Existing models for cloud-based storage are all centralized solutions, which may or may not be as secure as users expect them to be. There is a need to have a cloud storage system that is secure, highly available, and above all decentralized. Storj aims to provide blockchain based, decentralized, and distributed storage. It is a cloud shared by the community instead of a central organization. It allows execution of storage contracts between nodes that act as autonomous agents. These agents (nodes) execute various functions such as data transfer, validation, and perform data integrity checks.

The core concept is based on Distributed Hash Tables (DHTs) called Kademlia, however this protocol has been enhanced by adding new message types and functionalities in Storj. It also implements a peer to peer publish/subscribe (pub/sub) mechanism known as Quasar, which ensures that messages successfully reach the nodes that are interested in storage contracts. This is achieved via a bloom filter-based storage contract parameters selection mechanism called topics.

Storj stores files in an encrypted format spread across the network. Before the file is stored on the network, it is encrypted using AES-256-CTR symmetric encryption and is then stored piece by piece in a distributed manner on the network. This process of dissecting the file into pieces is called sharding and results in increased availability, security, performance, and privacy of the network. Also, if a node fails the shard is still available because by default a single shard is stored at three different locations on the network.

It maintains a blockchain, which serves as a shared ledger and implements standard security features such as public/private key cryptography and hash functions similar to any other blockchain. As the system is based on hard drive sharing between peers, anyone can contribute by sharing their extra space on the drive and get paid with Storj's own cryptocurrency called Storjcoin X (SJCX). SJCX was developed as a Counterparty asset and makes use of Counterparty (Bitcoin blockchain based) for transactions. This has been migrated to Ethereum now.