Digitized supply chains require transparent, integrated ecosystems in order to allow companies to fully model their networks and anticipate or react to disruptions in the supply chain . Blockchain technology provides a new digital mechanism for the supply of file storage. Decentralized file storage and retrieval can significantly improve reliability, security, privacy, supply and demand matching, and throughput time on file retrieval. Unlike traditional cloud file storage, decentralized file storage can connect customers directly to their data storage without any intermediaries. By leveraging decentralized file storage in their web storage supply chain, Amazon Web Services (AWS) can optimize both their customer’s supply chains and their own.
Proof of Supply Chain?
From a supply chain perspective, decentralization offers an advanced logistics system, efficiently matching user’s requests for storage to host’s excess hard-drive space, and duplicating files to be stored across different geographies, providing greater resiliency. Whereas a typical consumer has no visibility into the movement or storage of digital files with AWS, the nodes in a decentralized storage system can be verified. In contrast, when you store data on Amazon’s Simple Cloud Storage Service (S3), it may remain unencrypted on an AWS server, vulnerable to attack or misuse . These issues are a source of variability for AWS and for the customer, resulting in server downtime and decreasing average output rates of file storage.
Hashing out Supply Forecasting
Within a decentralized file storage system, tokenization eliminates the need for supply and demand forecasting. Suppliers of storage space are compensated with a cryptographic token (such as SiaCoin) and consumers of file storage pay with a token as well. The token’s value is intrinsically linked to the value of the network: when there is more demand, the token is worth more, and when there is more supply, the token is worth less as supply adjusts to meet demand. By leveraging decentralized technology, file storage services like Dropbox or AWS should be able to automatically match supply and demand. When supply and demand are aligned, a company like AWS can have dynamic supply chains, correcting the bullwhip effect that results from inexact supply chain estimates . For example, AWS won’t have to figure out how much data warehouse capacity to build in advance of when it’s used, and risk under- or over-supplying storage. As the amount of data created increases, more people and organizations will need to store that data, and better storage supply chains will become critical in allowing organizations to leverage their data in order to make decisions .
Prevalent cloud file storage & retrieval systems (Figure 1) vs. Decentralized storage & retrieval systems (Figure 2). Currently, companies like Google, Amazon and Dropbox have massive data centers, and files stored on these services go onto one of their central servers .
Hardware is Hard (When it’s Centralized)
While Amazon and AWS have not documented any effort to implement decentralized file storage, I believe AWS should be concerned about the growing risks to their supply chain. In early 2017, Amazon’s data center suffered a meltdown, causing numerous companies running their businesses on Amazon Web Services, such as Slack and Trello, to have sustained outages. According to Amazon, the S3 team was debugging an S3 billing issue, and in executing, one team member accidentally removed a set of servers that supported two other S3 subsystems. In short, a small user error was able to take down entire internet-based companies . Decentralization would reduce the impact of human error, and consequently reduce variability in Amazon’s supply chain.
Leveraging the Other Kids on the Block
As a short-term measure to improve its supply chains and remain competitive, AWS could use Sia, Swarm, FileCoin (when launched) or other decentralized storage systems as a partial replacement of its existing cloud storage providers and content distribution networks. In the long term, by using Sia, for example, instead of S3 data warehouses to store user data, AWS could gain superior reliability and throughput time by storing some document copies in geographic proximity to users.
The Sia network’s design for distributed, decentralized file storage has no central point of failure, and can survive extreme events like natural disasters and war while still allowing the user to maintain full control of their data . The Sia network, like other decentralized storage systems, uses blockchain to create an open marketplace for cloud storage, similar to the open market that exists for Bitcoin mining . Files are encrypted before being stored on the network to ensure user privacy, and Sia uses file contracts to ensure the file hosts stay on the network . Even if a storage host leaves the network, Sia can ensure that no group of hosts is a single point of failure by using redundancy features .
What’s Left to Figure Out Before AWS Forks it Over to Decentralization?
- Can blockchain systems preserve automatic supply and demand matching, but also implement user-friendly geographic targeting (so that users can limit the countries in which hosts can store data)?
- Are blockchains too wasteful in energy usage as they ensure data integrity? 
- If S3 were to use Sia to augment their current infrastructure, would they need their data warehouses? How could S3 be compensated for fail safes and data redundancies already built into their data centers?
 “Industry 4.0: How Digitization Makes the Supply Chain More Efficient, Agile, and Customer Focused.” Price Waterhouse Cooper, 2015, p.2.
 “Amazon Simple Storage Service (S3) – Cloud Storage – AWS.” Amazon Web Services, Inc., aws.amazon.com/s3/.
 Hau L. Lee, et al. “The Bullwhip Effect in Supply Chains.” MIT Sloan Management Review. April 15, 1997. http://sloanreview.mit.edu/article/the-bullwhip-effect-in-supply-chains/
 Richard Harris. “More Data Will Be Created in 2017 than the Previous 5,000 Years of Humanity.” App Developer Magazine, App Developer Magazine, 23 Dec. 2016, appdevelopermagazine.com/4773/2016/12/23/More-data-will-be-created-in-2017-than-the-previous-5,000-years-of-humanity-/.
 Rachel King. “Here’s Why Amazon’s Cloud Suffered a Meltdown This Week.” Fortune, 2 Mar. 2017, fortune.com/2017/03/02/amazon-cloud-outage/.
 David Vorick. “Sia the Decentralized Storage Network.” October 23, 2017, Cambridge, MA.
 Satoshi Nakamoto. “Bitcoin: A peer-to-peer electronic cash system.” 2008.
 Giuseppe Ateniese, Randal Burns, Reza Curtmola, Joseph Herring, Lea Kissner, Zachary Peterson, and Dawn Song. “Provable data possession at untrusted stores.” In Proceedings of the 14th ACM conference on Computer and communications security, 2007.
 “Bitcoin Energy Consumption Index.” Digiconomist, digiconomist.net/bitcoin-energy-consumption.
 Metz, Cade. “Google’s Untrendy Play to Make the Blockchain Actually Useful.” Wired, Conde Nast, 3 June 2017, www.wired.com/2017/03/google-deepminds-untrendy-blockchain-play-make-actually-useful/.