Blockchain is reinventing the cloud computing

Blockchain grew to become a revolutionary solution to P2P computing within a couple of years. Some people recognize blockchain as a technology originating from the Bitcoin, which was the first major virtual currency. Bitcoin posed a challenge for the banking industry, but blockchain will probably change the world within next ten years more than the cloud, robotics or many other rapidly evolving technologies.

Blockchain-based computing has managed to fabricate a new world without a middleman. Companies can exploit blockchain technology to build vast distributed computing systems open to anyone. Trust is built-in on blockchain network. It records each transaction anonymously on distributed ledger or database. The blockchain records change in each payment, music file, and medical record or other file and stress them in chronological order forever. Neither can a user alter them secretly because each transaction block must refer to preceding block to be valid.

This approach has the potential to reorient the whole big data and cloud computing industry shortly. The age of massive data centers is dwindling at a rate faster than we can imagine. Companies, as well as individual consumers, can soon keep their data in distributed cloud network based on highly secure blockchain technology. The cloud computing has already brought us lower computing costs, but P2Pnetworks consisting of hundreds of thousands of PCs and servers across the globe bring open cloud computing at very affordable pricing to everyone.

Blockchain is a Thin Cloud

The blockchain cloud is a thin cloud if compared to a traditional cloud computing infrastructure, therefore it is more ideally suited for running a new breed of thin programs, specifically known as “smart contracts”, which are business logic that executes on the blockchain’s Virtual Machinery (VM).

Not surprisingly, the term “virtual machine” has been borrowed from the traditional cloud computing nomenclature, and it is really this virtual network of decentralized computers that are hitched together by the resemblance to a prescribed set of blockchain’s consensus rules, i.e. to execute the logic represented in the software code.

When you run an application in the cloud (e.g. on Amazon Web Services), you are charged based on a combination of time, storage, data transfer and computing speed requirements. The novelty with virtual machine costing (e.g. on Ethereum) is that you are paying to run the business logic on the blockchain which is otherwise running on physical servers, but you don’t have to worry about setting-up these servers because they are managed by other users (miners) who benefit from a crowdsourced-like metering of their part of the infrastructure.

Therefore, the blockchain cloud has a form of micro-value pricing that parallels the traditional cloud computing stack, but via a new layer. It’s not a physical unbundling of the cloud, rather it’s a new layering of cryptography-based transaction validation and state transition recordings on a parallel, but thinner cloud.

Let’s not get carried away with the cloud computing analogy. The blockchain infrastructure resembles a layer of cloud computing infrastructure, but it doesn’t allow us to replace it. Further, Blockchain VM’s is expensive if their functionality isliterally compared to a typical cloud service such as Amazon Web Services or Digital Ocean, but they will be useful for certain decentralized applications. As a sidenote, we may envisage a future where client nodes can talk to each other directly in scenarios where blockchains are too expensive or slow.

However, running applications on this new infrastructure has certain obstacles: you need to do some work. That work comes in the form of adhering to a new paradigm of decentralized apps that follows web3 architecture to run specifically on the blockchain. Using Ethereum again as a primary example, 3-tier web3 architecture includes:

1)An advanced browser as the client,

2) Blockchain ledger as a shared resource, and

3) A virtual network of computers that runs smart business logic programs in a decentralized way by interacting with the blockchain consensus engine that clears transactions or toggles some value.

This new paradigm actually exemplifies the future direction of cryptography-based decentralized computing, and it is a variation of the existing Web apps architecture like running of Javascript inside browsers and on the server-side.

Another example of a blockchain platform that uses the virtual machine concept, but in a different way is Eris Industries. Started originally as an Ethereum fork, Eris runs “A customizable Blockchain as a service” allowing customers to define arbitrary rules for their own protocol by writing smart contracts that will execute on a private network of virtual machines (as in a private blockchains). Eris takes that concept further by allowing developers to design hybrid applications, that have a footing within a private application-specific blockchain, and links to a public blockchain (such as Bitcoin’s) simultaneously.