Decentralized Storage Unveiled - The Future of Cloud Storage With Storj Labs

In this episode, Mark Eckerle and John Gleeson, Chief Operating Officer at Storj Labs, discuss the benefits and simplicity of its decentralized storage service, the functionality, and advantages of its STORJ Token as well as the growing appetite for the decentralized web in the enterprise environment.

Transcript

Speaker 1 0:00

Hello listeners, welcome to this episode of Cryptonomics. Before we jump into today's discussion, please keep in mind this recording is for general education and is not intended to constitute investment advice. Any opinions expressed are those of the participants and do not necessarily represent those of with them. Hey folks, welcome back to another episode of cryptonomics, brought to you by with them. As always, I'm your host, mark Ackerly, and today I welcome to the show John Gleason, chief Operating Officer at Storage Labs. Welcome to the show today, John.

Speaker 2 0:30

Hey Mark, thanks for having me. Really appreciate it. Really excited to for our conversation today. Yeah,

Speaker 1 0:34

Likewise, likewise. Looking forward to, to jumping right into it. Do I think a good starting point would be, how long have you been with Storage Labs? Five years, six years,

Speaker 2 0:43

Something like that. Yeah, I joined, uh, storage Labs in 2017, so it's a long time maybe, uh, in the crypto space for sure. I

Speaker 1 0:51

Was gonna say every crypto year is like three to four in traditional finance or traditional tech. Oh,

Speaker 2 0:56

It sure is<laugh>. I feel it these days too. But, uh, yeah, it, uh, it takes a lot of time and effort to make decentralized applications, you know, kind of work in a way that, uh, that businesses are come to expect as they start to adopt that technology. And it's, uh, it's great that, you know, well, it's not great that it's taken, you know, this long for the, the industry to sort of mature to a level where, where it's really delivering some serious value, but at the same time, um, it's really exciting to be where we are right now.

Speaker 1 1:25

Yeah, so I mean, I think that's a great segue right into the product itself, what Storage Labs is. Um, I recently saw an announcement, I think Storage became the official partner with Adobe Official video partner with Adobe. So congratulations to that. I mean, I think 2023 has been fantastic for the company. I feel like every couple weeks I'm seeing storage in the headline. So let's dive right in. What is Storage Labs? What is decentralized storage as it relates to the product that you guys offer to market?

Speaker 2 1:53

Yeah, so Storage is a decentralized cloud object storage provider. So we're a drop-in replacement for Amazon s3. Uh, but the big difference is that instead of building data centers, aggregating data and, and operating, you know, at a billion dollar scale where, where we're having a, you know, a huge impact on, on climate and supply chains by just, you know, building buildings and aggregating all that hardware and just really spending an infinite amount of money, which is a market that's very hard to, uh, compete against. What we do is we aggregate excess data center capacity from data centers all around the world and even individual, uh, computers. And so anyone can share excess capacity with the network. And today we have about 24,000 points of presence in 103 different countries operated by something like 10,000 different operators. And all of those operators share their capacity. We aggregate it and make it available as, uh, an object storage layer. So what that means is we're basically the Airbnb of hard drives. And so it's a completely different business model and it has the potential to be really disruptive because it's offering a service that is in many ways superior to Amazon's S3 object storage, uh, but at a price that's about 80% lower.

Speaker 1 3:02

So if I'm a user, right, whether I'm a a retail user like individually and I have an excess hard drive that I want to then open up to the network and you offer to storage as excess hardware or, um, a user and I want to back up my photos, my videos, whatever it may be, can you like walk me through a transaction? Cause I think it's fascinating the charting process of how data there, there's no single point of failure and I think that's critical for users to understand. So can you walk us through almost how the inner workings of the protocol or, or I should say the decentralized storage nature works?

Speaker 2 3:39

Absolutely. So, uh, and this is, this is a great question because this is when we get asked by customers all the time, like, okay, so lemme get this straight, there's 24,000 computers, you don't own them. And how is it that my data is safe on top of those? And uh, the interesting thing is because we've built software that's designed to run a data center effectively in the most hostile environment in the world. So we assume that at any point in time, any one of those drives could fail, leave the network, or actually be hostile and try and disrupt the network. And so what we do is we distribute the workload across the entire network in a way that gives us sort of the advantage of being able to tap into a lot of parallelism, moving a lot of pieces at the same time, and at the same time build high availability because data is distributed over all of those different nodes. So the first part of your question was how does somebody share their hard drive space? So we make open source software that anyone can run, it's a docker container, it's also, uh, available in a few other implementation options, and you run that on your computer and we just expect a few simple things. It needs very low processor, a couple of terabytes is fine, although people, uh, some of the data center operators are sharing hundreds of terabytes with us. The network runs best on a large number of smaller nodes. And so even the large operators are running just lots of smaller nodes, but it aggregates to that, that larger amount. When those users, uh, sign up, they provide us with a, uh, ERC 20 compatible wallet. So that's a, an address to which we can send storage token, and this is probably one of the best use cases for, uh, for the use of a utility token at scale today, which is we have, you know, 10,000 different people that we're paying to, to store their, their data and we're sending sometimes micro transactions for new users or larger transactions for established, uh, providers. And being able to pr send that many transactions effectively to what is right now, I think 103 different countries, right? We don't have to worry about currency conversion. We don't have to worry about stripe transaction fees, right? We use zk ssy, which is a, uh, actually a ZK era now, which is a layer two payment service. And so what that lets us do is really lower the cost on a per transaction basis so we can get these transaction payments down to, to a really acceptable level. And so we're able to do these payments at scales because we have a cryptocurrency associated with, uh, with our business model now on. So those users, they just spin up the software and basically just let it run. And as long as that, that computer has good bandwidth and it's online all the time, they'll slowly accumulate storage tokens for the space that they share that we utilize and the bandwidth when users download data from a, uh, user perspective, if somebody wants to actually store data on our cloud, these are two separate functions. So you can share space or store data or do both, but you're not forced into a situation where you have to do both. And so you can use any application. There are a bunch of applications out there that have integrated storage. Adobe, uh, was one of the ones you mentioned. There's a, a large number of apps in the media and entertainment space. Amo, iconic GB labs, just a bunch of'em. Popular NAS software like, uh, IX systems, TRU NA has integrated storage as a backup service. There's just a a ton of different options you can use, but when data is stored, um, every object is first encrypted and it's encrypted with keys only the customer has. And that's important for a zero trust storage layer on the network because you don't want data that's stored on storage nodes to be able to be accessed by third parties who can access those nodes. And so data is first encrypted with keys we don't have, only the customer has. And then the, the data is erasure coded, so that means it's broken up into little tiny redundant pieces today. We break up objects into 80 pieces of which only 29 are required to get your object back. And so that means when those pieces are distributed over 80 different nodes, 51 of those nodes can go offline at the same time and your data is still highly available, but at the same time, it moves really fast. So globally, we get consistently better performance from a single upload even than Amazon S3 in any market, which is pretty cool. So when you upload and download from Amazon in the same city, so if the bucket, the S3 bucket in the, uh, the download pointer in the same city, Amazon's gonna be faster. But if you upload in Seattle and download in Frankfurt, we're gonna be faster. And if you download in, uh, Russia even faster than that, right? So no matter where you're accessing and moving that data from, it's gonna be consistently fast because we're distributing that data over our network that's globally distributed all around the world.

Speaker 1 8:04

The the one point you mentioned in there that I wanna make sure there's a clear distinction of is around the technomics around the storage token. That's the, call it the reward mechanism, but it's effectively paying out users that are offering up their hard drive space, right? Their computing power. Can you walk us through the, I I mean I think you get a great job of explaining the use case of the storage token and how it interacts with the protocol, but is that the only means to receive payment? Is there any type of fiat settlement or is that strictly how storage token operates? I just wanna go into the, the clear distinction between the decentralized storage and storage the token S T O R J.

Speaker 2 8:43

Sure. So the decentralized storage protocol is really the, the layer that does the data transfer. So we don't use the, a blockchain proper in the actual storage and retrieval of data, uh, because blockchains have high concurrency and high latency, and those are things that are just killer for most storage use cases, right? You can't stream data if you're waiting on a blockchain consensus mechanism to upload or download. So, um, so that's sort of one part of it. But what we use the token for is primarily on the, uh, the payment to storage node side. Like it's a no-brainer that efficiency is great, but on the person storing uh, data, uh, you actually get, uh, more storage capacity when you pay a storage token than you do pay when you pay in fiat. Now, we offer a fiat gateway for payment because what we want to do is have a platform that appeals both to web three, uh, applications and also traditional applications in the web two space. So if we want to, uh, have applications like Adobe, uh, integrate with us and have customers of Adobe use storage as the storage backend, we're a great service for that, right? For video streaming, video editing workflows that high throughput and high performance is great, but most of those companies don't want to have to deal with the aspects of figuring out a new protocol, figuring out how to use tokens or technomics. They just wanna swipe a credit card. And what we find is we've actually built a suite of tools that appeal to web two enterprises to sort of get them to dip their toes in the web three water. And so we have a series of these sort of gateway offerings. So there's the payment gateway, you can do stripe or storage token, you get a little bit more if you use storage token, right? So bring them in because it's easy. I know how to do this. I just switch from Amazon to storage, I save 80%, my performance is just as good. I'm a happy customer. Maybe I want to get a little bit more value and I'll try this token thing. So that's kind of how, how the payment side works. And then we also offer sort of a compatibility layer. So while you have a native protocol that lets you talk peer to peer with all of those, uh, storage tokens, but it's a development effort, we also offer an S3 gateway. It talks S3 on the front and storage protocol on the back. And so we host those so that businesses can just say, oh, my app already talks s3, I don't wanna rewrite my app. What have you got for me? Oh, just pointed at our gateway, right? So a lot of these tools are really designed around that, that onboarding experience to make it easy to adopt and then, uh, slowly expand your capabilities. And we've seen a lot of users who have started with credit cards who have moved into crypto because they get more, right? Mm-hmm.<affirmative>. So just better value. We've also seen customers that started with, uh, using the S3 gateway and they've actually done a native integration in their app. And so if you look at, uh, GB Labs is a great example. So upload uses our S3 gateway, but download uses native because when you get that peer-to-peer parallel transfer, you can get a lot more speed. You know, you can get as much speed as you have network and, uh, compute horsepower. And so they looked at it and said, this is a no-brainer. We'll make the tech investment because the payoff is really good. And they've integrated a web BRI technology.

Speaker 1 11:43

Was that always part of the company's mission or release, um, as you guys were building the product to appeal to that web two enterprise business case where right, they, they don't wanna go out and buy storage token, they don't want to deal in the crypto bubble, right? If you will, or the hot whatever crypto is. They don't wanna buy and have that on their balance sheet in order to pay customers, pay vendors, they just wanna have decentralized storage. Was that always part of the company's vision? Because I think that opens up such a mass market when you think about it, because a lot of companies building in this space are crypto only, crypto driven. We only see one lane, whereas you're, Hey, we're appealing to the masses here.

Speaker 2 12:22

Yeah. And, and I'd like to say we're the only one who thought like that, but we're not the only one. But, but it, that was one of the early things. So if you go back to our, uh, our white paper, uh, that we published in 2018, what you'll see is ES three compatibility is listed right in the white paper. And we've achieved, um, I think we're one of the few projects that's really achieved a hundred percent of the objectives in the white paper. And, and then some right now, of course, we also found some things like, yeah, we had Adelia in there and we emle out cuz it was just too slow. But there's just a, like when you, when you that aggregate there, yeah, that was definitely in there. And it, it's really driven by the fact that we look at web three as you know, that's where the innovation is and that's where like a lot of the, the, the thought leadership is coming from, but it's not where a lot of the data loads are today. And so if we also want to be able to have the different opportunities to build businesses on top of web three protocols, um, we have to build that bridge. And so, uh, we are doing it, we have, uh, partnerships with both, uh, live Pier and akosh. And so Live peer and akosh are distributed marketplace or decentralized marketplaces for distributed, uh, compute, live peer doing video transcoding, akosh doing more, uh, general purpose compute, and now leaning heavily into the AI space. And they are seeing really good adoption the same way we are. Because if you take advantage of all of the latent capacity, you don't have to build data centers and you don't have to do all of that extra work. You can pass that savings along to your customers. And in all three cases, we're all 80% or more low, uh, lower cost than Amazon for what are just as good comparable services.

Speaker 1 13:54

So outside of call savings, why would the average business average user that needs cloud computing, right? What are the benefits of going to a decentralized storage as opposed to Microsoft Azure, Google Cloud? You mentioned aws. I, I wanna make sure it's clear to the listeners why this is the future, right? Because I feel like we, in the last 10 years, right? We just finally understood what cloud is, what the cloud is like, I'm still trying to explain to my mom what the cloud is<laugh> when it comes to storage. Oh. Um, so now we're taking that next step. And I just want, I'm curious in your words, what makes outside of cost savings, what makes decentralized storage a better alternative?

Speaker 2 14:37

Yeah. Well, since I'm talking to our accounting firm, you know, absolutely, like price is number one. Like that absolutely resonates. That gets people into a, particularly in a world where prices are not going down, right? Cloud services, they've, they've sort of held steady for a very long time. Even though the, the cost of hardware has gone down, those, those cloud prices have not gone down at the same level. And in some cases, uh, we're seeing them go up. And so that, that is a huge driver, but there are a lot of other good reasons to use decentralized object storage. The, probably the, the right following, uh, price is the security and privacy aspects of it. Um, so because we are built to, to store data on a collection of third party hardware, the things that we had to do to sort of make sure that we could ensure the privacy of that data, strong encryption end-to-end encryption for not just data, but metadata as well, and a really, uh, well integrated, uh, encryption ecosystem where all of the tools are interoperable, right? When users sort of look at what they have to do to encrypt data and share encrypted data on traditional object storage, and then they look and see what they can do on decentralized object storage, the capabilities are really differentiated because they're really designed to have private storage of data and private sharing of data. And so users can store data on storage. We have no idea what's being stored on us only that there are bites there, and then they can share that data with other people. We have no idea with whom the data is being shared under what circumstances. All we can tell is it's a valid access credential. All the encryption decryption happens outside of us. And so having that really strong privacy story is good. And then the last thing is probably the availability and performance, right? Because we're distributing the service over such a broad, uh, geographic area and such a heterogeneous collection of power supplies, network connections, hardwares, and operators, the probability that a data center going down is gonna impact our operations or anybody's access to their data is astronomically low. So for any individual piece, you could lose 51%, uh, or 51 operators and nothing would happen. But in the aggregate, we could lose any data center, any equipment, any pipe to the internet. There's no single point of failure throughout the whole thing. And for our customers, they look at that and go, wow, we have great performance, low cost, fantastic privacy and encryption security controls. It's kind of a no-brainer. And so customers will try, you know, backup data and things where, you know, it's sort of relatively low risk, and then they'll slowly transition into the heavier workloads because honestly, it's the ones where data's being egress to the public internet and that are the most expensive on the public cloud, and it's irrationally cheap on decentralized storage.

Speaker 1 17:14

Yeah. Like you said, costs are not going down anywhere. So find call savings wherever you can. I think one of the, the, the most exciting parts was when we, we crossed paths, I think it was almost a year ago at this point now. And you, you gave me a demo of a video tutorial and it showed where the pieces of that video was stored and broken up around the world. And you could see not explicitly, but which countries it was coming from. And it was fantastic because to your point, right, no single point of failure. It's not that, hey, my data is broken up into 80 parts, but it's all held at one storage center or three storage centers in the state of Washington, wherever it may be. It's around the world. Completely broken up, completely decentralized. Is there anything on the user as far as piecing that data together? Or is that all built in within the protocol? Like, is there, I'm trying to think of how simple it is to use Yeah. From your average consumer.

Speaker 2 18:08

It's really dead simple, right? I mean, we have a little admin console. You can drag and drop files right up through the browser, and we'll handle all of the encryption or erasure coding, but we'll do it with your key and we'll manage the key in the browser client side, right? So we make sure that we have those privacy controls in place, but it's really easy to use any, uh, any application user who's used Amazon S3 can use our service. It's fully compatible. Um, the documentation is fantastic. It's very easy to use. And as you think about how this service scales, users don't have to worry about these things. They just have to keep track of their private key, just, you know, it's an encryption key. It's like a password. If they lose it, they lose access to their data. And we make that abundantly clear, but that also means no one else can get access to it. And the great thing is that because of that, that simple user experience, they just simply click, you know, share a file and they get a url, or they get a little access grant to share their object. The software handles all of that encryption at the protocol level, all of the, uh, the, the sort of key derivation. And it, it's sort of, they don't have to worry about, oh, if I share just one folder or one file, how do I just get an encryption key for that one folder or one file? And the service does all of that, right? And so it's really, really simple, really easy to use. And because the, the encryption ecosystem is, is really well integrated, it doesn't matter whether you use Adobe, you drop something to the browser, you use the S3 gateway, or you use, um, FileZilla, all of those things all work, uh, and interop operate consistently, and you don't necessarily see that with the other cloud providers, um, which is one of the great things.

Speaker 1 19:40

Yeah, I mean, in today's world, data is key, right? So protecting that with the most secure privacy, a a as much controls that we can implement around that data, I think is, is, is paramount, right? Because I feel like every month, every week you're, you're seeing something happened where data was corrupt, data was sold, it, it's mismatched. I mean, my inbox is getting<laugh> blown up with spammy emails that I don't even know what I signed up for. Yep. So it's, it's all over the place. And I think putting control into the user's hands is paramount in today's environment. So I think one of my last questions I just wanna bounce off you is holistically from a decentralized tech perspective, doesn't have to be decentralized storage, but what are you most excited for in the next year, two years, five years, just in, in that time horizon, how decentralized tech can disrupt normal technology, right? Because I feel like when you talk to different crypto companies, different protocols, everything is decentralized, this decentralized that. And when you, when you pull back the curtain, sometimes it's not always decentralized, but when you're talking to a a, a truly decentralized protocol, what are the perks and benefits and what does the longtime horizon look like to you, and what are you most excited for?

Speaker 2 20:54

Yeah, so I'm most excited that, that today, the, the, um, the reception and, and the interest, uh, particularly the enterprise side for, for the tech and what we do is a lot warmer than it was five years ago. I mean, crypto was absolutely toxic, uh, in the enterprise environment. If a CFO got wind that there was a token associated with you, you were out, right? There was no way to continue the conversation. But it's a different economic climate right now, and it's not just a crypto window, but it's a little bit of uncertainty in the, in the general economy. And so I think a lot of enterprises and, and businesses are looking to find, uh, an eek out cost savings, and they're not finding that in traditional cloud providers. They're finding that in the decentralized, uh, web because we're tapping into things like latent capacity all around the world. And because the drives that are getting added to storage are largely already being spun, powered and cooled. They're already on, they're already being bought. They're just empty or partially empty, and somebody's able to monetize those. And so what we're able to deliver to customers is an elastic service where we don't have dependency on supply chain, right? If someone says, Hey, I've got a hundred petabytes, can you store it? We say, absolutely, because we know there's a hundred cap petabytes of latent capacity out there that we can tap into. We have, uh, you know, planning and forecasting tools and all of that good stuff. We don't have to go buy a hundred petabytes of hard drives, which if you need the servers and the cages and the racks and the power supplies, good luck right now in that supply chain right now. It, it's not even feasible. And so it's really appealing that you can get all of the benefits that we talked about earlier in, in an elastic service where you don't have necessarily that same sort of timeline, uh, and time horizon with those dependencies. I think another, uh, thing that I'm excited about is because we're starting to have those conversations enterprise, they are taking, you know, sort of that same rigor to decentralize businesses in decentralized space as they are with startups generally. And so as they, you know, they look at a business and they look at like, okay, so now I'm gonna work with a startup and I'm gonna store my critical data on you. Tell me are you well established? Are you well run? Do you have good governance in place? You know, give me some of the indicators that would tell me you're a mature business. And one of the things that, that I really enjoy about working with, with them is that they're willing, able and expert, they have expertise at doing audited financials in the decentralized space, because it's one of those things that, that, that telegraphs to the enterprise that you're ready to do business with them, right? And so it's, it's a, it's a signal of maturity. And so when you take all of that together, uh, the thing that I'm excited about is just what this means for us, right? It means growth, it means opportunity to really start taking on much larger workloads and distributing the, the, the revenue and the benefits associated that with that, with our entire network. So as we grow and we succeed, the people who provide that storage also succeed. And so that's, that's kind of the, the whole, you know, purpose of this decentralized space is, is to sort of, you know, distribute control, distribute the balance that everyone participate in the cloud economy. And we're seeing that come to fruition right now. And, you know, I I, I just love to, you know, not just, you know, build interesting tech that, that solves a problem, but actually put it in the hands of the user and see them adopt it and see, you know, the, the looks on faces and people are like, okay, so let me get this straight. There's 24,000 of these nodes out there, and you just sprinkle data on them and it works. And, you know, sometimes like I wake up in the morning, I go, I can't possibly work. And then I look at it and it works, and I'm like, I can't possibly work as well as it does. And it's really great. And, and that's the, the number one thing is, you know, customers will, will listen to you and go, this really sounds interesting, right? I, I've heard this a million times from people, you know, in, in, in your space. They talk a good game, but when I actually try it, it falls over on its side and we're like, hit it, hit it with everything you got. And that's, and it works. And that's, so that's what, uh, that's what gets me up in the morning. That's what keeps me going during the day.

Speaker 1 24:42

Well, that's the beauty of it, right? When someone comes to you and says that it can't possibly work, like, here, let me show you<laugh>, because that's the best use case, right? Is just showing how, show it the, the protocol showing the service in action. So I, I mean, I think that's a perfect way to put a bow on today's episode. John, where can listeners go to learn more about yourself as well as storage labs and the exciting things that you guys are working on? Uh,

Speaker 2 25:03

Absolutely. So storage is storage.io, s t o rj.io. So you can go to the website, you can sign up for your free account and try it. You get 25 gigs storage bandwidth every month for free. Uh, we have great documentation@docs.storage.io, and of course you can join our community@forum.storage.io. Uh, if you wanna track me down, you can find me on LinkedIn. I'm easy to find. I'm JG Gleason, I'm also JG Gleason on Twitter and also on Telegram. So wherever you need to find me, I'm pretty easy to locate.

Speaker 1 25:30

Awesome. Great. Well, John, it was a pleasure having you on today, and it was great catching up. Great,

Speaker 2 25:34

Mark. Appreciate it very much as well. Thank you, and have a great day.

Speaker 1 25:37

That wraps up today's episode of Cryptonomics. All views expressed in this podcast by Mark Ackerley or his guests are solely their opinions and do not reflect the opinion of rhythm. This podcast is for informational purposes only.