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Blockchain and cloud computing: surprising allies who benefit each other 

Feature
Blockchain and cloud computing: surprising allies who benefit each other 

In recent years, both blockchain technology and cloud computing have been two notable trends shaping the digital landscape. Blockchain, which originated as the underlying technology for cryptocurrencies, has evolved into a versatile solution that can support various use cases beyond finance. 

Meanwhile, cloud computing has changed the way businesses and individuals utilize and store data, enabling them to access vast amounts of computing resources without having to invest in on-premises infrastructure.

While blockchain and cloud computing may seem like two distinct technologies, they share some common features and complementary strengths. Both technologies offer transparency, security, and scalability, and can potentially enhance each other’s capabilities. 

The integration of blockchain in cloud computing has become particularly necessary, considering the rate at which cloud computing has grown over the past decade, with industry leaders looking for solutions to its limitations.

Cloud computing and blockchain: an ideal pair?

In an exclusive interview with crypto.news Matt Henderson, chief strategy officer at Aurora Labs, stated that blockchain technology can be leveraged to complement the cloud computing industry. 

“Blockchain, in its truest sense, relies on the ethos of decentralization, whereas cloud computing is a very centralized approach. By leveraging blockchain, a decentralized network of nodes can be formulated to share, process, and secure data.”

Henderson said

According to Henderson, the use of blockchain can help address the issues that come with centralization in cloud computing services. “A distributed network of computers can help in avoiding a single point of failure,” he claims. Henderson believes cloud computing and blockchain are the ideal pair, as “cloud computing makes it easier to store and retrieve data online whereas blockchain brings a high level of transparency and encryption to store data in secure servers online.”

He also emphasized the role of blockchain technology in ensuring that cloud services can be more effective, flexible and better secured. 

“Web2 enterprises can leverage blockchain-based cloud computing for record management, user transaction verification, blockchain-based cloud storage, permissioned information access through smart contracts, identity management, authentication, data provenance, and so much more.”

Henderson remarked

Moreover, Arno Bauer, senior blockchain solution architect at BNB Chain, pointed out that blockchain and cloud computing can work together to create innovative decentralized storage resources such as BNB Greenfield, a storage-driven data network.

Bauer told crypto.news in an exclusive interview that by combining the scalability and accessibility of cloud computing with the security and immutability of blockchain technology, decentralized cloud storage platforms can provide numerous benefits. 

He stated blockchain could help provide greater security for cloud storage solutions through the use of cryptographic algorithms. Additionally, Bauer highlighted data ownership measures and an increased level of control over data as some of the key advantages that blockchain brings to cloud computing.

“For instance, BNB Greenfield allows users to control data ownership and access rights, granting exclusive access to specific users to stored data, unlike traditional decentralized storage networks.”

Arno Bauer, senior blockchain solution architect at BNB Chain

Bauer believes that blockchain and cloud computing can join forces to create a thriving environment for emerging web3 concepts such as DeFi, NFTs, and dapps. According to him, blockchain can ensure decentralization and transparency, while cloud computing provides “secure, scalable, and easily accessible infrastructure” for these technologies.

He also pointed out that cloud computing could help improve blockchain scalability and bolster the management of blockchain nodes. For instance, Flare, an EVM-compatible data-driven blockchain, recently integrated its blockchain API suites into the Google Cloud marketplace.

“Cloud computing can use its vast resources and infrastructure to handle the increased workloads of blockchain networks, thus enhancing their scalability. Furthermore, cloud computing can facilitate the deployment and management of blockchain nodes, making it easier for developers and users to access and interact with blockchain networks.”

Bauer told crypto.news

Cloud computing: opportunities and challenges

According to market predictions, the global cloud computing industry is set to experience significant growth in the next decade, with an estimated value of USD 2.3 trillion by 2032, representing a CAGR of 16% between 2023 and 2032. 

In 2022, the private deployment category accounted for almost half of the market, with the SaaS segment dominating revenue shares by 56%. Among the various segments, large enterprises generated the most revenue share at 52.6%, while the BFSI sector was the top revenue earner, representing over 26.4% of total revenue. 

North America held the largest market share, with 41.2% in 2022. The market’s growth is mainly attributed to several factors, including the rise of AI and machine learning, the remote work trend, SaaS, seamless data management, and real-time visibility.

A report from Grandview Research indicates that cloud services are also becoming increasingly popular in developing countries, where businesses are looking to improve their digital activities. Additionally, government efforts to safeguard data integrity and safety are contributing to market growth, as well as the COVID-19 pandemic, which has boosted the adoption of hybrid work models and cloud computing.

Growing concerns

Security

However, the report also highlights the potential obstacle of increasing data privacy and security concerns that may hamper market growth. 

One of the most significant challenges of cloud computing is the security of data. As data is stored on third-party servers, organizations and individuals need to trust cloud providers to keep their data secure. This includes protecting data from cyber attacks, data breaches, and other security threats.

From a Statista survey, approximately half of all respondents across the world indicated that their organization incurred unforeseen expenditures in order to address security vulnerabilities caused by cloud-related cyber attacks in 2022.

In a separate survey, the number of respondents reporting challenges with account compromise almost doubled from 2020 to 2022. Moreover, 73% of the surveyed parties disclosed that their security breach was a result of a phishing attack. 

Data Privacy

Data privacy is another concern when it comes to cloud computing. Users need to ensure that their data is not accessed by unauthorized parties or used for purposes other than what it was intended for. A Foundry report from last year found that up to 35% of decision-makers have challenges with data privacy.

The prevalence of security breaches also compounds concerns with data privacy. A 2022 report by the Identity Theft Resource Center indicated that up to 1,862 data breaches were observed in cloud computing in 2021, marking a 68% increase from the figure witnessed in the previous year.

Centralized control

Centralized control in cloud computing can be problematic because it gives a single entity too much power and control over the data and computing resources of businesses. This can create issues with data security, privacy, and availability and could also lead to vendor lock-in and limited innovation. 

Additionally, if the centralized entity experiences a collapse or outage, it might lead to significant issues for businesses that rely on their cloud platform. Some of the most notable outages experienced over the years have impacted businesses using AWS, Microsoft Azure, and Alibaba Cloud. In December 2021, AW experienced up to three outages that impacted businesses.

Vendor lock-in

Organizations that use cloud computing services can become dependent on their cloud provider. This can make it difficult to switch to a different provider if the need arises. Data from Statista shows that 47% of organizations highlighted issues with vendor lock-in with regard to cloud computing in 2022.

Blockchain presents a solution

These reports have underscored the growing need for increased security in cloud computing, and the integration of blockchain technology could help address these concerns. 

Security and data privacy 

Traditional cloud platforms rely on a centralized approach to store and manage data, which makes them vulnerable to security breaches and data theft. In contrast, blockchain technology provides a decentralized and immutable infrastructure for storing and sharing data.

The distributed ledger in a blockchain network ensures that data is not tampered with, as every transaction is recorded in multiple copies across the network. This means that any attempt to alter or delete data in one copy of the ledger will be immediately detected and rejected by the other copies. This makes the blockchain highly resistant to hacking and data manipulation, which are some of the most common forms of cyber attacks in cloud computing.

Moreover, the use of smart contracts can enable secure data sharing in blockchain-based cloud platforms. Smart contracts are self-executing computer programs that run on the blockchain network, and they can be programmed to automatically enforce data access and sharing rules. 

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For instance, a smart contract can be designed to ensure that only authorized users can access certain data and that any attempt to share the data with unauthorized parties will be immediately detected and blocked.

Henderson underlined that blockchain technology can help address the growing issues of vulnerability that subject cloud computing to multiple security breaches and manipulation. “Blockchain provides a high level of immutability, data integrity, global distribution, and scalability,” he noted.

Bauer shares this sentiment, equally identifying data security and integrity as one of the improvements blockchain brings to cloud computing. “As an example, within BNB Greenfield, each piece of information can be stored across multiple storage providers, making it resistant to tampering and enhancing the accessibility of the file,” he noted.

Vendor lock-in

Vendor lock-in is a major concern for businesses that adopt cloud computing. Once a business adopts a particular cloud platform, it could become challenging and expensive to switch to another platform due to technical dependencies and proprietary tools.

However, blockchain-based cloud platforms can enable interoperability between different cloud providers, allowing businesses to switch between platforms seamlessly. Blockchain technology can provide a standardized and open-source framework for cloud computing, which can enable different cloud providers to work together and exchange data seamlessly.

For instance, blockchain-based cloud platforms can use standardized APIs and smart contracts to enable interoperability between different cloud providers. This can help businesses switch between platforms without having to worry about compatibility issues or loss of data.

In addition, blockchain technology can enable the creation of decentralized marketplaces for cloud resources, where businesses can buy and sell computing resources on a peer-to-peer basis. These marketplaces can enable businesses to access computing resources from different cloud providers based on their needs and preferences.

Centralization 

Decentralization is a crucial aspect of cloud computing, as it enables businesses to have greater control over their data and computing resources. Traditional cloud platforms are typically centralized, which means that businesses must rely on the service provider to manage their data and computing resources.

However, blockchain technology can enable decentralized control of cloud resources, empowering businesses to have greater control over their data and computing resources. Blockchain-based cloud platforms can leverage the distributed and decentralized nature of blockchain to enable businesses to manage their data and computing resources directly.

By using a blockchain-based cloud platform, businesses can store their data on a decentralized network rather than relying on a centralized server controlled by a cloud provider. This can provide greater security and privacy for businesses, as they can have greater control over who has access to their data.

Additionally, blockchain technology can enable the creation of decentralized autonomous organizations (DAOs) that can manage cloud resources in a decentralized and transparent manner. DAOs are self-governed organizations that are managed by smart contracts, which can automatically execute predefined rules and policies.

By using DAOs, businesses can have greater control over their cloud resources and ensure that they are being used in a way that aligns with their interests and goals. For instance, a business can create a DAO to manage their cloud resources and set rules and policies for how the resources should be used.

Emerging trends

Owing to its promise, some cloud computing companies have already begun eyeing an entry into the blockchain scene. The penetration of blockchain within the cloud computing industry is still quite low despite the numerous benefits the technology can bring to the sector.

Last January, reports suggested that Google Cloud was aiming to set up a team that would oversee its entry to blockchain technology, as the company disclosed plans to start developing blockchain-based solutions. These solutions would be in the form of decentralized applications (dapps). 

Google Cloud has also been inking numerous partnerships to set its foot in the web3 scene. The latest web3 firms to collaborate with the cloud computing giant are Solana (SOL), Nansen Alchemy, and some others. These partnerships are aimed at facilitating a startup program for web3 firms.

Moreover, Alibaba Cloud has also made its presence known in the blockchain scene through several partnerships and initiatives. In one of its first moves into the blockchain, Alibaba Cloud formed a partnership with blockchain protocol Avalanche (AVAX) last December to allow users to operate Avalanche validator nodes on its infrastructure. 

Most recently, Amazon Web Services (AWS) also deepened its reach into the blockchain industry with a partnership with Cronos (CRO), an Ethereum (ETH)-based chain. The collaboration, which was announced by Cronos on April 26, will see Amazon Web Services provide support for startups in the blockchain industry through Cronos’ Accelerator Program.

https://twitter.com/cronos_chain/status/1651098734875533312?t=vXowt1vJboXIO2y1P71xeg&s=19

The future of blockchain in cloud computing 

Despite these trends, the use of blockchain for the improvement of cloud computing remains scant. Still, Bauer believes blockchain integration in cloud computing will continue to grow each year. According to him, this would be driven by increased demand for such integration.

“As more and more users become aware of data ownership and privacy, decentralization of the data will be vital for the transformation of entire industries, starting with social networks and spreading across more traditional industries, such as healthcare.”

Bauer said

Using blockchain technology can, according to Henderson, enhance the efficiency of cloud services by bringing in greater flexibility and security. 

“Web2 enterprises can leverage blockchain-based cloud computing for record management, user transaction verification, blockchain-based cloud storage, permissioned information access through smart contracts, identity management, authentication, data provenance and so much more.”

Henderson said, speaking on how blockchain could help improve cloud computing

Henderson further emphasized that the alliance of blockchain technology and cloud computing could also help in improving other industries such as healthcare, transportation, smart-home automation, manufacturing, and identity solutions. 

“Over 60% of the world’s corporate data is stored in the cloud, and the public cloud end-user spend will reach nearly $600 billion in 2023. Big enterprises can employ these technologies in relevant fields to build a trusted, secure, and decentralized ecosystem. As an example, using blockchain and cloud computing in smart home automation can elevate users’ experience, providing increased comfort to individuals residing there.”

Henderson said, speaking on the future of such collaboration

Henderson further highlighted blockchain’s ability to introduce high-level security to systems facilitated by IOT devices that gather and store information on the cloud using sensors. According to him, this security can be introduced through “blockchain-based data integrity architecture to secure the system without relying on a third party.”

The CSO of Aurora Labs noted that another example would be adding permission and usage instructions on who can access data from a particular server automated through smart contracts (possibly adding commands like a specific region, specific time, etc.). 

“I envision the future of blockchain-based cloud computing services involving the creation of user-controlled data architecture utilizing sharing mechanisms to drive scalability.”

Henderson added

Case studies: Aurora Cloud and BNB Greenfield 

Speaking on the most suitable blockchains for cloud computing, Henderson specifically called attention to Aurora (AURORA), the layer-2 solution built on the Near (NEAR) blockchain. He discussed Aurora Cloud, a cloud-based solution that enables corporations to deploy their own enterprise blockchains on Near.

The Near protocol leverages a sharding design, per Henderson, known as “Nightshade” to amplify scalability and can accommodate up to 100,000 transactions per second by utilizing the unique Nightshade algorithm referred to as Doomslug Consensus Algorithm. 

Henderson acknowledged the nascence of blockchain technology scalability challenges blockchain networks face due to congestion in their networks. However, novel methods like data-sharding are currently employed to enhance the data storage capabilities of blockchain, he said. 

“Moreover, Web2 enterprises are leveraging enterprise blockchain solutions to streamline their operations, permissioned instructions to their users, share real-time data with their stakeholders, and track on-chain activity and commercial procedures, thus making it unique and personalized to their business.”

Henderson concluded

On the other hand, BNB Chain’s Arno Bauer believes BNB Chain might just be ahead of other blockchains in terms of its capability to facilitate improvements in cloud computing. 

“BNB Chain is a mature blockchain technology with the largest ecosystem in terms of daily active users and the number of transactions.” 

Bauer said

Speaking further, he added that “such quick growth has put a lot of pressure on the community to develop the best technology to withstand high throughput, while not compromising on user experience […] BNB Chain also helps web3 builders in its ecosystem to integrate the best technology for their use case, through programs like the Most Valuable Builder (MVB) accelerator program.”

Bauer believes that enterprises will leverage blockchain’s “enhanced security, data ownership transparency, and interoperability to achieve goals like cost reduction, improved data protection, and efficient collaboration, ultimately driving innovation and competitiveness.”

Furthermore, Bauer pointed out the potential need for blockchain-based solutions such as BNB Greenfield in the future, as consumers start demanding decentralized cloud storage solutions. According to him, this will be triggered by the need for data privacy and data ownership.

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