Amazon hasn’t cracked China’s cloud market. This blockchain startup thinks it can.

Photo credit: John Voo.

For foreign cloud providers, entering China’s market is often more trouble than it’s worth. Not only are overseas firms required to form joint ventures with local companies, but they’re also prohibited from owning or operating certain types of cloud tech and hardware.

That’s why AWS sold off US$300 million worth of cloud assets to its Chinese partner earlier this week. Factor in China’s new data localization laws, and it’s no wonder that domestic firms captured more than 80 percent of revenue in China’s cloud industry this year.

Storj Labs, a US blockchain startup, thinks a decentralized model could soften some of those pain points. Instead of operating and running its own data centers, the startup runs a peer-to-peer Dropbox-like service that lets users (called ‘farmers’ in Storj parlance) rent out excess storage space on their hard drive. Farmers are paid in STORJ, the startup’s eponymous token. Payment details of file transfers are recorded on the Ethereum blockchain.

Instead of operating and running its own data centers, the startup runs a peer-to-peer Dropbox-like service.

It’s an asset-light cloud storage model that Storj Labs claims mitigates traditional data failures and cuts costs. Users who want to store their data with Storj can pay US$0.015 per gigabyte per month. AWS’s equivalent service goes for US$0.023.

“I think it’s probably early to say that we’re going to disrupt AWS, Microsoft, and Google, but we do think that there is the potential to take a huge unused resource […] and bring that to market,” John Quinn, co-founder of Storj Labs, tells Tech in Asia, referring to excess storage capacity.

In China, the startup is working with Genaro, a Shanghai-based blockchain startup that is developing its own decentralized cloud storage system. The partnership, announced today, will see Storj Labs’ more mature technology integrated with Genaro’s in exchange for expansion into China.

Due to latency issues associated with the Great Firewall, the catchall term for China’s online censorship system, Storj Labs needs in-country farmers. According to Genaro founder Larry Liu, the company plans to work with large cryptocurrency mining farms in China, who will add storage units to their mining rigs. That will help the Chinese firm launch its network with thousands of terabytes of available space, he says.

To date, Storj Labs has more than 40,000 users storing data on its network across 50,000 devices in 70 different countries. Genaro’s network is still in beta testing.

Storj’s network of farmer nodes. Places with cheap, unlimited internet are usually able to score more file storing contracts.

Data loss

Genaro will also be responsible for compliance within China, which includes handling the all-too-familiar issue of illegal content stored on the cloud, such as porn and pirated movies. Last year, a crackdown on banned content in China forced many cloud storage providers to shut down.

In that sense, Storj Lab’s system may have an advantage. Stored files are encrypted, splintered into different pieces, and then distributed across the company’s network. Copies of file shards are also stored to help prevent data loss, which can happen if a farmer shuts down their hard drive.