Filecoin and Cloudwith.me are both raising money using funding mechanisms based on blockchain, to build cloud infrastructures enabled by blockchain.

Mitch Wagner, Executive Editor, Light Reading

August 8, 2017

6 Min Read
Startups Plan Peer-to-Peer Clouds, Funded & Enabled by Blockchain

Two different companies are making plans for peer-to-peer cloud platforms, funded and enabled by blockchain, that stand out for their ambition even in Silicon Valley, where every startup inventor dreams of being a billionaire.

The companies, Filecoin and Cloudwith.me, are both raising money using a funding mechanism based on blockchain, to build cloud infrastructures enabled by blockchain.

One company, Filecoin, plans a storage cloud distributed over many computers around the world, with people trading spare gigabytes on their laptops and server farms for cryptographic "tokens" managed by blockchain. Filecoin also plans to use tokens to raise money to build its platform, in a form of funding called an "Initial Coin Offering," scheduled for Thursday.

Figure 1: By Davidstankiewicz (Own work) [CC BY-SA 4.0], via Wikimedia Commons By Davidstankiewicz (Own work) [CC BY-SA 4.0], via Wikimedia Commons

Another company, Cloudwith.me, based in Dublin, Ireland, plans a peer-to-peer cloud providing both distributed compute and storage. Like Filecoin, Cloudwith.me also plans to pay people who provide infrastructure in blockchain tokens, and plans to raise money with an ICO, scheduled for August 25.

Coins purchased for either network will be redeemable for capacity on their respective networks, when those networks are up and running. Coins can also be sold and traded by investors looking to make a profit.

Filecoin has already raised $52 million in advance sales to select early investors, according to the Wall Street Journal. Participating investors include Winklevoss Capital, Digital Currency group, and Y Combinator's Sam Altman. The company has already put off its sale twice due to changed investment terms. The sale had initially been July 27, then Monday, and then was postponed over the weekend.

FIlecoin's ICO complies with Securities and Exchange Commission regulations, says Protocol Labs, which backs Filecoin. That's significant because companies have used ICOs as a means of circumventing investment regulations.

Filecoin is both the name of the organization building the cloud platform, and the name of the digital token that will be the cloud's exchange unit. People providing storage, called "miners," will receive Filecoin in exchange for allowing their storage to be used by customers, called "clients." "This creates a powerful incentive for miners to amass as much storage as they can and rent it out to clients," according to a white paper on Filecoin's website

Clients pay using Filecoin to access the storage.

Blockchain, the software underlying the digital tokens, is a form of distributed database or ledger, which advocates say is ideal for tracking ownership of digital or physical objects -- in this case, the tokens traded for access to the Filecoin cloud network. Blockchain is the underlying technology enabling bitcoin, managing transactions between bitcoin owners.

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A video produced by Filecoin compares its service to an Airbnb for unused storage, and says the company wants to "redecentralize" the Internet, to eliminate single points of failure.

We requested an interview with Filecoin on Monday, and have arranged to talk with them later this week.

We were able to speak with the other company, Cloudwith.me, which has an ambitious plan to raise $300 million, Asaf Zamir, Cloudwith.me CTO and co-founder, said in an interview with Enterprise Cloud News.

Next page: Starting simple

Starting simple
Cloudwith.me launched 18 months ago with a service designed to simplify cloud onboarding for Amazon Web Services and Microsoft Azure, in 11 languages, with a particular focus on southwest Asia, Zamir said.

Cloudwith.me plans to launch a distributed cloud providing both storage and compute in 12 to 18 months. The architecture is similar to that proposed by Filecoin -- providers and customers exchange infrastructure access for cryptographic tokens developed by Cloudwith.me. Participants in the ICO get tokens that they can sell, trade, or exchange later for cloud access. Like Filecoin, Cloudwith.me is selling its tokens early; early investors in Cloudwith.me get a steeper discount than people who wait.

Cloudwith.me plans to initially build its own data centers to get its cloud up and running -- a big part of the reason they believe they need $300 million.

One of the advantages to the planned Cloudwith.me cloud is that it will let people sign up for cloud services more easily than they can with existing cloud providers, Zamir says. Amazon access, for example, is easy to get in the US, less so in Europe -- where many people don't have international credit cards -- and even more difficult in Southeast Asia, where many people don't have credit cards at all. Cloudwith.me tokens are designed to mitigate that problem; they can be purchased using fiat money -- familiar dollars, Euros, and other national currencies -- or cryptocurrency like Bitcoin or Ethereum.

"It's about lowering barriers," Zamir says. "You lower technology barriers, language barriers, you now need to lower banking barriers."

Cloudwith.me has about a dozen employees, and was bootstrapped by founders, family and friends with a total of €1.6 million. So Cloudwith.me's $300 million funding goal is a huge step forward.

ICOs are a relatively new fundraising option for startups. It's kind of like Kickstarter, only fully decentralized and using cryptocurrency instead of fiat money.

Initial ICOs have been used to fund creation of new kinds of cryptocurrency, but advocates say they can also be used to disrupt all forms of tech startup investment, by providing early access to projects -- exactly as Filecoin and Cloudwith.me are doing -- and finance digital infrastructure. (See Blockchain to Blow Up Startup Investing and Beware the Blockchain Bubble.)

Participating in these ICOs is very risky. One big question: Who are those guys?

Juan Benet, listed as founder and CEO of Protocol Labs, describes himself on LinkedIn as a Stanford alum, and doesn't appear to have a track record running a successful company. We hope to find out more about him and his company later this week.

As for Cloudwith.me, their founders' official biographies, sent to me in email, are long on color and short on specifics. Zamir has been "programming since he was 6," and worked on several large systems, but doesn't name them or where he previously worked. Co-founder and CEO Gilad Somjen is a "serial entrepreneur and investor in tech companies." Which ones? Cloudwith.me doesn't say.

— Mitch Wagner Follow me on Twitter Visit my LinkedIn profile Visit my blog Friend me on Facebook Editor, Enterprise Cloud News

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About the Author(s)

Mitch Wagner

Executive Editor, Light Reading

San Diego-based Mitch Wagner is many things. As well as being "our guy" on the West Coast (of the US, not Scotland, or anywhere else with indifferent meteorological conditions), he's a husband (to his wife), dissatisfied Democrat, American (so he could be President some day), nonobservant Jew, and science fiction fan. Not necessarily in that order.

He's also one half of a special duo, along with Minnie, who is the co-habitor of the West Coast Bureau and Light Reading's primary chewer of sticks, though she is not the only one on the team who regularly munches on bark.

Wagner, whose previous positions include Editor-in-Chief at Internet Evolution and Executive Editor at InformationWeek, will be responsible for tracking and reporting on developments in Silicon Valley and other US West Coast hotspots of communications technology innovation.

Beats: Software-defined networking (SDN), network functions virtualization (NFV), IP networking, and colored foods (such as 'green rice').

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