Decentralized Data Storage Platform Storj Migrates to Ethereum Network From Bitcoin
Storj, the open-source distributed cloud storage platform, officially migrated from the bitcoin-based Counterparty protocol to the Ethereum network on March 23. Bitcoin browser Brave is also looking to the Ethereum blockchain to add value to its offering.
Storj is a protocol which operates as a decentralized data storage platform wherein users can store information within a secure ecosystem. Previously, Storj hedged information onto the Bitcoin transaction ledger or blockchain to encrypt user data and ensure that information is stored in a decentralized manner.
However, bitcoin transactions require miner fees in order to be facilitated, settled and confirmed by miners. According to Bitcoin Fees, a platform designed by 21 Inc. for users to find the optimal transaction fee, the average miner fee for bitcoin is $0.47.
Bitcoin’s transaction fee increases depending on the size of the transaction. If the information stored in the transaction is larger than usual due to large inputs and outputs, the fee has to be increased for the transaction to be confirmed by miners at an average confirmation period. If a large transaction fails to attach an appropriate fee for it, the transaction can take over 48 hours to be verified and in the worst scenario, cancelled and returned to the users after 72 hours.
Bitcoin’s blockchain congestion resulted in its fee market to grow more rapidly than the community expected. The average fee increased from around $0.2 to $0.47 over the past few months and as a result, platforms like Storj have migrated to the Ethereum network.
As reported by BTCManager in an article entitled “Ethereum: Viable Alternative to Bitcoin as a Payment Network,” the fee structure of an Ethereum transaction is significantly different from that of bitcoin. The transaction fee of Ethereum, also known as gas, is not dependent on the size of the transaction. Thus, a user sending $20 will pay an identical fee or gas to a user sending $2 million.
Edmund Edgar, the founder of Social Minds Inc., explained, “In Ethereum, a user’s account can be modeled as… an account. You can have a single balance, and it does not matter how many payments it took to get you that balance. Wallets are simpler, less surprising stuff happens, and fees are easier to predict and explain. All payments cost the same, regardless of where the funds came from.”
In consideration of Ethereum’s flexibility when it comes to the fee market, Storj decided to migrate its platform to the Ethereum network. The development team of the Storj project explained that they simply could not deal with the transaction fees of the Bitcoin network any longer. In February alone, Storj stated that they paid over $1,600 in transaction fees, which was equivalent to 13 percent of all payouts.
In its official statement on March 23, Storj Labs CEO and CTO Shawn Wilkinson stated:
“Because Counterparty uses the Bitcoin blockchain for transactions, which is currently having issues with transaction backlog, our users have experienced extremely long transaction times (hours to days).”
Wilkinson added that his development team would collaborate with the development community of Ethereum to migrate to the Ethereum network efficiently, without any issues regarding the change in the protocol and its tokens.
“Over the next few weeks, I will be working with the community, the team, and the thought leaders to prepare a clear migration plan. As always, the process will be transparent and public. We believe the technical migration process will be straightforward. Farmers will use a simple tool to convert their tokens from the old to the new protocol, and then change their payment address in the Storj Share application,” Wilkinson noted.
As well as Storj’s shift to Ethereum, web browser Brave, launched to provide content providers with a more practical method of securing revenue with digital currency micropayments, also announced its plans to launch an Initial Coin Offering (ICO) for its Ethereum-based ad token.
Since publishers and content providers on the Brave browser will be credited with micropayments depending on their traffic allocated to its advertisements, Brave plans to offer publishers an Ethereum-based token as their main payment method. As discussed above, Brave is utilizing the Ethereum network for the same reason as Storj; flexibility and low fees.
The development team of Brave released a white paper on its Ethereum ad token and revenue distribution system entitled “Basic Attention Token (BAT)” where it was explained that its Ethereum-based token would serve as the basis of its ad exchange where advertisers will sell their ads to publishers and content providers:
“Brave will now introduce BAT (Basic Attention Token), a token for a decentralized ad exchange. It compensates the browser user for attention while protecting privacy. BAT connects advertisers, publishers, and users and is denominated by relevant user attention, while removing social and economic costs associated with existing ad networks, e.g., fraud, privacy violations, and malvertising.”