Building the new web on old foundations: decentralized systems vs. centralised infrastructure
Deep beneath Edinburgh’s South Bridge are a series of underground vaults discovered in the 1980s. Previously used to house shady drinking establishments and store goods, these were even home to a number of squatters as far back as the 1700s. Countless numbers of unwitting tourists and locals have enjoyed a Gregg’s sausage roll, a burrito or noodles from the shops on the bridge, completely ignorant that the restaurants and shops above were built on top of a much older sub-city that thrived hundreds of years ago. Today’s blockchain and Web 3.0 business is not dissimilar to Edinburgh’s intriguing past: new systems and architecture built on a much older system – the internet. Of course, the two are tightly interlinked; blockchain partially arose because of the need for trustless systems that don’t need governing bodies. However decentralized blockchain’s principles are, building on infrastructures that are generally centralized by default comes with a number of challenges for our growing industry.
A Challenge in the Ether
According to a recent report, 53% of the Etherium mainnet is hosted with one single provider, across just two countries: the US and Germany. Although the stability of the network is almost certainly not at risk, given the scale and redundancy of large hosting providers today, this degree of centralisation does pose governance risks. For example, if adverse privacy policies were put into place in these regions, then a large proportion of the network would come under threat.
In many ways, centralisation is not one single dimension. Yes, large, traditional hosting providers have their own rules and jurisdictions, and also fall under regional rules and regulations – many of which can be beneficial to blockchain systems – but many parts of their infrastructure are also decentralized. For example, single providers can have hosting facilities in multiple different in the same country, using equipment from different providers, providing redundant power and network infrastructure. Different arms of a company can exist in different jurisdictional areas as different legal entities – for example, in Europe and the US, where data privacy and residency laws differ radically.
In a best-case scenario, the infrastructure behind blockchain applications would mirror the principles of blockchain itself – decentralised and trustless by default. Unfortunately, blockchain is a young industry, largely opex-driven, and without the resources that larger, more established sectors have. The resources needed to effectively and efficiently host blockchain apps, exchanges and mining nodes (to name but a few) on-premise, or to build a new physical infrastructure for Web 3.0 would be quite simply cost-prohibitive.
This makes a multi-cloud approach crucial for the blockchain industry, whereby organisations use many cloud systems, in different regions, from different providers, ensuring that their technology estate is spread across different technical, regulatory and geographic localities. However, this last consideration raises a very significant issue for blockchain companies – latency.
The Need for Speed
One of the challenges that the internet has faced for decades is that of speed. Until the dawn of networking technologies like 5G and Fibre to the Premises, not to mention highly competitive marketplaces offering ever-faster, ever-cheaper business connections with low contention ratios, the evolution of both business and personal internet usage was held back. Today, we enjoy a vast range of rich media applications, from AR and VR to online gaming, in near-real time. However, the flip side of this is that we now expect these speeds in all our online experiences – not to mention that there are some applications (often financial) where high speed and low latency is a must-have.
In a decentralised system, the best available host – and by this we mean the most suitable provider in a country with an appropriate political and regulatory environment – may be further from the end-user than is desirable, or may be unable to provide as fast an experience as a traditional hyperscaler headquartered in the US or China is able to.
To some degree, this is inevitable, and it’s worthwhile remembering that large hosting providers can be a component in a blockchain network, as long as they’re not the largest one. Blockchain creators should follow the best practice set by financial investors, who spread their bets across a number of organisations to balance risk and reward, rather than putting all of their eggs in one basket. There are also a number of organisations working to help overcome this issue, like B-Datagray, which helps blockchain application creators find hardware near to them in a secure and decentralized fashion.
Regulation and Education
A number of the concerns around centralised infrastructure arise from vulnerability to changing government policy and regulations, but many industries themselves are highly regulated. For example, in financial services and healthcare, there are regulations such as PCI-DSS and HIPAA, which dictate how information should be handled and secured. Many of these work in blockchain’s favour, specifying redundancy and security, for example, but others do not.
This reinforces the importance of education throughout every link of the chain. For creators, knowing the limitations and benefits of each part of the infrastructure estate is a must if they are to make the best decisions about the foundation that their application will sit on. For policymakers, education is vital so that they understand the complexities and nuances of the industry (and not just that blockchain is different to bitcoin!) – and in turn, users and the public should be educated so that they understand why openness, decentralization and privacy are so crucial to tomorrow’s web.
All of this is vitally important, because building a robust, scalable and usable Web 3.0 ecosystem requires stakeholders to make smart compromises in some places, and hold firm in others, balancing cost, security and latency. As we have seen throughout time, significant developments are created in small increments, and with the right amount of knowledge and experience, we can all take a step towards building tomorrow’s web, today.
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