for decentralized storage rises in tandem with Web3 interest
The concept of data sovereignty is increasing investors’ interest in Web3 platforms. A recent study estimated the Web3 market to be worth about $2.9 billion in 2021. Yet, this figure is expected to exceed $23 billion by 2028 as global interest in Web3 continues to surge.
Since Web3 is built on the promise of giving complete data control back to the users, its rapid growth has resulted in the need for decentralized storage solutions. These decentralized storage protocols allow users to archive, retrieve, and maintain their own data.
According to a recent report from Huobi Research Institute, rising global data storage volume will elevate the cost of security and high power consumption. The report noted that this increase will fuel the trend toward decentralized storage.
(Source: Huobi Research Institute)
The rise of decentralized storage platforms
The global storage system demand has evolved over the past few years from remote to instant cloud storage, and now blockchain decentralized storage. Most existing data storage systems on the internet are centralized. A majority of global user data are kept in data warehouses owned by a handful of companies, including Amazon Web Services, Microsoft Azure, and Google Cloud.
The concentration of such massive amounts of data allows these companies to decide how, where, and when to use consumers’ data at their sole discretion. Many times, these companies suffer blackouts and swaths of the web go down for a couple of hours. For instance, in December 2021, AWS suffered several outages that shut down numerous online services critical to everyday life. In a similar case, Microsoft Azure suffered an eight-hour-long outage in October 2021, affecting millions of users while the outage lasted. These situations create a single point of failure as billions of user data are lost.
Thus, as a result of these challenges with centralized data storage systems, demand for decentralized alternatives is increasing by the day. These alternatives build a better version of the web by creating a network of nodes distributed globally. They combine the storage capacity and computing power of multiple individual devices into the network to store multiple copies of data.
These decentralized data storage protocols eliminate the risk of a single point of failure since the availability of data is not limited to one node. Thus, websites can still stay up even if some nodes fail, preventing the loss of consumer data. There are currently several decentralized storage platforms available on the internet and one of them is Filecoin.
Filecoin is a decentralized, peer-to-peer digital storage platform built on top of the InterPlanetary File System (IPFS) that allows anyone to rent or buy storage space. The protocol was developed with data security and privacy in mind. It allows users to split and store sensitive data on different computers across the world rather than trusting only one company with the data. To ensure the security and confidentiality of stored data, Filecoin uses end-to-end encryption that prevents third parties, including storage providers, from accessing the data.
Filecoin incentivizes users to rent out their storage spaces. Users can become storage miners on the Filecoin ecosystem when they have free storage available. There are two categories of miners on Filecoin.
The first category of miners is responsible for storing data on the Filecoin network and are rewarded for their work using the platform’s native token, FIL. Storage buyers pay the FIL tokens both to store and retrieve their data. The FIL token is currently trading at $8.4.
The next set of miners on the Filecoin protocol are the retrieval miners. These miners facilitate the data retrieval process between customers and storage miners. They are also rewarded in FIL for their services. Despite market conditions, Filecoin’s committed storage capacity grew steadily in Q2 2022, reaching over 16 EiB. The protocol’s storage capacity is supplied by over 4,000 storage providers.
Flaws slow down Web3 storage solutions adoption
While the concept of decentralized storage platforms is revolutionary, these protocols are currently in an exploratory phase. As a result, they have flaws that limit mainstream adoption. One major flaw is the complexity of the processes used in most decentralized storage systems, which results in a lack of convenience for end users.
To store data, users must connect to the decentralized storage protocols using their crypto wallets. They also need to use different cryptocurrencies to pay for storage. In some cases where users do not have the required cryptocurrency, they would need to buy the coins before using the platform. These processes are too complicated for the average internet user.
While the concept of data sovereignty is appealing, complicated protocols are a major turn-off for most users. Therefore, to attract more mainstream users, developers must focus on building decentralized data storage solutions that provide quick and easy use. If the process is less complex and fast, users will be more inclined to use the decentralized storage alternatives.
As the scope of Web3 adoption continues to expand, demand for decentralized storage will only increase. The industry has a lot of room to grow, with developers adding new features and improving existing protocols. In the meantime, users must ensure the safety of their data and digital assets to avoid losses in accidental data breaches and exploits.
One of the best fail-safe security measures is adding an insurance product to their portfolios. These insurance solutions, such as the ones offered by Insured Finance, help investors mitigate losses. When investors have these insurance solutions, they can confidently participate in the Web3 market, and be assured that their data and digital assets are safe at all times.
About Insured Finance
Insured Finance is a decentralized, peer-to-peer insurance marketplace. Users can request customized insurance on a wide variety of digital assets, thereby ensuring full protection. Those fulfilling requests can earn premiums and earn a competitive return on their capital. Claims are fully collateralized and settled instantly.