Everyone was excited when Google finally launches Google Drive. This is the search king’s response to dropbox, box.net and Skydrive. But there is a little known startup called Bitcasa which you may want to know about.

BitCasa is promising unlimited online storage for $10 a month. The service claims that as soon as you upload your first file, your OS will show you 500TB of available space remaining (and they say this limit is set by Windows and Mac which cannot show a larger number).

The feature that is the most revolutionary is that the local Bitcasa agent integrates completely with your computer. You can select any folder, on any drive, right click it and choose to Cloudify it. The files are moved to your online storage (freeing up local space) but the folder remains in the original location. Your local drive becomes a caching system for your cloud storage and anything you save to the directory automatically gets uploaded (the most commonly used files are the ones that get cached so they are available faster and even if your internet connection is down). This was a big turn off for me with Dropbox and even Google Drive.

Economics of unlimited storage

The natural question is how can they offer unlimited storage? The economics can’t make sense, right? The CEO of the company says that up to 60% of the files users store are duplicates therefore their actual storage infrastructure remains manageable. Their claim to fame seems to be a patented de-duplication algorithm, compression technologies and encryption.

Security

Because the beta is just opening up, we don’t have independently verified security reports yet but here is the company’s position. They say that everything is encrypted on the client side, which protect it from hackers and even company employees. To be more specific, the company has said that all files are encrypted using AES-256 hash, SHA-256 hashing.

They seem to be using a technique called Convergent Encryption where the encryption key for the data is derived from the data itself which would allow the company to compare uploads from different users and still detect duplication and to perform de-duplication without having your encryption key.

The company says that even with a subpoena, they are unable to decrypt your files therefore you can feel safe knowing no one can take your files without your explicit consent (unlike Dropbox, Google Drive or Skydrive where the files are available to those providers).

Beta Signup
Head over to their site and sign-up to their waiting list.

I have 10 invitations remaining so message me via Twitter (@ekiledjian) and I’ll send you an invite code (while supplies last).

Conclusion

The concept sounds so good, it seems to be too good to be true. I am currently running the beta and found some small glitches (I am sure they will work out before it becomes final). The main question is about the economics of the service. They believe that regardless of actual storage, each user will have about 25-30GB of unique (non de-duplicatable) data. What if the actual number is double or triple that estimate? Will their backend service scale well? We have yet to hear the details about where they will host their backend. There are lots of questions but this is definitely a startup to watch very closely.

If they can deliver what they promised, this may be the next billion dollar startup.