Data storage is “the new real estate” — Interview with FileMarket

As the data economy expands, the way we access and utilize information is undergoing a transformative change. However, the current centralized data storage solutions, primarily utilized by cloud data storage providers like Dropbox, Sync, and Google Drive, have several limitations. This centralized approach poses significant risks as individuals cede ownership and control over their data to the service providers, making them vulnerable to data breaches, unauthorized access, and loss.

In response, decentralized storage solutions emerged as a promising alternative, leveraging blockchain technology to distribute data across multiple nodes, enhancing security, ownership, and accessibility. In this interview, Ilya Orlov, the founder and CEO of FileMarket, a decentralized P2P file-sharing platform, delves into the challenges and opportunities of fostering a more equitable and decentralized data economy.

Cointelegraph: Tell us about your journey into the blockchain industry. What inspired you to create FileMarket, and what challenges did you overcome to realize your vision?

Ilya Orlov: I started my crypto journey in 2016 when I realized that none of the existing socio-political technologies are capable of organizing the rapidly changing and growing world society. The financial aspect was always secondary for me, even though I went through the bankruptcy of the family business.

Actually, I still believe that the main product-market fit of Web3 is a global network state, the United Digital Federal Republic. All the mess we see in the market now looks like children playing in the kindergarten. We are still very young and will realize our true purpose and potential later when we grow up.

CT: Can you explain in layman’s terms what FileMarket is?

IO: FileMarket is not some kind of complicated Web3 infrastructure or decentralized finance (DeFi) project, although we use deep tech and focus on decentralization. FileMarket allows users to sell any file of any format they have created. Only buyers get access to the encrypted file, which is stored on the decentralized perpetual storage, tokenized on the blockchain. This file could be a notion template, a 3D model for a 3D printer, a spreadsheet with contact details of Web3 VCs, a font, a collection of prompts for ChatGPT, a front-end library, or even a preset of setting nodes for a Blender to get a unique visual effect.

CT: How is FileMarket different from existing data marketplaces?

IO: FileMarket gives digital solopreneurs full ownership of funds and data assets. Encryption keys are stored only on the client side and transferred on-chain using asymmetric encryption, providing the highest level of confidentiality. No third party can ever get access to the encrypted data that is attached to the Encrypted FileToken (EFT).

In addition to these benefits, users also receive a permissionless secondary market, royalties, on-chain provenance, and perpetual decentralized storage (guaranteed for at least 200 years)

In essence, we have implemented the principle: “Not your keys — not your data.”

Ilya Orlov is the founder and CEO of FileMarket. Source: FileMarket

CT: What challenges do you see in enabling secure and private data transfers on the blockchain?

IO: While Ethereum and other major EVM blockchains currently rely on centralized servers or projects like Lit Protocol, Ocean Protocol, Crust Network, or Threshold Network to manage confidential data access, these methods often involve sharing encryption keys among multiple nodes, raising concerns about centralized control and potential access by third parties. The future of data privacy lies in fully homomorphic encryption (FHE), a cryptographic technique that enables computations on encrypted data without requiring decryption. FHE is already making strides, with projects like ZAMA.ai developing FHE threshold libraries and Inco Network launching an early testnet.

We anticipate FHE’s widespread adoption within the next year, marking a paradigm shift in data privacy and surpassing the limitations of current zero-knowledge (ZK) approaches. We are actively involved in FHE research and even participated in the Inco Network hackathon.

CT: How does FileMarket address these challenges and ensure security and privacy so that no data is leaked?

IO: Currently, we employ asymmetric encryption, a robust solution for secure file transfer. However, this method incurs some user experience (UX) challenges due to the requirement for three transactions to complete the exchange. Each transaction involves transferring the decryption key from the original owner to the new user using asymmetric encryption. This process necessitates the new user’s private key to decrypt and access the file.

In the future, we plan to use account abstraction and FHE to make the UX simple and friendly for Web2 users.

CT: Can you explain FileMarket’s revenue-sharing model for data creators and data consumers?

IO: Individual creators, whom we refer to as digital solopreneurs, act as data providers, while their buyers are data consumers. Currently, we derive a modest commission from each transaction. However, in the future, we intend to secure revenue share from storage providers and redistribute it among active FileMarket users.

At present, we are focused on the B2C2C (business to consumer to consumer) market, with plans to expand to B2B2C (business to business to consumer) and B2B2B (business to business to business) segments once regulators have fully grasped the intricacies of interfacing with the emerging Web3 internet.

Data sharing and storage are becoming increasingly important. Source: FileMarket

CT: How important do you think blockchain technology is for storing, transferring and protecting data?

IO: Blockchains with decentralized storage networks are essential for any data sharing and storage. This is the only way to truly own your data and not let anyone else access it. It also allows us to build transparent and interoperable data economy markets.

One of the next big narratives is going to be DataFi, which is all kinds of DeFi protocols built on top of different data economies. The amount of data being produced is growing exponentially, and in the future, people will only be able to store a small fraction of the data being produced. The demand for data storage will be enormous.

CT: What are your thoughts on the debates surrounding the balance between privacy and data protection in the current regulatory landscape?

IO: We are still in the early stages and need to experiment with successful use cases in this area to see how things should really be organized and regulated. We definitely need 100% privacy and probably other ZK and FHE technologies to allow computation over encrypted data without decryption. But most importantly, we need to figure out how to build a peaceful society and not an authoritarian cyber punk corp state full of rebels.

CT: What are FileMarket’s long-term goals for fostering a more equitable and decentralized data economy?

IO: I recently returned from ETH India, where FileMarketMaker, our factoring order book for decentralized storage markets, garnered recognition. This innovative platform empowers storage providers on Filecoin to monetize their future revenues, fostering a more dynamic and rewarding ecosystem. As we delve further into the DataFi realm, we aspire to not only safeguard data privacy and ownership but also provide users with the opportunity to participate in the underlying economics of decentralized storage markets. Our ultimate dream is to construct our own layer-2 on top of Ethereum, leveraging the ZK stack and the fully implemented FHE to enable gasless transactions for all users.

This initiative, the Open DataFi Layer, envisions a gateway to all existing decentralized storage networks (DSNs), where various basic and alternative DataFi protocols will reside. We even envision launching index tokens tied to individual DSNs or the future value of storage.

Additionally, FileMarket will revolutionize the user experience by eradicating gas fees and introducing a robust scoring protocol for our factoring order book. This, coupled with creating a diverse range of derivatives akin to mature markets, will elevate FileMarket to a prominent position in the DataFi landscape.

Just as people reside in houses, data finds its home in data centers. Data storage, therefore, represents the new real estate but with the added benefit of a fully transparent on-chain statistics and reputation system. While this may seem like a utopian dream, we are confident in our ability to materialize it. However, for now, we shall preserve this vision for future endeavors.