What is Storj? Under the hood of the cloud storage disruptor
Are the Atlanta-based innovators niche operators or the future of cloud storage?
- Storj Labs: A backstory
- Who the target audience for Storj?
- What is the STORJ token?
- How does Storj’s rewards system work?
- How many Storj nodes are there?
You may have been asking yourself: What is Storj? How does Storj work? What is Storj used for and how the hell do you pronounce it?
Well, Storj Labs is the creation of Atlanta native and computer scientist Shawn Wilkinson. At its core, Storj (pronounced storage) is a cloud-storage platform akin to Google Drive or Dropbox that uses blockchain technology to encrypt data in a decentralised environment.
Rather than having images, videos, projects and other assets contained in one monolithic data centre at a specified location, the Storj network fragments each asset into 80 separate pieces which are then stored among an ever-growing network of nodes located across the planet.
As per Storj’s white paper, this lack of centralised control “allows users to store and share data without reliance on a third-party storage provider”.
Furthermore, it adds: “Decentralisation mitigates the risk of data failures and outages while simultaneously increasing the security and privacy of object storage.”
Underpinning this decentralised cloud system is the STORJ token (STORJ), a native cryptocurrency used to pay out rewards among operating nodes (essentially the blockchain’s version of a bitcoin miner).
Looking to have the basics of Storj explained in a clear way? Then join us below as we peek under the hood of this unique blockchain technology. Please check out our predictions here for further information on STORJ’s current value, future projections and further in-depth Storj review.
Storj Labs: A backstory
Prior to launching Storj Labs, Wilkinson was a miner, not of precious metals but of bitcoin. This passion led to a job at Bitshares in 2013, a role he briefly kept before leaving to focus on his decentralised cloud-storage passion project.
In 2017, Wilkinson obtained grant funding through the Utah Governor’s Office of Economic Development (GOED) to advance the development of his innovative platform. A few months later, STORJ had a successful initial coin offering (ICO) that hit its $30m target in a matter of days.
Slightly prior to the ICO, Storj Labs migrated from Bitcoin to the Ethereum blockchain, owing to frustration with the former’s sluggish transaction times and high gas fees. Unfortunately for Wilkinson, Ethereum’s gas fees have skyrocketed over the years, an issue still plaguing Storj Labs’ profitability.
At time of writing, Storj Labs’ decentralised cloud-storage network consists of close to 12,000 active nodes offering free capacity of 5.7 petabytes. A total of 370 million objects are currently stored on the network.
(Some details sourced from Wilkinson’s personal blog)
Who the target audience for Storj?
While individual consumers are more than welcome to use the Storj platform, centralised cloud systems such as Google Drive and Amazon Drive likely provide the requisite security and desired ease of use.
Rather, developers are the ones who stand to gain most from Storj’s distributed storage ecosystem and enhanced security and privacy.
What is the STORJ token?
According to chief operating officer of Storj Labs, John Gleeson: “The STORJ token is a utility token and it’s really there to facilitate transfers of value related to storing and retrieving of data.”
In this sense, anyone looking to actually invest should be aware that as a currency, the primary purpose of the STORJ token is one of practicality, rather than of potential returns against fiat currency. But if the value of the STORJ token was to uptrend, this could be where the incentive to maintain an operating domestic node truly kicks in.
Rewards are paid out in STORJ as standard; if STORJ value skyrockets, even small-scale nodes could see big returns. STORJ is an Ethereum-based token. As such, it is at the mercy of the wildly fluctuating gas fees associated with the network.
A more detailed rundown of STORJ’s current value as well as future projections can be read here.
How does Storj’s rewards system work?
Storj nodes are rewarded in much the same way as any other blockchain, through tokenised money distributed to the most active, reliable nodes.
What is Storj Labs paying the node community? Smartly, nodes are only rewarded for uploads, eliminating the incentive to misbehave. Otherwise nodes could simply collect download rewards without contributing to uploads; much the same as how ‘leeching’ Limewire users operated, for those old enough to recall.
If you have a few terabytes of storage laying around and you’re hoping to start a side hustle as a STORJ node, think again. First, servers are vetted on a reliability, speed and downtime hierarchy, placing the average domestic rig at the bottom of the pile.
Second, payouts are paltry compared with the available energy and time reserves of the average domestic user. There is a plethora of YouTube channels of hobbyists donating terabytes of capacity to the Storj community, only to see returns of fewer than a dollar over a span of months.
Gleeson claimed that every $0.60 to the dollar is redistributed to storage nodes. But given the miniscule returns noted above, it is possible that this rewards system is heavily weighted to industrial-strength storage nodes.
Storj Labs’ own figures approximate a payment of between $10-$20 a month per terabyte in STORJ, depending on the operation being handled. In reality, the vetting procedure severely limits the amount of operational bandwidth for each node. In short, do not expect to donate your spare five terabyte to the network and see instant returns.
Realistically, it could take years before recovering even the initial cost of purchasing sufficient storage space to run a half-decent node. However, unlike bitcoin mining, hosting requires very little processing power. A few terabytes of storage left to run out of sight might generate returns, albeit over the course of a few years.
How many Storj nodes are there?
As of 18 November, the active node count is close to 12,000 spread across 87 countries hosting over 370 million objects.
This large pool of crowdsourced storage is also the key to reducing Storj’s operating and maintenance costs, which are virtually outsourced among the huge network of independent nodes.
Gleeson suggested that this amounts to an 80% reduction in running costs.
So does Storj and a growing number of similar platforms present the future for cloud-based storage? Blockchain certainly allows for substantially higher security through encryption.
However, compared with user-friendly apps like Google Drive, they come with a learning curve. As such, while Storj and similar offerings might be attractive to high-end developers and other sophisticated customers, the casual market could be a while off yet.
There are currently 314.4 million STORJ in circulation according to Coinbase.
No, you cannot mine STORJ, which is technically a token as opposed to a coin. Rather, Storj is distributed among nodes as a reward for hosting and sharing data on the Storj Labs decentralised cloud-storage network.
You can buy STORJ at a range of crypto exchanges. We don’t have it yet at Currency.com, but we will let you know if and when we do. Just remember to do your research and never invest more than you can afford to lose.