Centralized system will have better pricing, the core costs are hard drives and electricity. Both are cheaper at scale. P2p file sharing has been around for 20 years. This is great for piracy, not if you want to have consistent reliable storage. There is a whole thread on hacker news where people go into more detail here, this is actually a technical forum https://news.ycombinator.com/item?id=14806440
If you want to look at pure underlying economics, one of our competitors has a great post detailing how much it costs to run a storage costs.
* From https://www.backblaze.com/blog/hard-drive-cost-per-gigabyte/ 1TB of storage cost around $25. * I'll assume 3 year life-span for a drive. * Add 50% costs for the infrastructure and electricity to support the storage. * Add another 17.6% due to redundancy (17 data shards + 3 parity) - https://www.backblaze.com/blog/vault-cloud-storage-architecture/
Gives a minimum cost (before employee costs, marketing etc) of $1.22/TB/month.
If we do the same with Siacoin (which I believe stores 3 copies of your data) we get $3.12/TB/month.
I know the company I'm at has a few million clients and even at our scale competitions with Amazon on price is nearly impossible on the storage side. It's not where the margins are
I think people are just hyped about ethereum so just trying to find any valid usecase to use blockchain.
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Comparing the costs of a decentralized cloud storage system to a centralized cloud storage system (Amazon, iCloud, etc) on a per TB basis completely ignores the underlying premise of a decentralized system. A decentralized cloud storage system doesn't depend on the per TB costs to operate. Which is exactly the reason why it can offer prices way lower than what Amazon can compete with.
That's exactly the same mistake that the user "hudon" makes in the thread you linked to. He/she tries to estimate the economic costs at scale for hosting data. The mistakes are numerous, but the biggest reason why this thought is not correct is because it doesn't realize the fact that unused storage (just like unused bandwidth) doesn't earn any money. So if a user tried to scale an operation to the point where economies of scale came into play, no amount of economies of scale can compete with someone who wants to give something away of the same quality that they don't use. Let me further clarify this...
Amazon, in order to achieve economies of scale, must scale their own network in order to sell it extremely cheap in a way that meets demand. If Amazon purchases way too much network than the demand can meet, then their costs will be way too high and they won't be able to meet the demand price point required to be competitive. So Amazon must scale their network extremely carefully so that they can offer supply that meets demand precisely. Why? Because as I said, unused bandwidth and storage don't earn you anything.
This is exactly why distributed systems are effective at beating centralized systems at scale. Why? Because there is a crap ton of unused storage/bandwidth out there that has already been purchased that goes unused every single day. That's why when downloading a file over bittorrent that has a lot of seeders, you can achieve a way faster download speed than I can ever achieve downloading something from Amazon or Microsoft. This is because you're taking advantage of bandwidth offered from 50 different people who's bandwidth is just sitting idle anyway. You can't compete (from an economic stand point) against someone who is willing to give away something that they aren't using. So while economies of scale makes sense from a centralized solution perspective, those same economies of scale don't apply to decentralized solutions. Further elaborating on this..."John" purchases a 1TB hard drive for a personal reason, but then he only ends of using 50% of it. The other 50% of it goes unused until he realizes that he could earn a little bit of extra money with it. It isn't enough extra money to allow him to turn it into a business model, but it is better than letting unused space go to waste. So why not? This is the very reason why a decentralized solution will out-price any centralized solution. Because it takes economies out of the picture. A little bit here and there from millions of users turns into a massive solution that prices way lower than anything Amazon could provide at any scale.
That's why applying the "per TB costs" to Sia as you didn't is not the correct approach. The network doesn't depend on per TB costs to operate. It just depends on people realizing that unused disk space doesn't earn them anything at all and costs them nothing to "rent out". Therefore, earning something on something that costs them nothing additional makes perfect economic sense.
Look at Bittorrent, you can download a file way faster than any centralized provider and there isn't even an economic incentive provided by Bittorrent simply because people have bandwidth that their paying for anyway (for internet access) doing nothing throughout the day. The same is true (probably even more so) for storage.
This is true for Bittorrent. It is true from a compute perspective with crypto-currencies (it is why a 51% attack would be extremely difficult to perform by a single entity). It is also true for storage.
My question is what are the coins for, particularly with the applications of the technology that don't seem like they want to be an alt-currency. For example, two of the coins mentioned up thread, Sia and Storj. I checked both websites, generally understand what they are trying to do with the distributed storage and content access, but don't understand why anyone would want to own the coins.
Anyone have an explanation for amateur?
Thanks.
Crypto-currencies don't necessarily need to be used as a medium of exchange to hold value. For example, Sia and Storj, as mentioned are essentially a coin that represents a holding of value in the particular system they represent. Just like anything that has a represented value to it, as long as there are buyers and sellers agreeing on the value, then they can be traded or exchanged for something else of equal value. So while you can't go out and buy bread with Siacoin, there are exchanges (like Poloniex) where you can then go and exchange Siacoin for another currency that can be used as a medium of exchange (Bitcoin). Or, in these two cases, the coin as part of the storage is used to purchase storage space in their respective solutions. So buyers of Siacoin can use Siacoin to purchase storage and store their files in the network. It's all about buyers and sellers really. After all, isn't that what all markets are about?
Check out the Poloniex and OpenLedger exchanges. A whole world of Crypto-currency trading will open up to you. Fees are almost neglible.