Storj Review - Altcoin Fundamentals

in blockchain •  2 years ago

We just can't keep ourselves from buying the highest performing new gadgets. But at the end of the day, that 332HP car spends most of its time in the garage, our quad-core processor idles while we struggle with MS Word, and the additional hard-disk space that we bought just to be on the safe side will remain empty forever. Even large parts of our brain lie waste while we check another 10'000 cat pictures on Reddit.

A lot of Altcoin projects aim to give purpose to all those unused resources, allowing end users to make a little money off their spare processing power, car mileage, personal information or even to farm their aww-inebriated minds for money, like in the case of Steemit.

In the second installment of our series about Altcoins, we present another project that goes for our unused hard disk space. Storj got us pretty excited by how far ahead it already is, but most of all by the way in which its developers try to strike a balance between perfect decentralization and overall usefulness.

The Technology

Like Sia, which we reviewed in the first installment, Storj offers decentralized, end-to-end encrypted cloud storage.

The core protocol allows for peer to peer negotiation and verification of storage contracts. Providers of storage are called "farmers" and those using the storage, "renters". Renters periodically audit whether the farmers are still keeping their files safe and, in a clever twist of similar architectures, immediately pay out a small amount of cryptocurrency for each successful audit. Conversely, farmers can decide to stop storing a file if its owner does not audit and pay their services on time. Files are cut up into pieces called "shards" and stored 3 times redundantly by default. The network will automatically determine a new farmer and move data if copies become unavailable. In the core protocol, contracts are negotiated through a completely decentralized key-value store (Kademlia). The system puts measures in place that prevent farmers and renters from cheating on each other, e.g. through manipulation of the auditing process. Other measures are taken to prevent attacks on the protocol itself.

Storj, like other similar services, offers several advantages over more traditional cloud storage solutions: since data is encrypted and cut into "shards" at source, there is almost no conceivable way for unauthorized third parties to access that data. Data storage is naturally distributed and this, in turn, increases availability and download speed thanks to the use of multiple parallel connections.

On top of the core protocol, the Storj developers have built a suite of tools that walks the line between complete decentralization and usefulness. We like this approach because we believe that fully decentralized, so to say "maximalist" blockchain plays lack the usability necessary for mainstream adoption.

Accessible to any end user is Storj Share, the client that allows farming free hard disk space on Windows, MacOS or Linux - a few clicks and you are a farmer. More on this in our usability review below.

The Storj Bridge centralizes and simplifies access to the network, handling contract negotiation, auditing, payment and availability. In a way, it can be compared to the Skype supernodes of yore.

The Storj Client accesses the Bridge and the API it provides to store the actual data in the network.

Account management and client pairing can be handled through the client or through a small central web-app.

This architecture eliminates the need for each and every client to become an integral part of the network and greatly increases the system's immediate usefulness for developers, without sacrificing too much of the advantages that stem from its decentralization.

The Economy

While the Storj protocol could work with any kind of currency, even, if economics permit, a non-crypto asset, the Storj tools rely on Storjcoin X (SJCX) for the payment of storage space.

SJCX is a Counterparty asset, Counterparty in turn relies on Bitcoin's blockchain for its transactions. There is a fixed total of 500'000'000 SJCX, 49'518'143 were available at the time of writing. The initial distribution of SJCX happened via a crowdsale that raised about 910 BTC at a rate of 38'500 SJCX per BTC. The crowdsale was preceded by a pre-crowdsale that sold about 8M SJCX. From 2014 to 2016, Storj Labs Inc. used approximately 2M SJCX per year, almost all of which have gone to fund community volunteers and pay farmers in the Test Groups. Storj Labs Inc. is working on a transparency plan for SJCX and told us that they will commit to a 10M SJCX cap per year on the amount of coins that can be used from the larger balance of funds that include the community pool, developer pool, and Bitcoin pool detailed in the Crowdsale Terms.

Like with other storage plays, money will primarily be entering the ecosystem through the purchase of storage space.

Storj is quite far ahead and plans to enter the commercial market somewhen later in 2016. Consequently, we had to look quite far ahead too when searching for potential pitfalls in Storj's economic model.

If Storj intends to primarily compete on price, there is a certain risk that beyond the initial enthusiasm, few rational actors will remain committed to farming out their unused hard-disk space. Neglecting traffic revenues, but also any profit for the renter, a theoretical max income for a 24/7 farmer could be one-third of Amazon's S3 prices in this setting - a negligible amount of money, about 0.01$/GB/Month at the time of writing. The classical argument against this is that storage space and bandwidth are sunk costs anyway. But after decades of environmental education, we believe that things will not work out like this: for many people, the perceived cost of leaving their desktop or laptop running 24/7 is probably higher than the real cost and farming only when the computer needs to be on anyway doesn't feel quite right. From this point of view, we hope that Storj will be able to take full advantage of the actual benefits it has to offer compared to classical storage services: privacy, reliability, and speed. The ideal Storj-based consumer offering would be some kind of "highly private" Dropbox that is able to charge a premium compared to the convenient but insecure-by-design US-based company's product.

For the renting side, Storj will mostly appeal to big-time storage guzzlers or to those who have a very high interest in privacy or global network resilience. For all but the biggest players, storage comes for almost free with the services that they are already using and they would probably rather consider farming their existing storage than buying new one. We hope that Storj will be adopted and loved by developers for the unique properties it has to offer and not just be considered a cheap alternative to S3 and the likes.

The company behind Storj, Storj Labs Inc. relies on a combination of crowdfunding and conventional venture capital. So far, the company has raised a $2M Seed Round in February/March 2016.

Developers and Community

Storj Labs Inc. has been able to attract a talented bunch of people and is looking for more.


The Storj founders, left to right: Tome Boshevski (Chief Design Officer), James Prestwich (COO & CFO), John Quinn (Chief Development Officer) and Shawn Wilkinson (CEO & CTO)

The Storj team structure too reflects the company's determination to strike a balance between technological prowess and real-world usefulness. Among others, it encompasses developers, business people and advisors, but also UX specialists and community workers.

The community around the project seems to be picking up too, with an encouraging number of outside contributions on GitHub and the user forums.

The Storj team reached out to us after we published the Sia Review here on Steemit. Little did they know that we had already become small-time farmers on their system a few days ago. They provided us with additional technological background info and important clarifications regarding the upcoming transparency plan for SJCX.

End-User Experience

Farming

Storj's farming solution, Storj Share, is exceedingly simple to use: download the client, install, define the storage location and your payment address, and you're good to go. We loved farming with Storj Share so much (we have peers! we make contracts, all the time!) that in the beginning, we didn't even think about the fact that we were actually providing resources to somebody else.

During the ongoing test phase, rewards are paid out in bulk via a script run by the Storj developers. Of course, a reward model that almost immediately shows (albeit small) payouts will add to the gamification of the system.

Storj Share ran just fine and out of the box on our typical home networks. At work, UPNP is disabled and we had to manually set up the correct firewall rules.

Storj Share behaved nicely on the systems we used to test. On the home network, the additional strain on the WiFi connection became noticeable for example when streaming music over the same network. Our Gigabit network at work didn't even notice the additional traffic.

Things got a bit more complicated when we tried to build a farming rig based on Ubuntu 16.04LTS: both the GUI and the command line clients refused to handle the four drives that we installed gracefully. After combining the drives into a RAID 0 and renting them out as one, everything went back to normal.

All in all: an impressive farming experience for such an early stage product.

Renting

Renting is free while the current testing phase called Test Group C lasts, farmers are paid through the Storj project.

Renting doesn't come with an easy to use GUI client, it is very obviously targeting developers. For those, however, quick starting by up- and downloading a few cat pictures is made easy thanks to a comprehensive documentation.

We experienced impressive throughput rates both up- and downloading files on various kinds of networks. There were a few hiccups, for example, when trying to store an entire HD episode of Game of Thrones (which we, of course, didn't share with anybody else), we experienced occasional hangups during up- and downloading.

Overall, the renting experience seemed stable enough to start building a beta product based on Storj right now.

For Fun and Profit

Besides speculating on the value of SJCX, is there a way to make money off Storj right here, right now?

Well, it's difficult to tell since payouts based on the actual provision of storage space are not happening yet. Current payouts are rewarding test group participants according to a formula developed and made transparent by the Storj team.

Out of parts that we had lying around at the office, we decided to build a small storage rig that is able to farm about one TB. A profitable rig would probably have to be bigger. Since, unlike GPU or ASIC farms, it's possible to build extremely power efficient and cheap storage rigs (try a raspberry pi with some used 500GB disks off eBay?), it's not completely unimaginable that such a system could work profitably on Storj, especially if the bandwidth it uses can be considered sunk cost.

Our rig seems to consume about 30W currently and to use a negligible amount of our flat rate gigabit internet connection. Since we got the parts for free, we'd have to only make about 40 $ per year for the rig to be "profitable" under our conditions, meaning: with the high electricity costs here in Zurich, Switzerland.

Anybody up for a solar powered low energy storage farm on his rooftop?

Conclusion

As you can probably tell if you got that far, we are pretty excited about Storj and about how far ahead the project already is compared to other blockchain-enabled storage plays.

In spite of all the excitement, we must not forget that the basic premise of such projects needs to be proven: that there's a need for truly decentralized, end-to-end encrypted storage solutions that are farming excess storage space. That there is indeed a need for that is the knee-jerk reaction of almost anybody working with the Internet for as long as we are, but we must not ignore that mass-market adoption of privacy-focused technologies has been slow at best. We see Storj as an invitation to create completely new kinds of services in this domain and hope that a lot of developers with a vision will jump on the opportunity.

We plan to continue this series and to eventually review most of the current crypto projects from a fundamentals perspective. Tell us what you think about Storj, what kind of info you’d like to see in our reviews and of course what kind of projects you’d like us to review.

Facts at the Time of Writing

NameExplanation
Project URLhttps://storj.io/
Network status URLhttps://dash.storj.io
CompanyStorj Labs Inc.
Direct/indirect competitorsSia, MaidSafe
Market cap6’308’512 US$
Announced (bitcointalk.org)July 20th, 2014
Network launchDecember 2014
Next milestoneAutumn 2016: End of TGC, Commercial Launch
Blockchain typeBitcoin-based (Counterparty)
Stored on the blockchainPayments only
Other distributed technologiesKademlia, used for discovery, contracting, negotiation and communication
Coins available50M SJCX
Coins total500M SJCX
Listed atShapeShift, Poloniex, Counterparty, Bittrex
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Typo in the beginning, you write "performant" instead of "performance." But good stuff, thank you. Checking out your 1st part now.

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Changed. We Swiss don't even have our own written language, how should we be able to learn another one :).

Sotrj is great investment these guys were one of the first to do it. Been with them since day one and holding some SJCX.

I use cryptomator with it for an extra layer of security :D

I am running Storj share and got my first rewards a few days ago - I now have 1200 SJCX. I am using the Windows GUI and Storj Share runs so I don't even notice it. Great idea and implementation, go Storj!

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you got 1200 as your rewards? How much space did you have filled up at the time and for how long?

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I have that much but I didn't get that many rewards - almost all of it is bought. I have about 19 GB filled up for over a month and I got a small reward for it the last time. I still like the idea and keep it running all the time.

This is a great project!

This write-up is awesome! I'm sorta bummed that you've only got 25 votes so far - this is really valuable information.

As someone who doesn't have the time or technical knowhow to mine/farm/etc all the different crypto assets out there, but is still curious about all the different use cases of all these blockchain protocols, your review is super helpful.

The best part about this: it's unbiased - it's not a puff-piece. You don't seem to be getting economic incentives from Storj...you're just telling it like you see it - the good and the bad. Upvoted and followed! Looking forward to your next post.

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Thank you for the compliments. For us, it's simply a pleasure to observe so much innovation after a time where the Internet started to feel a bit stagnant (and highly centralized). More to follow. Let's see what happens next.

Well done guys! Let give hackers a really hard time ;)

Good write up! I have been participating in the Storj test groups since the start of the year, and have gotten about 1000 SJCX in testing rewards so far for contributing 5 TB of capacity (of course this is in no way indicative of actual income after commercial launch). Storj inspired me to buy a low end Synology NAS, which has been great for archiving backups of my desktop system and being a Storj farmer 24/7. It was a bit complicated to setup farming on the NAS and required a bit of trial and error, but in the end I got it working with support from the fairly active Storj Slack community. These days it pretty much runs on auto pilot, but I still log onto the NAS and check logs every couple days to make sure things are going smoothly, and occasionally I have to upgrade the software when new versions get released.

Overall, being a Storj farmer has been an educational experience and a fun little hobby. Getting involved has expanded my personal horizons and taught me new tech skills, so even if farming doesn't become very profitable it's still worth it for me.

I wish the Storj team much success with future phases of the project! It's off to a good start and I look forward to a solid level of adoption after commercial launch.

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Could you share more about the NAS that you have? What is a NAS any way?

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NAS means Network Attached Storage. It's basically a very minimal computer without a keyboard or monitor, whose purpose is to house hard drives to provide extra storage space. It can be attached to a home network, which allows you to access its drives from your desktop PC. You can buy special hard drives which are optimized to run 24 hours a day for a NAS, such as the Western Digital Red 4 TB drives I have in mine.

My NAS is a Synology DS416. Here's a link to the Amazon product page: https://www.amazon.com/Synology-DS416-Station-Diskless-Attached/dp/B016EWTC7E/ref=sr_1_1?ie=UTF8&qid=1471576560&sr=8-1&keywords=synology+ds416

I like Synology because it provides an easy to use web admin interface that you can access using your desktop's web browser. It was also one of the brands discussed on the Storj Slack and known to be compatible with Storj. The DS416 is a relatively low end model, but still has enough memory and processing power to run the Storj software. It's a 4 bay NAS, meaning it can hold up to 4 hard drives all linked together. I only use 2 bays right now, but it's nice to have the extra bays available for future expansion.

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i was participating in the Storj testing group and i manage to lose 10000 SJCX on coinbase.

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Oh man, I feel your pain! Gave your article a read, hopefully it will prevent some people from making a similar mistake. Cryptocurrencies in general really need some safeguards to prevent this sort of thing; mainstream adoption will never occur until dangers such as this are no longer an issue.

Today i put 2.4K $ into storJ. Fingers crossed.
Otherwise the project seems rather stanning and thanks for the good work.
Goodluck to us all

Is Storj still up and running? I checked coinmarketcap today and the market cap of Storjcoin is 0.

Such an informative post to read about
I have written similar post about STORJ https://steemit.com/cryptocurrency/@pps/storj-tokens-revolutionizing-the-cloud-storage-industry

Nice post. I was about to post a similair post. No matter how populair a coin is. People should always do a proper background check. It surprises me how many coins are out there that don't have their basics right. Personally I always use: https://www.coincheckup.com Supposingly they researched every crypto coin in the scene based on: the team, the product, advisors, community, the business and the business model. They even score the coins stengths. For example: https://www.coincheckup.com/coins/Storjcoin X#analysis To check Storjcoin X Research report

" We just can't keep ourselves from buying the highest performing new gadgets. But at the end of the day, that 332HP car spends most of its time in the garage"
It´s very clear that your target audience is from upper middle class to upper class. Most people can´t afford an expensive car.Most people hardly have enough to eat,on a global level. Please consider this when you speak about what "we" are buying. If you have too much money lying around,maybe donate some? Here is a start: https://www.givedirectly.org Or to your fellow poor Steemians.