What A Decentralized Infrastructure Is And How It Actually Works

Max (Chong) Li Contributor

Faculty at Columbia University; CEO of Web3 Data Cloud “Oort”

When we talk about blockchain networks or Web3, 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 around the world.
Unlike centralized cloud service providers like Google and Amazon, giving users access to proprietary storage and computing capacity, a decentralized infrastructure relies on a distributed network of computers and hardware devices (“nodes”) all working together to meet users’ needs, with each computing node managing only a portion of a compute or storage task.
Decentralized infrastructure provides benefits such as enhanced privacy, reliability, and cost efficiency. That’s what makes cryptocurrencies like bitcoin different from central bank digital currency experiments. On the other hand, technologies that rely on decentralized infrastructures must face unique challenges related to complex security tradeoffs, performance (usually too slow), and (often unclear) regulation.

The Core Advantages Of Decentralized Infrastructure

Privacy – Decentralized infrastructure offers better privacy than the corporate world’s legacy cloud service providers. In a decentralized network such as Oort, users’ data is stored, processed and encoded in a unique way. First, the user uploads raw data. The data is then encrypted at the “edge” of the network—that is, by the node with the closest proximity to the user—duplicated, and sharded (divided) into hundreds of thousands of pieces. These fragments of the encrypted file are then distributed to hundreds of network nodes. Each node stores only a few pieces of the file, and no one node ever holds an entire file. On this serverless infrastructure, users can be certain that their data has been rendered totally inscrutable to any of the nodes responsible for its storage. And only the user can retrieve, decode and decrypt the file by means of a private key. The privacy afforded by decentralized infrastructure means that users are finally the owners of their data. Privacy guarantees ownership.

Reliability – Conventional cloud networks are centralized, which means they are vulnerable in a way decentralized infrastructure isn’t. The failure of a single node in a centralized network can bring down the whole system. This is a recurring problem for even the biggest cloud service providers. For example, Alibaba Cloud recently broke down in HongKong for more than 24 hours. Decentralized infrastructure enjoys a comparative advantage in reliability, because data is hosted on hundreds of nodes, not a single—and therefore vulnerable—server.

Cost – A decentralized infrastructure can leverage low-cost and idle resources from around the world; According to Anthesis Group and Stanford University Researchers, 30% of serviers are sitting “comatose”. With decentralized infrastructure, users can tap into servers and other resources from Virginia to Nigeria, Dubai to Vietnam—taking advantage of cheaper and idle computing and storage resources to process their data and literally making users’ money go further.

The Challenges Related To Decentralized Infrastructure

Security – Security is at the top of the user’s mind when he or she considers whether to use a cloud service. Cloud networks are not impervious to hackers, who regularly target giants like Google. But whereas Google and Amazon, as a consequence of their frequent run-ins with hackers, have consistently improved and proved their security, Except BitcoinBTC network, decentralized infrastructure is too new to have undergone the same amount of stress-testing and security upgrades.

Performance – If a decentralized provider’s services can’t match up to the system performance offered by AWS or Google Cloud, it’ll be hard pressed to win any users. Performance is a critical sticking point. Performance is usually defined as latency, availability, and durability. Ironically, part of the reason for decentralized infrastructure’s disadvantage in performance is a consequence of the technology’s strength in the area of privacy. It’s a tradeoff: When you increase user privacy, you lose some 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 the fragmentation of file data across multiple nodes. While there may be some regulatory frameworks in place, 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 increased privacy, reliability, and cost efficiency, much remains to be done in terms of security, performance, and regulation before decentralized networks can win users over from Google Cloud, AWS and other centralized cloud giants. As the 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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