Six steps to understand how blockchain storage works
Six steps to understand how blockchain storage works
Storing data in large, centralized data centers comes with performance, availability, and scalability issues, as well as high capital or operating expenses. Additionally, centralised data invites sophisticated attackers. Because of these factors, businesses are trying to decentralise data storage. Blockchain storage is one way to do it.



The development of Blockchain storage is still a relatively young technology, but its popularity is growing. Potential business use cases have begun to emerge in an effort to increase the security and reliability of data storage. Understanding how this technology works is a critical first step in determining if it's the right approach for your organization.

How blockchain storage works

For recording transactions between two or more parties blockchain is used which is a distributed ledger technology. Until recently, the technology had been used primarily to support cryptocurrencies, such as bitcoin, but it is now gaining traction in other areas.

The blockchain ledger serves as a decentralized database that maintains the details of each transaction. Transactions are added to the ledger in chronological order and are stored as a series of blocks. Each block references the previous block to form an interconnected chain.

Each node keeps a complete copy of the distributed ledger, which is spread among a number of nodes. Blockchain automatically synchronizes and validates transactions across all nodes. The ledger is transparent and verifiable by all participating members, eliminating the need for a central authority or third-party verification service.

Due to its distributed nature, the development of blockchain is being touted as a natural fit for peer-to-peer (P2P) decentralized storage. In this scenario, blockchain provides the necessary structure to create a logical storage pool of geographically dispersed storage resources that serve as blockchain nodes.

A blockchain-based storage system prepares data for storage and then distributes it through a decentralized infrastructure, a process that can be broken down into the following six steps:

  1. Create data snippets. The storage system breaks the data into smaller segments, a process called chunking . Sharding involves dividing data into manageable chunks that can be distributed across multiple nodes. The exact approach to fragmentation depends on the type of data and the application performing the fragmentation. Fragmentation of a relational database is different from fragmentation of a NoSQL database or fragmentation of files on a file share.

  2. Encrypt each fragment. The storage system then encrypts each piece of data on the local system. The process is entirely under the owner's control. The goal is to ensure that no one other than the content owner can see or access the data in a chunk, wherever the data is located, and whether The process is entirely under the owner's control.

  3. Generate a hash for each chunk. The blockchain storage system generates a unique hash, an encrypted output string of a fixed length, based on the shard's data or encryption keys. The hash is added to the ledger and shard metadata to link the transactions to the stored shards. The exact approach to generating hashes varies from system to system.

  4. Replicate each fragment. The storage system replicates each shard so that there are enough redundant copies to ensure availability and performance, and protect against data loss and degradation. The content owner chooses how many copies to make of each snippet and where those snippets are located. As part of this process, the content owner must set a threshold to maintain the minimum number of copies as a guarantee against data loss.

  5. Distribute the replicated fragments. A P2P network distributes replicated chunks to geographically dispersed storage nodes, either regionally or globally. Storage nodes are owned by multiple organizations or individuals, sometimes known as farmers , who rent additional storage space in exchange for some form of compensation, usually cryptocurrency. No one entity owns all of the storage resources or controls the storage infrastructure. Only content owners have full access to all of their data, no matter where those nodes are located.

  6. Record the transactions in the ledger . The storage system records all transactions in the blockchain ledger and synchronizes that information across all nodes. The ledger stores details relevant to the transaction, such as shard location, shard hash, and lease costs. Because the ledger is based on blockchain technology, it is transparent, verifiable, traceable, and tamper-proof .

Although step six appears last, blockchain integration is an ongoing process, with the exact approach depending on the storage system. For example, you could initially record the transaction in the blockchain ledger when the storage process begins. It would then update the transaction with information such as the unique hash or node-specific details as they become available. Then, once the participating nodes have verified the transaction, the system marks the transaction as final within the ledger, and locks it to prevent changes.

The six steps outlined here are intended to conceptualize the blockchain storage process. The precise strategy will rely on how a given use case's implementation of a particular storage system and management of that data storage are handled.