What is STORJ?
Storj Decentralized Cloud Storage (Storj DCS) is advertised as an encrypted, secure, object storage service that enables the storage, back up, and archiving of large amounts of data to a decentralized cloud. Storj Labs operates Tardigrade, a enterprise level decentralized object storage service for storing data in the cloud between Storj DCS network participants. Any open source applications that enable users to store data (storage and network bandwidth) on Tardigrade via connectors will receive a percentage of the revenue produced by those users through the Tardigrade Open Source Partner Program. Tardigrade users are incentivized to pay using the STORJ token, instead of a credit card, by receiving a bonus on any STORJ token deposit they make. Any third party operating a Satellite (a type of node) must also accept STORJ as a means of payment for storage and bandwidth.
STORJ is an Ethereum ERC-20 token that serves as a unit of account for Storj DCS, and it has a total supply of 425,000,000 units. After a customer uploads a file to Storj DCS, pieces of each file are distributed to a global network of independent nodes. When someone requests the file, it is then recompiled securely and made available for download. This is supposed to allow anyone to store files on Storj DCS without having to trust a centralized data centre. Developers can purchase cloud storage services with STORJ. Network participants earn STORJ in return for providing unused hard drive space and bandwidth to the network.
How does STORJ compare to Bitcoin?
STORJ differs from Bitcoin in a few important ways.
First, Bitcoin is a “coin” and STORJ is a “token.” That is because Bitcoin powers the Bitcoin blockchain, and it is mined by a decentralized network of computers that solve complicated maths puzzles to verify transactions. By contrast, STORJ is a token that runs on the Ethereum blockchain. On Ethereum, ETH is the only coin that can be mined and miners mine ETH to process STORJ transactions. It is what is known as an ERC-20 token, the name applied to the generic token standard for the Ethereum blockchain.
Being an ERC-20 token has perks. Blockchains aren’t great at speaking to each other—you can’t get an Ethereum contract to work with a Bitcoin smart contract without some complicated engineering. However, it’s very easy for ERC-20 tokens to speak to one another, which means that STORJ can be used in most other decentralized finance applications.
In addition, unlike Bitcoin, STORJ is a utility token. While, like Bitcoin, STORJ can be used as a means of payment or a store of value, its market price may be very volatile and so it may not be useful for payments or storing value.
Finally, STORJ’s market capitalization is smaller than Bitcoin’s. As of May 2022, STORJ’s market capitalization was estimated to be $216 million, as compared to Bitcoin’s market capitalization of $600 billion.
Before trading any crypto assets it is important to understand the risks. This overview is a starting point for you to perform your own research prior to investing in a crypto asset. First and foremost:
No Canadian securities regulatory authority has expressed an opinion about STORJ, including an opinion that STORJ is not itself a security and/or derivative.
Wealthsimple has performed a legal assessment of STORJ prior to making it available on Wealthsimple Crypto and has concluded that STORJ is not and is unlikely to be deemed a security or derivative. However, there is a risk that this conclusion could change in the future and the impact of this on an asset’s value is outlined in our Product Disclosure.
We evaluated STORJ based on publicly available information, including (but not limited to):
- The creation, governance, usage and design of STORJ, including the source code, security and roadmap for growth in the developer community and, if applicable, the background of the developer(s) that first created STORJ;
- The supply, demand, maturity, utility and liquidity of STORJ;
- Material technical risks associated with STORJ, including any code defects, security breaches and other threats concerning STORJ and its supporting blockchain (such as the susceptibility to hacking and impact of forking), or the practices and protocols that apply to them; and
- Legal and regulatory risks associated with STORJ, including any pending, potential, or prior civil, regulatory, criminal, or enforcement action relating to the issuance, distribution, or use of STORJ.
Like all other crypto assets, there are some general risks to investing in STORJ. These include short history risk, volatility risk, liquidity risk, demand risk, forking risk, cryptography risk, regulatory risk, concentration risk, electronic trading risk and cyber security risk. Each of these risks are described in more detail in our in-app Product Disclosure.
STORJ is used as a means of payment within the Storj DCS. The Storj DCS appears to be dependent on Storj Labs and its affiliated entities, which created the network. The risks associated with this token are centred on the notion that if Storj Labs were to cease operations, it is unclear whether Storj DCS would continue to operate and whether STORJ would continue to have utility and value.
Further to these general risks, Storj DCS, STORJ development team and other affiliated entities are not under any legal or regulatory obligation to disclose material information to the public regarding its activities. Holders of STORJ have no recourse to Storj DCS or Wealthsimple if STORJ declines in value for any reason.
We emphasize that this Crypto Asset Statement is not exhaustive of all risks associated with trading STORJ. Investors should perform their own assessment to determine the appropriate level of risk for their personal circumstances.
WDA is offering Crypto Contracts in reliance on a prospectus exemption contained in the exemptive relief decision Re Wealthsimple Digital Assets Inc. dated June 18, 2021. Please be aware that the statutory rights of action for damages and the right of rescission in the securities legislation of each province and territory of Canada would not apply to a misrepresentation in this Statement.