All You Need To Know About Storage Tokens


The concept of cloud computing has gained considerable popularity these days. Every company needs a website and every website requires storage space. However, rental and self-owned centralized storage solutions may have some limitations. This article is about storage tokens and their role in this industry.

What is a Storage Token?

Storage tokens have introduced the concept of decentralized storage. Blockchains can store their on-chain data in a decentralized manner in the form of distributed ledgers and nodes. Using the same concept, storage token protocols offer decentralized data hosting services.

Cypher Mind HQ

How do Storage Tokens Work?

Storage tokens are native to blockchain projects and DeFi protocols that offer decentralized hosting services. Users of the service can rent empty storage space in exchange for their storage token holdings.

These tokens are also traded on exchanges and DEXs among other crypto listings. Storage tokens can also operate as governance tokens allowing holders to cast votes concerning upgrades and other changes.

What is Decentralized Storage?

Much like the blockchain network, a decentralized storage service can disperse the data among nodes. There are many advantages associated with the term namely privacy, scalability, resistance, and security.

However, there are certain caveats associated with this type of storage option as well. Here are some key components of decentralized storage:

  • Data storage takes place in the form of uniform blocks.
  • Every new block contains a specified hash or encrypted code linked to the last verified block as a security measure.
  • Hash information on each block can be traced back to the genesis or first block of the network.
  • It is possible to assign different levels of user access to the stored data. Additionally, the admin may also introduce a verification process to ascertain block authenticity.

Advantages of Decentralized Storage

Here are some of the most important benefits of decentralized storage:

Cypher Mind HQ
  • Retail and commercial entities can rent out storage services using decentralized hosting.
  • The process of onboarding and changing the storage services becomes automated and organic, unlike centralized alternatives.
  • Decentralized storage options such as IPFS enhance data access and lower risk of data loss.
  • Decentralized storage has monetized nodes. Anyone can become a node operator and earn money by renting out spare storage.
  • Decentralized storage grants security from censorship and unwarranted outages.
  • Decentralized storage removes a single point of failure that can bring the entire network down.
  • Distributed hosting can also improve scalability in comparison to traditional options.
  • This type of storage is also cheaper and easier to access.
  • In addition to bettering the security standing, decentralized storage also increments privacy.
  • Data remains secure and accessible on decentralized storage even if some of the nodes are affected on account of replication.
  • Decentralized storage has also incremented cloud mining by incentivizing nodes.

Centralized Storage Vs Decentralized Storage

Here are some major distinctions between centralized and decentralized storage options:


Centralized storage options are usually expensive on account of maintenance and upgrade costs. On the other hand, decentralized storage is cheaper since it does not account for the aforementioned charges and it is more scalable at the same time.


Centralized storage has a concentration of data in one or a few places. Therefore, it offers less resistance to hacks and exploits. On the contrary, decentralized nodes are distributed and it is almost impossible for hackers to decrypt all nodes at once.


Centralized storage depends on a single location that is owned by a nominated centralized authority. Meanwhile, decentralized storage is spread across the globe in the form of nodes and each node does not have any idea about the particulars of the data that they are hosting.


Centralized storage often has one or a few copies to back up their data. However, it can increase their operational cost. At the same time, in case of a data breach or loss, this type of storage may not be able to secure backup.

However, decentralized hosting distributes data into several copies by design and it remains more affordable without increasing network complexity or costs.


People with additional storage capacity can now earn additional income through decentralized storage projects such as Filecoin, MaidSafeCoin, Storij, and Siacoin, etc.

Cryptocurrencies such as storage tokens play an important role in upgrading storage options and bringing more value to technology such as cloud mining.

Author: Isacco Genovesi

Isacco writes news articles, reviews and guides about cryptocurrencies including technical analysis, blockchain events, coin prices marketcap and detailed reviews on crypto exchanges and trading platforms.

Leave a Reply

Your email address will not be published. Required fields are marked *