If you can't stream data the user is sending through the server to the database you have to buffer the entire payload in memory. This doesn't scale well but can work for smaller payloads.
You CAN stream bytea but:
* Good luck finding a client that supports it(npgsql does actually)
* It doesn't support support start the read/write at any location other than the start. So you'd have to basically build the Lob(Large Object) functionality yourself on top to support upload resume and other use cases.
With Lob even if your client doesn't support streaming, you can mimick it by writing chunks into the Lob.
The client I use currently, npgsql, supports proper streaming so I've created a FS->BLOB->PG storage abstraction. Streamy, dreamy goodness. McStreamy.