Decentralized Storage vs Traditional Cloud in Web3: Pros and Cons To Consider

Your favorite Web3 application has its smart contracts on the blockchain, but where is the user information, and all other data stored? This is the battleground between decentralized storage and the traditional cloud.

While the logic of a dApp lives on the blockchain, the front-end and other data need to be stored somewhere. This creates a fundamental choice for developers: use a traditional centralized cloud provider such as Amazon Web Services or a new decentralized storage network, like Filecoin. Recent outages at major cloud providers also affected Web3 infrastructures, underscoring its lingering reliance on centralized infrastructure, an issue that continues to influence crypto businesses and applications processing crypto payments for business.

This article will provide a balanced comparison of decentralized storage and traditional cloud storage for Web3 applications, breaking down the pros and cons of each and helping you understand why this is one of the most important architectural decisions in Web3.

The Case for Traditional Cloud: AWS, Google Cloud, and Azure

The Pros

Performance and Reliability

Traditional cloud providers are incredibly fast, reliable, and have proven track records of uptime. AWS, Google Cloud, and Microsoft Azure have invested billions into infrastructure that delivers millisecond response times and guarantees of 99.99% uptime or higher. For applications requiring instant data retrieval and real-time interactions, traditional cloud storage remains the performance benchmark.

Microsoft Azure Cloud computing. Source: Azure

The speed difference is significant. Retrieving a file from AWS S3 typically takes milliseconds, while decentralized networks might take seconds or longer, depending on network conditions and the location of storage nodes.

Ease of Use

They offer mature and user-friendly suites of tools that developers are already familiar with. AWS S3, Google Cloud Storage, and Azure Blob Storage integrate seamlessly with existing development workflows, have extensive documentation, and support every major programming language and framework. The learning curve for developers transitioning from Web2 to Web3 is steep enough without adding complexity around basic storage operations.

Cost-Effective for Now

For many use cases, traditional cloud is still the most cost-effective option. AWS S3 standard storage costs approximately $0.023 per GB per month. Filecoin averages around $0.19 per month for 1TB, making it competitive but not necessarily cheaper when considering the complexity of implementation. For temporary storage needs with frequent updates, traditional cloud often wins on pure economics.

The Cons from a Web3 Perspective

Centralisation and Censorship

This is the biggest problem. If your dApp’s front-end is hosted on AWS, then Amazon has the power to shut it down at any time. This represents a major single point of failure that goes against the core ethos of Web3. We’ve seen this happen: in 2021, Amazon Web Services suspended hosting for Parler, a social media platform, demonstrating that even large applications can be deplatformed overnight.

For DeFi protocols, NFT marketplaces, and other Web3 applications claiming to be decentralized and censorship-resistant, hosting on AWS creates a fundamental contradiction. The smart contracts might be unstoppable, but if users can’t access the frontend interface, the application is effectively offline.

The Case for Decentralized Storage: Filecoin, Arweave, and IPFS

The Pros

Censorship Resistance

A file stored on a decentralized network is stored on thousands of different computers worldwide. There is no single company that can censor or delete it. When data is distributed across a decentralized network, it becomes permanently accessible. If one node in the network goes down, data is still stored on all the others.

With encryption and hashing technology, data is fragmented and distributed across multiple nodes, making it impossible for an unauthorized centralized authority to access or tamper with it. With no centralized server storing all data in one place, the chances of censorship occurring are essentially zero.

Verifiable and Trustless

Decentralized storage networks use cryptographic proofs to verify that your data is being stored correctly. Filecoin uses Proof-of-Replication and Proof-of-Spacetime to ensure correct data storage. You don’t have to trust a central company; the blockchain verifies storage integrity mathematically.

Arweave uses Succinct Proofs of Random Access for lightweight verification, ensuring miners are actually storing data rather than just claiming to. This trustless verification is impossible with traditional cloud providers, where you simply trust that AWS or Google is storing your data properly.

Aligned with the Web3 Ethos

Using decentralized storage creates a more fully decentralized and resilient application stack. Aligning with Web3 principles of data ownership and privacy, users have control over their data. This philosophical alignment matters to users who choose Web3 specifically for its decentralization properties.

The Cons

Performance and Complexity

Decentralized storage can be slower and more complex to use than traditional cloud storage. Retrieving a file can take longer. Arweave’s performance is quite consistent due to its permanent storage model, but the initial upload process might take longer.

Filecoin’s performance can vary based on network congestion and the distance between the client’s location and the storage miner’s location.

For decentralized storage solutions to compete with traditional cloud storage services, they need to be just as easy, if not easier, to use. Filecoin might have a steeper learning curve due to its more complex and flexible set of features. This complexity represents a barrier to mainstream adoption.

Immutability: Double-Edged Sword

The fact that data on some decentralized storage networks, like Arweave, is permanent and cannot be deleted can be problematic, especially regarding data privacy. Once data is uploaded to Arweave, it becomes part of the permanent web. This permanence is excellent for archival purposes but creates complications for applications that need to comply with regulations like GDPR’s right to deletion.

Arweave advises avoiding its network for sensitive or regulated data unless encrypted beforehand. The immutability that makes decentralized storage censorship-resistant also means mistakes cannot be undone, and private information cannot be removed if accidentally published.

Choosing the Right Solution: Use Cases

IPFS: Short-Term, Volatile Content

The Interplanetary File System (IPFS) is ideal for developers needing a decentralized CDN for frontend assets, dApp interfaces, NFT metadata, or version-controlled documents. It’s a flexible tool for building composable Web3 apps with fast access and referencing capabilities. However, IPFS lacks a native incentive mechanism, requiring external pinning services like Pinata or web3.storage to ensure data persistence.

Peer-to-peer modclient-server model. Source: IPFS

Filecoin: Scalable Renewable Storage

Filecoin is ideal for enterprises and infrastructure providers requiring scalable, secure, and cost-effective decentralized cloud storage. It’s suitable for large datasets, backups, and contractual file hosting. Filecoin Onchain Cloud now offers verifiable storage, fast retrieval, and fully on-chain programmable payments, expanding capabilities for Web3 builders.

Major projects like KYVE use Filecoin to durably store blockchain data across decentralized providers. Filecoin’s contract-based storage mirrors traditional cloud providers, making it easier for developers to transition from centralized services.

Arweave: Permanent Archives

Arweave is best for archivists, historians, journalists, and regulators requiring trustless and immutable preservation of important content. Its permanence is perfect for censorship resistance, compliance logs, or immutable recordkeeping. Applications like Mirror, deLand. land, and KYVE use it to archive Web3 and DeFi data.

Arweave introduces an entirely new economic model: permanent storage with a one-time fee. This represents a fundamentally new category of service that wasn’t possible before permissionless crypto networks.

The Hybrid Approach: The Best of Both Worlds?

The Pragmatic Solution

Many dApps today take a hybrid approach, using traditional cloud providers for front-end performance while employing decentralized storage networks for critical user data or backing up smart contract state. This pragmatic compromise balances performance, cost, and decentralization.

There’s no one-size-fits-all solution. The optimal strategy often involves hybrid architectures: use IPFS for fast access, Filecoin for scalable, renewable storage that behaves like a decentralized cloud, and Arweave for permanent archives and regulatory logs.

For example, an NFT marketplace might host its website interface on AWS for speed, store NFT metadata on IPFS with Filecoin backing for persistence, and archive important transaction records permanently on Arweave. Each layer uses the storage solution best suited for its specific requirements, including allowing users to swap crypto with no fees and track Bitcoin price.

Conclusion

The choice between decentralized storage and traditional cloud is fundamentally a trade-off. Traditional cloud offers better performance, reliability, and ease of use, while decentralized storage offers better censorship resistance, verifiability, and alignment with the Web3 ethos.

As decentralized storage technology continues to improve, we will likely see a gradual shift away from traditional cloud towards a more fully decentralized Web3 stack. Recent developments like Filecoin Onchain Cloud, which launched programmable storage and retrieval services, demonstrate the sector’s rapid maturation.

The future of the internet is decentralized, from the logic to the storage. Use Digitap to explore leading decentralized storage projects and to find dApps building a more resilient and censorship-resistant Web3. As the technology matures and performance gaps narrow, decentralized storage will increasingly become the default choice for applications that take Web3’s promises seriously.

FAQ

What is decentralized storage?
Decentralized storage distributes data across multiple independent nodes on a peer-to-peer network rather than storing it centrally. Data is divided into encrypted fragments spread globally to enhance privacy, security, and availability.

What is Filecoin?
Filecoin is a blockchain-based decentralized storage network that allows users to rent out unused storage space and others to store data securely. It uses a proof-of-replication and proof-of-spacetime consensus to verify that data is stored correctly over time.

Is decentralized storage cheaper than AWS?
Decentralized storage can be cheaper depending on the platform and use case. For example, Filecoin’s costs for 1TB average around $0.19 per month, significantly cheaper than AWS’s roughly $23 per month for the same space.

Where is the data for an NFT stored?
NFT data, including metadata, images, or other assets, is often stored off-chain on decentralized storage networks like IPFS or Filecoin to ensure immutability and censorship resistance.​

What is the InterPlanetary File System (IPFS)?
IPFS is a peer-to-peer, decentralized file storage protocol that splits files into small chunks and distributes them across a global network of nodes. It provides fast data access, content addressing by hash, and censorship resistance.