Lacie’s online backup service Wuala has been updated to build 368, codenamed Hirslanden. The biggest change of note is the removal of storage trading, which previously allowed users to give up free space on their hard drive in return for free online storage.

This news – which has angered many Wuala users – appears to be caused by a switch from UDP to TCP networking, a move Wuala claims will make the service more stable, but which makes trading storage impossible for security reasons. Anticipating a backlash, Lacie has announced that any earned storage through trading will remain free for 12 months, at which point it promises a “generous rebate” for those who wish to keep this storage.

The loss of traded storage – a feature that set Wuala apart from other online backup services such as SpiderOak and Dropbox – has overshadowed other notable changes introduced by the Hirslanden build.

First, Wuala has doubled free storage to 2GB to bring it more in line with other online backup providers – this is still short of the 5GB offered by SugarSync and AVG LiveKive, however. In its defence, Wuala does offer a cheap entry level package – €19 per year for 10GB of storage.

Second, Wuala is in the process of updating its encryption from AES 128-bit to AES 256-bit, making the backup service more secure than before.

Third, Hirslanden sees the debut of a new file storage system, which it claims will improve overall performance and stability. The service now supports incremental file updates, so the entire file doesn’t need to be reuploaded when minor changes are made to it.

It also now supports individual file uploads of up to 100GB, while multiple concurrent downloads of updated files and faster random access should ensure that changes are more quickly uploaded. These changes all help reduce the program’s CPU and disk usage, which should have knock-on effects for performance elsewhere too.

The new file storage system isn’t enabled by default – it can be switched on manually by advanced users: close Wuala, then browse to the program’s parent directory – Windows users should look inside their user folder for the hidden AppData\Local folder . Open the wuala.cfg file in a text editor and add the following line:

blobs=true

Save your edits and restart Wuala or reboot your computer to make the change. Early feedback suggests enabling the feature does have a beneficial effect, particularly on upload speeds.

Whether Wuala can survive long term having lost the one thing that made it unique among online backup providers remains to be seen, but Lacie has already adopted a defensive stance, stressing that Wuala is the only online backup provider currently offering Europe-hosted files with client-side encryption.

if you can download the latest version of Wuala now for Windows, Mac and Linux. Companion apps for iPhone/iPad and Android are also available.