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Decentralized Cloud

A decentralized cloud is a peer-to-peer network of computing resources provided by untrusted entities without any single point of coordination. Rather, the nodes of the network are self-organizing based on a common protocol encoded in a shared global ledger. Infrastructure providers either host dedicated nodes or share idle capacity of existing compute resources in exchange for fees provided by developers who prefer hosting their applications in a decentralized computing environment.

Common reasons to prefer a decentralized cloud over a centralized cloud computing service provider include:

  1. Cost: Infrastructure providers in a decentralized cloud service usually devote idle capacity or run their nodes in optimal locations where they have a significant advantage on land, electricity and/or cooling prices. In close context, Filecoin has displayed that its decentralized storage solution can be cheaper than its centralized counterparts.

  2. Availability: Centralized cloud services introduce single points of failure. Network outages or data center failures can result in loss of access to critical services and data. On the other hand, decentralized cloud services work with the assumption that individual nodes can fail and that geographical diversity of node operators is to be leveraged to ensure continuity of services.

  3. Data sovereignty: Data stored in centralized clouds is susceptible to being used for analytics, improving the service provider’s offerings or to serve ads. It is just as vulnerable to being stolen in data breaches. Encrypted data processed using confidential computing techniques like FHE, MPC or TEEs ensure that user data remains in control of the user and prevents incidents similar to the Carta-Linear saga.

  4. Censorship-resistance: Apps hosted on traditional cloud services are subject to the whims of the cloud provider which can block apps that conflict with their own business interests. Additionally, cloud vendor lock-ins make it difficult for users to migrate their services from one provider to another. A decentralized cloud provides developers with much greater flexibility in choosing infrastructure providers as it’s designed to enable easy switching from one host to another.

  5. Flexible payment modes: Centralized cloud services often require credit cards, a luxury that can’t be afforded by all especially new entity structures like DAOs. Even then, changes in norms like the Reserve Bank of India’s new mandates that require two-factor authentication for each recurring transaction or prevent merchants from storing card details break cloud subscriptions. Decentralized cloud services allow modern payment rails like stable coins which are more conducive for web 3 participants.