When it comes to blockchain or Web3 networks, one crucial aspect that has been missing in this space is decentralized infrastructure – the backbone of the entire blockchain ecosystem – which refers to a cloud network made up of numerous independent computing nodes, from individual computers to entire data centers, distributed all over the world.
Unlike centralized cloud service providers like Google and Amazon, which give users access to proprietary storage and processing capabilities, a decentralized infrastructure is based on a distributed network of computers and hardware devices (nodes) all working together to meet user needs, with each compute node handling only a portion of a compute or storage activity.
Decentralized infrastructure offers benefits such as increased privacy, reliability and cost efficiency. This is what makes cryptocurrencies like bitcoin different from central bank digital currency experiments. On the other hand, technologies that rely on decentralized infrastructures face unique challenges related to complex security trade-offs, performance (usually too slow), and regulation (often unclear).
The main advantages of decentralized infrastructure
Confidentiality – Decentralized infrastructure offers better privacy than legacy cloud service providers from the corporate world. In a decentralized network like Oort, user data is stored, processed and uniquely encoded. First, the user loads the raw data. The data is then encrypted at the edge of the network, i.e. from the node closest to the user, duplicated and fragmented (split) into hundreds of thousands of pieces. These fragments of the encrypted file are then distributed to hundreds of network nodes. Each node stores only some parts of the file and no node ever contains an entire file. On this serverless infrastructure, users can rest assured that their data has been rendered totally unfathomable to any node responsible for storing it. And only the user can retrieve, decrypt and decrypt the file by means of a private key. The privacy afforded by the decentralized infrastructure means that users are finally the owners of their own data. Privacy guarantees ownership.
Reliability – Conventional cloud networks are centralized, which means they are vulnerable in a way that decentralized infrastructure is not. Failure of a single node in a centralized network can bring down the entire system. This is a recurring problem even for the largest cloud service providers. For example, Alibaba Cloud recently went down in Hong Kong for more than 24 hours. Decentralized infrastructure has a comparative advantage in terms of reliability, as data is hosted on hundreds of nodes, not on a single and therefore vulnerable server.
Cost – A decentralized infrastructure can leverage cheap, idle resources from around the world; According to Anthesis Group and Stanford University Researchers, 30% of servants are in a coma. With decentralized infrastructure, users can tap into servers and other resources from Virginia to Nigeria to Dubai to Vietnam, taking advantage of cheaper, idle computing and storage resources to process their data and literally make money for users.
The challenges of decentralized infrastructure
Safety – Security is at the forefront of users’ minds when considering whether to use a cloud service. Cloud networks aren’t impervious to hackers, who regularly target giants like Google. But while Google and Amazon, as a result of their frequent run-ins with hackers, have steadily improved and have proven their security, with the exception of the BitcoinBTC network, the decentralized infrastructure is too new to have gone through the same amount of stress testing and security updates.
Performance – If the services of a decentralized provider cannot match the system performance offered by AWS or Google Cloud, it will be difficult to win over any user. Performance is critical. Performance is generally defined as latency, availability, and durability. Ironically, part of the reason for the performance disadvantage of decentralized infrastructures is a consequence of the technology’s strength in the area of privacy. It’s a trade-off: when you increase user privacy, you lose speed and ease.
Regulation – The distributed nature of decentralized infrastructure presents challenges in complying with traditional regulations such as FINRA, due to the geographic spread of nodes and file data fragmentation across multiple nodes. While some regulatory frameworks may exist, there can be a lack of clarity or enforcement in how they apply to decentralized networks. Technological innovation tends to move at a faster pace than regulatory developments.
Decentralization shapes the future of Web3
In conclusion, decentralized infrastructure presents both opportunities and challenges. While it offers greater privacy, reliability, and cost efficiency, there is still a long way to go in terms of security, performance, and regulation before decentralized networks can win over users of Google Cloud, AWS, and other centralized cloud giants. As technology advances and regulators respond to these developments, however, the potential for decentralized infrastructure to reshape the cloud computing landscape remains promising.
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