Cloud Providers Have Taken Over Data Infrastructure, Can Decentralization Make Them Obsolete?

For the past two decades, cloud providers have played a significant role in supporting the digital operations of firms and individuals across the globe. Whether Fortune 500 companies, startups or family offices, all these entities rely on centralized cloud infrastructure giants like Amazon Web Services (AWS), Microsoft Azure and Google Cloud. Together, these three tech juggernauts account for over 60% of the cloud market as per latest figures on Statista . Their value proposition is simple: delivering speed and reliability at a global level. But at what cost? control, censorship and vulnerability. While the leading cloud providers have proven to be reliable over the years, the concentration of power among a few entities introduces serious risks that we have seen manifesting in various instances. One of them is the risk of a single point of failure. For example, between 2020 and 2021, AWS experienced several outages which affected services across major platforms, including Netflix, Slack, Adobe and Coinbase. What’s worse are accusations of data privacy breaches and cooperations with governments. Microsoft, for instance, has previously been criticized for China censorship compliance in the joint venture it runs with 21Vianetin to serve the Chinese cloud market. Centralized vs Decentralized Data Infrastructures So, what’s the difference between centralized cloud services and decentralized data infrastructures? Simply put, centralized (Web2) data is stored and managed by a single entity while decentralized (Web3) data is distributed across a peer-to-peer (p2p) network to eliminate single points of failure. Cryptographic proofs also double down to ensure trustless and verifiable operations. While centralized cloud service providers still dominate the market to a large extent, it is intriguing to observe the rise of Web3 cloud solutions under a niche now popularly known as Decentralized Physical Infrastructure Networks (DePINs). This nascent crypto innovation space now accounts for a market capitalization of $20 billion according to Coingecko . A huge part of the traction can be attributed to the core fundamentals DePIN projects exhibit over traditional cloud providers: Censorship Resistance Unlike their traditional counterparts which can be shut down or coerced to share clients’ data, DePIN projects are immune to central authorities since they are run by a community of contributors who run distributed nodes as opposed to controlling all the resources from a single point. Resilience Another major factor putting DePIN projects ahead of the Web2 bandwagon is the resilience of the networks when it comes to avoiding single points of failure. Blockchain networks are fundamentally designed as distributed ecosystems to avoid the common downtimes we see in Web2. Cost Efficiency DePIN projects are also proving to be more cost efficient owing to the fact that resources such as computing space is crowdsourced from a broader network of participants who probably weren’t using it in the first place. This makes it cheaper than the rates offered by traditional cloud providers. User Ownership Most importantly, DePIN projects are pioneering a user-owned economy where those who contribute resources within the decentralized networks are in turn rewarded with utility or other types of crypto tokens that can be converted into fiat. Case Study: Datagram – The DePIN Baselayer To better understand the value proposition of decentralization infrastructure, Datagram is one of the best DePIN examples to study. Touted as the DePIN baselayer in the age of the new internet, the platform operates as an AI-driven, Hyper-Fabric Network with the main goal of harnessing idle hardware and bandwidth. It then transforms the underutilized resources into a scalable, decentralized physical infrastructure. This is possible through Datagram’s core substrate which technically enables the seamless integration of decentralized node networks; the platform also features a modular, intelligent, and multi-layered fabric network which consists of fabric layers for low-latency data transmission and a hyper-network layer that dynamically optimizes traffic, congestion control, and scalability. As such, Datagram’s DePIN infrastructure tackles the critical weaknesses of today’s centralized internet, where reliance on proprietary cloud systems, opaque APIs, and vendor-controlled networks creates systemic vulnerabilities. Unlike traditional models, Datagram establishes a composable runtime fabric that dynamically distributes, routes, and validates workloads across decentralized physical infrastructure networks (DePIN). Although still a relatively new project, Datagram has already served over 200 enterprises and 1 million users. The project also recently launched its Alpha Testnet , enabling users to participate on its Hyper-Fabric Network by running nodes, contributing to network performance and earning rewards for uptime and referrals. When Mass Adoption? Back to the initial question, can decentralization challenge the long standing dominance of centralized cloud providers? Like any new innovation, it will probably take some more time before businesses embrace the idea of leveraging decentralized hardware and software resources but it is not a far-fetched vision. Currently, only a handful of entities control this space, some of which are constantly being criticized for monopolizing the global tech ecosystem. Such sentiments and the growing need to move away from censored and centrally controlled ecosystems will likely trigger the adoption of DePIN projects sooner than most stakeholders anticipate. According to a recent report by the WEF, the convergence of new technologies such as blockchain and AI is poised to propel the DePIN market to a $3.5 trillion ecosystem by 2028. “Currently valued at $30 billion-$50 billion with over 1,500 active projects worldwide, this relatively new sector is projected to grow to $3.5 trillion by 2028,” read the report. That said, there is still a lot of strides to be made when it comes to product testing the current infrastructures, onboarding resource contributors and node operators. These are some of the core areas that projects building in this space ought to be focusing on. Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice

Source: Crypto Daily