Internxt gets $1M to be ‘the Coinbase of decentralized storage’ – TechCrunch


Story by: Natasha Lomas TechCrunch » Startup

Valencia-based startup Internxt has been quietly working on an ambitious plan to make decentralized cloud storage massively accessible to anyone with an internet connection.

It has just bagged a million dollars in seed funding run by Angels Capital, a European VC fund owned by Juan Roig (aka Spain's richest grocer and second richest billionaire) and Miami-based The Venture City. It had previously raised around half a million dollars through a token sale to finance early development.

The seed capital is put into the next phase of growth – its monthly growth rate is 30% and she tells us that she is confident that this can at least be sustained – including planning a large increase in staff so that it can speed up the process Product development.

The Spanish startup has spent most of its short life to date developing a decentralized infrastructure that it believes is both inherently more secure and private than mainstream cloud-based apps (such as those from tech giants like Google offered).

This is because files are not only encrypted in such a way that they cannot access your data, but information is also stored very remotely, divided into tiny shards that are then spread across multiple locations with users of the network adding storage space (and being compensated for providing this capacity with – you guessed it – crypto).

“It's a distributed architecture, we have servers all over the world,” explains founder and CEO Fran Villalba Segarra. “We take and use the space that is made available by professionals and individuals. So they connect to our infrastructure and start hosting data shards and we pay them for the data they host – which is also cheaper since we don't go the traditional way of just renting a data center and for a fixed one Amount of space to be paid.

“It's like the Airbnb model or the Uber model. We have more or less democratized the storage facility. "

Internxt did three years of research and development starting in 2017 before launching its first cloud-based apps: Drive (file storage) a year ago – and now Photos (a rival of Google Photos).

So far, according to Villalba Segarra, it has attracted around one million active users without worrying about marketing.

Internxt Mail is the next product in its pipeline – to compete with Gmail and also ProtonMail, a privacy-friendly alternative to Google's freemium webmail client (and more on why it believes it can be an advantage there read on).

Internxt Send (file transfer) is another product that will be billed soon.

"We are working on a G-Suite alternative to ensure that we are on par with Google when it comes to competing with Google," he adds.

The problem that Internxt's architecture is designed to solve is that files stored in only one location are vulnerable to being accessed by others. Whether this is the storage provider itself (who, like Google, may have an anti-privacy business model based on the data of mining users); or hackers / third parties who manage to crack the security of the provider – and can thus access and / or otherwise disrupt your files.

Security risks in compromising networks can include ransomware attacks – which have been on the rise in recent years – in which attackers who have broken into a network and gain access to stored files, then mistake the information for ransom by they block the rightful owner's access (usually by applying a separate layer of encryption and asking for payment to unblock the data).

The core belief that drives Internxt's decentralization push is that files residing entirely on a server or hard drive are sedentary ducks.

The answer to this problem is an alternative file storage infrastructure that combines zero access encryption and decentralization – which means files are split, distributed and mirrored across multiple locations, making them very resistant to memory failures or even hacking and snooping .

The approach alleviates data protection concerns of cloud service providers, since Internxt itself cannot access user data.

To make money, his business model is simple, tiered subscriptions: With (currently) a plan that covers all existing and planned services – based on the amount of data you need. (It's also freemium, with the first 10 GB being free.)

Internxt is by no means the first to see an important benefit for the user in rethinking the core architecture of the Internet.

Scotland's MaidSafe has been trying to build an alternative decentralized Internet for well over a decade at this point – and only began alpha testing its legacy network (aka the Safe Network) in 2016 after ten years of testing. His long-term mission to reinvent the Internet continues.

Another (slightly less experienced) competitor in decentralized cloud storage is Storj, which is aimed at corporate users. There is also Filecoin and Sia – both also part of the newer wave of blockchain startups that emerged after Bitcoin sparked entrepreneurial interest in cryptocurrencies and blockchain / decentralization.

How is what Internxt does different from these competing decentralized storage games – all of which have been with this complex coal mine for a long time?

"We're the only European-based startup that does this [except for MaidSafe, although it’s UK not EU based]," says Villalba Segarra, arguing that the European Union's legal system gives it an edge over US competitors in terms of data protection and privacy. "Everyone else, Storj, plus Sia, Filecoin … these are, as far as I know, all companies based in the USA."

The other major differentiator he highlights is ease of use – arguing that the above competitors were "built by developers for developers". While he says that Internxt's goal is the equivalent of "Coinbase for decentralized storage"; aka, it wants to make a very complex technology easily accessible for non-technical internet users.

"It's a huge technology, but in the blockchain space we see it all the time – where there is huge potential, but it's very difficult to use," he tells TechCrunch. “This is essentially what Coinbase is trying to do too – making blockchain available to users, making it easier to use, easier to invest in cryptocurrency, etc. That is what we are trying to do at Internxt too, bringing blockchain for cloud storage to people. Ease of use with a very easy to use user interface and so on.

"It is the only service in the distributed cloud area that can actually be used – that is our main differentiator from Storj and all these other companies."

"In terms of infrastructure, it is quite similar to that of Sia or Storj," he continues, further comparing Internxt's 'Zero Access' encryption to the architecture of Proton Drive (aka File storage product from the manufacturer of the end-to-end encrypted email service ProtonMail) – which also relies on client-side encryption to give users a robust technical guarantee that the service provider cannot snoop on your data. (So ​​you don't just have to trust that the company won't violate your privacy.)

But while it also advertises zero access encryption (it appears to be using commercially available AES-256 encryption; it says it uses "military", open-source, client-side encryption that is used by the Spanish S2 Grupo., A large local cybersecurity company), Internxt is taking the next step of decentralizing the encrypted data as well. And that means that, according to Villalba Segarra, it can advertise additional safety advantages.

“We also fragment data and then distribute it all over the world. So the servers are essentially hosting encrypted fragments of data – which is much more secure because if a hacker ever accessed one of these servers, they would find encrypted fragments of data that are essentially useless. Not even we can access this data.

“This adds a tremendous level of security against hackers or third parties [access] with respect to data. And then on top of that we build very nice interfaces with which the user is very familiar – pretty similar to those from Google … and that also makes us very different from Storj and Sia. "

Storage space for Internxt users' files is provided by users who have an incentive to offer their unused capacity to host data shards with micropayments in cryptocurrency. This means that the capacity could come from a single user who only connects to Internxt with their laptop – or from a data center company with large amounts of unused storage space. (And Villalba Segarra notes that a number of data center companies such as OVH are connected to its network.)

"We have no direct contracts [for storage provision] … Anyone can connect to our network – that is, data centers with available storage space, if they want to earn some money with them, they can connect to our network. We don't pay them as much as we would pay them if we came to them the traditional route, ”he says, comparing that part of the approach to how Airbnb has both hosts and guests (or Uber needs drivers and passengers) .

"We are the platform that connects both parties, but we do not host any data ourselves."

Internxt uses a reputation system to manage storage providers – to ensure network availability and quality of service – and also applies blockchain "proof of work" challenges to node operators to ensure they are actually storing the data they claim.

“Because of the decentralized nature of our architecture, we really need to make sure that it achieves a certain level of reliability,” he says. "That's what we use blockchain technology for … When you store data in your own data center it's easier to make sure it's reliable, but when you store it in a decentralized architecture it has many benefits – like more privacy or it is." also more affordable – but the disadvantage is that you have to make sure, for example, that they actually store data. "

Payments to storage capacity providers are also made using blockchain technology – which, according to Villalba Segarra, is the only way to scale and automate that many micropayments to ~ 10,000 node operators around the world.

On the subject of energy costs – in view of the fact that blockchain-based “proof of work” technologies are subjected to increased scrutiny with regard to energy consumption when performing the calculations – he suggests that Internxt's decentralized architecture should be more energy efficient than traditional data centers because data shards are more likely to be closer to the requesting user – reducing the power required to retrieve packets instead of always having to do it from a few central global locations.

“What we have seen in terms of energy consumption is that we are actually much more energy efficient than a traditional cloud storage service. Why? Think about it, we are mirroring files and storing them all over the world … it is actually impossible to access a file from Dropbox sent by [a specific location]. When you access Dropbox or Google Drive and download a file, they're essentially sending it from their data center in Texas or wherever. So there is an enormous amount of energy used to transfer data – and people don't think about it, ”he argues.

“The energy consumption of data centers is already 2% * of the worldwide energy consumption, if I am not mistaken. So if you can take advantage of the latency and send your files from [somewhere near the user] – which is also faster, which is all taken into account in our reputation system – our algorithms will send you the files that are closer to you so we can save a lot of energy. So if you multiply that by millions of users and millions of terabytes, that actually saves a lot of energy consumption and costs us too. "

What about the latency from the user's point of view? Is there any noticeable delay when trying to upload or retrieve and access files stored on Internxt compared to – for example – Google Drive?

Villalba Segarra says the ability to store fragments of files closer to the user also helps make up for delays. But he also confirms that there is a small speed difference to mainstream cloud storage services.

"We're pretty close to Google Drive and Dropbox in terms of upload and download speeds," he suggests. "Again these companies have been around for over ten years and their services are very well optimized and they have a traditional cloud architecture that is also relatively simpler and easier to build, and they have thousands of [employees] so their services are like this" obviously much better than our service in terms of speed and stuff. But we come very close to them and work very quickly to bring our speed [to that level] and also as many functions as possible into our architecture and our services. ”

"Essentially, we're on par with Proton Drive or Tresorit in terms of usability," he adds to the latency point. “And we're getting very close to Google Drive. But the average user shouldn't see much of a difference and as I said, we are literally working as hard as possible to make our services as useful as Google's. But we are way ahead of Storj, Sia, MaidSafe and so on – that's for sure. "

Internxt does all these complex networks with a team of currently only 20 people. But with the new seed funding in your pocket now, there are plans to increase the hiring over the next few months – so that it can accelerate product development, sustain its growth, and further expand its competitive advantage.

"If we do a Serie A, we should have about 100 people at Internxt," says Villalba Segarra. “We are already preparing our Series A. We have just completed our seed round, but because of our rapid growth, we are already being approached by several other leading VC funds from the US and London.

“It's going to be a pretty big A Series. Possibly the largest in Spain … We plan to grow to Serie A at a monthly rate of at least 30%, which we have grown so far. ”

He also advises TechCrunch that the intent for the Series A is to complete the $ 50 million valuation funding.

"We had planned to do this in a year because we have literally just completed our [seed] round, but due to the many VCs reaching out to us, we may do it by the end of this year" he says, adding, “But the time frame is not an issue for us. The most important thing is to achieve this minimum rating. "

* According to the IEA, data centers and data transmission networks each accounted for around 1% of global electricity consumption in 2019


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Source References: TechCrunch » Startup