How Clouds Will Crystallize Around Blockchain

Blockchain stands poised to become a key disruptor in today’s highly centralized cloud computing industry. What’s happening is that startups everywhere are rethinking the cloud around blockchain, proving out new approaches for radically decentralizing hosting, management, and access to compute, storage, and other resources.

There’s nothing in the core definition of cloud services says that any of these resources need to be controlled by large service providers, such as AWS, Microsoft, Google, IBM, Oracle, and Alibaba. What cloud is all about is ensuring on-demand pay-as-you-go access to shared infrastructure, platform, and application services. Pooled resources are available through an on-demand self-service with rapid elastic provisioning and measured service guarantees.

Likewise, the cloud paradigm does not specify that any of these resources be hosted in traditional data centers. Theoretically, the resources could be distributed across blockchains, edge computing environments, the Internet of Things (IoT), and other radically decentralized cloud infrastructures. In fact, Wikibon is seeing a growing range of startups who are pioneering blockchain-based cloud-provisioning business models to compete with the big cloud players.

The next generation of cloud services environments may incorporate blockchains to support any or all of the following core capabilities:

Storage: Massive storage resources are the centerpieces of all cloud services. In that regard, there has recently been a surge of startups who have built blockchain-based environments for peer-to-peer brokering and monetization of available storage resources throughout the Internet. Noteworthy cloud-storage startups taking this approach include Sia, Filecoin, Storj, Stokit, and Maidsafe. Typical of these is Sia, whose decentralized cloud storage service makes use of spare storage all over the world by allowing users to sign up as hosts for storing others’ files, which are protected through partitioning among multiple hosts, encryption to maintain confidentiality, and erasure coding to ensure that files are purged completely from hosts when their owners request it. A blockchain-based smart contract ensures that hosts get paid when they actually store someone else’s files. Filecoin and Storj take a slightly different approach, enabling users to earn the services’ eponymous blockchain-based cryptocurrencies by providing storage to customers, with the ability to use these currencies to pay for any other peers’ storage within the blockchain-based communities.

Compute: Clouds provide on-demand access to high-performance compute resources. There is a growing range of blockchain-based startups serving compute resources in peer-to-peer fabrics, such as DFINITY, ælf, iExec, and DADI. For example, DFINITY operates a “blockchain-based computer” that leverages a secure, permission-based consensus mechanism for executing fast computations with predictable performance and scalable compute and storage brokering among distributed nodes. Aelf’s blockchain-based platform categorizes node types according to their roles in a distributed deployment, giving it the flexibility to split and distribute jobs in parallel across sidechains with efficient cross-chain coordination.

Access: Traditional cloud services ride on the Internet’s ubiquitous infrastructure of service access, discovery, and routing, which includes IP, DNS, and HTTP. A startup called Blockcloud has created a blockchain-based peer-to-peer platform that handles these functions in a radically distributed fashion. The Blockcloud platform implements a “service-centric networking” backplane that enables addressing of services by “named services” rather than IP addresses.  Blockchain is the distributed middleware backbone for this “service access layer,” which supports end-to-end trust, policy, control, routing, mobility, and failover between clients and services across the cloud. Blockchain is also the foundation of a “proof-of-service” fabric for reliable service verification, as well as a “compacted directed acyclic graph” structure to record service transactions and a “truthful continuous double auction” mechanism to fairly discover, match, and orchestrate client service requests to providers across a cloud.

Identity: Traditional cloud services require that users register with the service provider and thereby allow that company to manage one’s digital identities and credentials. However, a recent industry initiative, the nonprofit Sovrin Foundation, aims to turn that cloud model on its head. The foundation has defined a blockchain-based distributed identity hyperledger and trust infrastructure framework. This involves allowing users to self-provision their own trusted identifiers that point to the public keys and service endpoints that anyone can use to verify those identities. In addition, the initiative defines verifiable claims and zero-knowledge proofs that enable entities to engage in trusted transactions without prior business arrangements and without compromising privacy. Under the Sovrin framework, independent software agents engage in peer-to-peer identity transactions on behalf of identity self-issuers.

Over the coming 1-2 years, there’s a high probability that these and other blockchain-based startups will be acquired by the big public cloud providers. None of these startups appears likely to challenge AWS, Microsoft, Google, IBM, and other public cloud providers in their core enterprise accounts. Instead, incumbent public cloud providers will deploy blockchain-based provisioning platforms to address any or all of the following operational requirements:

Surge provisioning: To keep a lid on the fixed costs of provisioning their own compute and storage clusters, while ensuring capacity to meet surge requirements, public cloud providers will tap into partner-provisioned premises-based compute and storage within blockchain-federated environments. If providers use cryptocurrencies to compensate trading partners for their cloud resources, they can also play arbitrage when the cryptocurrency-denominated costs deviate from the equivalent real-currency costs of provisioning the equivalent resources from the cloud provider’s own inventory.

Regional provisioning: To meet service-level agreements for clients in regions where it lacks a point of presence, a public cloud provider may spin up compute and storage from available partner-provisioned resources in those regions. Cloud providers might also take this approach to comply with regulatory requirements that there be no storage or processing of sensitive data outside a specific country, province, or state. Conceivably, each region might have its own third-party blockchain-based peer-to-peer cloud provisioning environment, which are federated to each other and to public cloud providers through smart contracts.

Edge provisioning: To support high performance on mobile or IoT applications, public cloud providers might dynamically allocate partner-provisioned compute and storage resources that are physically closer to those users, or of greater capacity or more performant than the provider’s own resource inventories in those edge tiers.

In order to manage these decentralized arrangements, public cloud providers will need to implement blockchain-based resource provisioning environments within which client-service requests are fairly and dynamically matched with, routed to, and served from the most optimal partner-provided resources. This will require, for each public cloud provider, a comprehensive resource-provisioning chain with sidechains for storage, compute, access, and identity provisioning.  It will also require clever engineering to pull off in an operational infrastructure, considering the performance, security, and compliance challenges associated with the current state of blockchain technology.

Last but not least, it will require standards to ensure that all these blockchains federate seamlessly to provision resources in all the multi-cloud and cloud-to-edge scenarios that will dominate enterprise computing for years to come.

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