Data can be stored directly in a blockchain, and with this fact it achieves decentralization.
However, a significant disadvantage of this approach is that a blockchain is not suitable for storing large amounts of data by design.
How On-Chain vs Off-Chain Storage Works
It can store simple transactions and some arbitrary data, but it is certainly not suitable for storing images or large blobs of data, as is the case with traditional database systems.
A better alternative for storing data is to use Distributed Hash Tables (DHTs).
DHTs were used initially in peer-to-peer file sharing software, such as BitTorrent, Napster, Kazaa, and Gnutella.
DHT research was made popular by the CAN, Chord, Pastry, and Tapestry projects.
BitTorrent is the most scalable and fastest network, but the issue with BitTorrent and the others is that there is no incentive for users to keep the files indefinitely.
Users generally don’t keep files permanently, and if nodes that have data still required by someone leave the network, there is no way to retrieve it except by having the required nodes rejoin the network so that the files once again become available.
Why This Matters for Blockchain Technology
Two primary requirements here are high availability and link stability, which means that data should be available when required and network links also should always be accessible.
InterPlanetary File System (IPFS) by Juan Benet possesses both of these properties, and its vision is to provide a decentralized World Wide Web by replacing the HTTP protocol.
IPFS uses Kademlia DHT and Merkle Directed Acyclic Graph (DAG) to provide storage and searching functionality, respectively.
The concept of DHTs and DAGs will be introduced in detail in , Public Key Cryptography.
Key Points to Remember
- Storage Data can be stored directly in a blockchain, and with this fact it achieves decentralization.
- However, a significant disadvantage of this approach is that a blockchain is not suitable for storing large amounts of data by design.
- It can store simple transactions and some arbitrary data, but it is certainly not suitable for storing images or large blobs of data, as is the case with traditional database systems.
- A better alternative for storing data is to use Distributed Hash Tables (DHTs).
Going Deeper: Advanced Concepts
The incentive mechanism for storing data is based on a protocol known as Filecoin, which pays incentives to nodes that store data using the Bitswap mechanism.
The Bitswap mechanism lets nodes keep a simple ledger of bytes sent or bytes received in a one-to-one relationship.
Also, a Git-based version control mechanism is used in IPFS to provide structure and control over the versioning of data.
There are other alternatives for data storage, such as Ethereum Swarm, Storj, and MaidSafe.
Conclusion
Storage represents one of the many innovative layers that make blockchain technology so powerful and transformative. As distributed systems continue to evolve, a solid understanding of these core concepts becomes increasingly valuable — not just for developers, but for anyone building, investing in, or working alongside blockchain-powered systems.
Whether you are just starting your blockchain journey or deepening existing expertise, mastering these fundamentals gives you the tools to think clearly about decentralized systems and make smarter decisions in this rapidly evolving space.