Cloud computing infrastructure giants Amazon Web Services, Microsoft Azure and Google Cloud have dominated the big tech scene for decades. With their reliable, high-performance and scalable cloud infrastructure, they provide the backbone of enterprise technology today, having built up a vast ecosystem of services that’s available across the globe.
Most big businesses make use of cloud computing infrastructure today, but not all of them are happy customers. That’s because the cloud comes with a big tax in the shape of spiralling costs, vendor lock-in and data privacy concerns.
These weaknesses of the public cloud model have opened the door to an alternative in decentralized cloud computing infrastructure that promises to transform the way technology is delivered.
What Is Decentralized Cloud Infrastructure?
With decentralized clouds, the computing resources and storage are made up of community-owned and distributed nodes. Instead of relying on a single server, an app or a data file might be hosted by multiple nodes dispersed across the globe. These nodes utilize blockchain technology to communicate with one another and share information.
The core concept of decentralized cloud infrastructure is that individuals and small businesses own and control the computing resources they use. It’s a more democratic cloud infrastructure that shuts the door on the centralized technology giants, in which anyone can participate in a community-based marketplace, buying and selling resources.
The blockchain is critical to the concept as it provides a secure and transparent peer-to-peer network that enables resources to be shared without any intermediaries. Another key component of decentralized clouds is cryptocurrency, which enables computational resources to be tokenized and sold on the open market.
We can better illustrate the concept with some examples. IO Net is building a decentralized GPU cloud, in which users rent out their idle graphics processing units to make some extra money. Just by leaving their laptop online 24 hours a day, someone can share their GPU’s processing power with other users who require it, earning crypto-based rewards for doing so.
There are many others too, including the Decentralized Physical Infrastructure Network (DePIN) Datagram, which is used to host real-time video and audio communications applications, and Helium, which offers decentralized wireless connectivity across the globe through a network of user-owned hotspots.
Datagram’s infrastructure goes a step further to promote decentralized infrastructure, recently launching its Core Substrate—a foundational layer purpose-built for launching DePIN-powered applications. Core Substrate sets itself apart with instant access to a live, scalable node network, eliminating the need for developers to build infrastructure from scratch. This marks a major evolution in decentralized cloud services, offering a plug-and-play experience for deploying real-world apps across industries like AI, gaming, decentralized SaaS, and content delivery.
Centralized vs Decentralized Clouds: How Do They Compare?
Control and Ownership
Centralized clouds are operated by large corporations, which own and manage all of the underlying infrastructure. These companies maintain absolute control over those servers and storage arrays, as well as the associated services they offer, and this means that customers have to entrust that their data will be kept secure and their workloads will remain up-and-running.
On the other hand, a decentralized cloud is not owned or controlled by any single entity. Because data is distributed across nodes, users have more control over their data, as there’s no way for anyone else to access it. In many cases, blockchain-based decentralized architectures can offer greater resiliency, security and privacy compared to centralized alternatives.
Scalability
Companies like Amazon and Google can support massively scalable workloads because they have invested billions of dollars in building up a globally distributed network of data centers. However, it seems that this is a never-ending endeavor, as increased customer demands force them to continually upgrade their cloud computing infrastructure to support the never-ending growth in data volumes they need to process. But it’s the customers who ultimately pay for this spending.
For decentralized clouds, scaling is about adding more nodes to their networks. The more nodes that participate, the greater they can scale, increasing their resilience at the same time. It can be argued that centralized clouds are more scalable right now, but the gap is closing as decentralized network adoption rapidly accelerates.
Privacy and Security
Centralized cloud infrastructure providers have invested heavily in securing their systems, and while their track record is good, they are not entirely perfect. Their centralization, combined with their unified architecture, makes them susceptible to hackers and also creates a single point of failure. In addition, data privacy is entirely dependent on the cloud provider, and companies have no choice but to trust them to safeguard their sensitive information.
This is where decentralization wins hands down. By utilizing blockchain and advanced encryption methods, it becomes impossible for anyone but the customer to access the data stored on a decentralized cloud. The distributed nature of the decentralized resources increases resistance to hacking, as any attackers would have to compromise multiple nodes to steal any data. As such, decentralization gives customers more control and security.
Performance and Costs
Centralized clouds can be quite affordable for some companies due to economies of scale. If they take advantage of long-term commitments they can access computing resources at extremely low costs. But even so, they may also have to cough up for hidden expenses such as data egress costs, which is when they transfer data into and out of the cloud. Moreover, most centralized cloud operators implement variable pricing models, which can increase the costs for smaller customers.
Then again, centralized cloud providers are known for the high-performance of their cloud resources, as they have sufficient capital to invest in the latest infrastructure and typically get early access to new servers, processors and other hardware.
Decentralized clouds cut out the middleman which enables them to offer much more affordable services, where prices are dictated by market supply and demand forces. There are also fewer hidden costs, as data address fees, for example, are non-existent. It means customers benefit from much lower fees and more predictable pricing.
On the downside, individual users are usually among the last to gain access to the most advanced servers and processors, which means the overall performance of decentralized infrastructures cannot always compete with centralized clouds, although this is only really applicable to the most demanding workloads.
Centralized vs Decentralized Clouds: Which Is Best?
Today, the vast majority of cloud computing workloads are still hosted on centralized infrastructures, because the likes of AWS and Google Cloud have a first-mover advantage. While centralized clouds have been around for two decades, decentralized clouds are much newer, only emerging recently thanks to advances in blockchain and Web3 technologies.
However, decentralized cloud adoption is accelerating fast, gaining market share among businesses and consumers alike.
Decentralized clouds are attractive because of their lower costs, their specialized nature, and also the opportunity for everyone to participate. For instance, Datagram’s Hyper-Fabric Network is designed to cater to real-time video and audio communications applications, providing exceptional performance and reliability. With it, anyone can purchase a specialist node and start contributing resources to the network. When someone joins Datagram’s network as a node operator, they’ll join a network where workloads are managed by AI models that work to dynamically balance them across the available nodes. This ensures that workloads run efficiently, regardless of the network conditions or resource constraints.
The most compelling thing about Datagram’s network is the way it tokenizes its computing resources, enabling them to be traded across a decentralized marketplace. Customers must pay DRGAM tokens to access its infrastructure, while UPD tokens are paid to node operators as rewards for contributing resources.
By tokenizing cloud computing resources in this way, Datagram provides an opportunity for others to invest in its network, which becomes a tradeable asset much like oil, gas or gold.
Cloud Diversity Is The Future
While centralized cloud infrastructures are unlikely to become obsolete, there’s certainly an opportunity for decentralized providers to disrupt the traditional business model.
Decentralized clouds provide distinct advantages, with their user-centric nature making them more private and secure, and often much more affordable. Moreover, the opportunity for everyone to participate in cloud computing markets, either as a contributor that earns rewards or simply as an investor, is extremely compelling.
On the other hand, centralized clouds will surely maintain a presence thanks to their scalability and their ability to invest in the most advanced computing resources. For instance, the vast majority of Nvidia’s new Blackwell GPUs, which provide unprecedented processing power for AI workloads, are expected to end up in the hands of centralized cloud providers. So they’ll likely remain the best option for companies looking to run the most capable new AI models for some time to come.
This is why the future of cloud computing is one where centralized and decentralized infrastructures will co-exist, catering to customer’s different needs. Those who need high-performance and more sophisticated infrastructure will likely stick with centralized providers, while anyone who values privacy and control will be increasingly tempted by decentralized alternatives.
