Blockchain Cloud Computing: Benefits and Examples

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Rafael Timbó
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Rafael Timbó
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Chief Technology Officer
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Learn more about Blockchain and its role in cloud computing, and examples of the different types of industries that can use it.
Published on
March 1, 2023
Updated on
April 11, 2024

With the worldwide spending on blockchain solutions crossing $6.6 billion, it's no surprise that this technology is being used in every industry, from banking and finance to healthcare and manufacturing.

The cloud has become an integral part of enterprise infrastructure, and blockchain is poised to have a similar impact. Secure information exchange is the most common use of blockchain in companies.

Though the two technologies are still in their early stages of development and adoption, there are already several ways in which they can be used together to create new services and optimize existing ones.

In this article, we'll explore the use of blockchain in cloud computing, plus its benefits for enterprises.

What Is Blockchain?

Blockchain is a decentralized, distributed database that allows secure information sharing among different parties. It consists of a growing list of records, called blocks, linked together using cryptography.

Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data. Bitcoin, the first and most well-known cryptocurrency, is based on blockchain technology.

The increasing interest in blockchain is mainly due to its potential to provide a higher level of security than traditional databases.

In a centralized database, all the data is stored in one place, making it vulnerable to hacking and other cyberattacks.

With blockchain, there is no central point of failure because the data is distributed across a network of computers, called nodes. As a result, it is much more difficult for hackers to corrupt the data.

What Is Blockchain in Cloud Computing?

In cloud computing, blockchain can create a decentralized network of nodes that share data and processing power. This allows enterprises to avoid needing a single, centralized provider. Instead, they can rely on a distributed network of computers that are not under the control of any one company.

Such a system can provide several advantages, including enhanced security, improved scalability, and increased availability.

In addition, it makes it possible to create new applications that are not currently feasible with traditional cloud-based architectures. For example, a decentralized network of nodes could be used to create a distributed file storage system that is more secure and resilient than existing solutions.

Primarily, the applications of blockchain in cloud computing are closely associated with the Cloud of Things (CoT). The Cloud of Things refers to the interconnection of physical devices and objects with the internet. It includes everything from connected cars and wearable devices to industrial equipment and home appliances.

CoT is expected to generate a massive amount of data that will need to be stored, processed, and analyzed. That's because many industries use the existing Internet of Things (IoT) to collect data from connected devices for various purposes, such as asset tracking and inventory management. Statista forecasts the number of IoT devices worldwide to reach 29 billion by 2030.

The use of blockchain in cloud computing can help enterprises to manage this data better and ensure its security. For instance, a blockchain-based system could be used to store the data collected by IoT devices in a secure and tamper-proof manner. Moreover, IoT devices typically have a limited storage capacity.

Meanwhile, the cloud can store substantial data reserves, cementing the importance of CoT.

How Does Blockchain Cloud Computing Work?

In a blockchain-based cloud infrastructure, each node in the network is responsible for storing a copy of the blockchain. When a new transaction is added to the blockchain, all nodes in the network are updated with the new information.

This allows for a decentralized, transparent, and secure way of managing data.

The blockchain cloud also has the potential to revolutionize the way we manage data. It could be used for everything from managing medical records to tracking the provenance of food.

Blockchain vs Cloud: How Do They Compare?

In a cloud computing vs. blockchain comparison, it's easy to see that these two technologies are quite different. However, they both offer unique benefits that can be merged to create a comprehensive product for the good of enterprises.

Cloud computing offers a way to store and access data and applications over the internet. It's a flexible and scalable solution that businesses of all sizes can use.

On the other hand, a blockchain is a distributed database that maintains a growing list of records. These records, called blocks, are linked together using cryptography. Blockchain is often used to create immutable ledgers for cryptocurrency transactions.

So, how do these two technologies compare? Here are some factors:

  • Data access: In the cloud, users can access information online. The same applies to a blockchain, except that hashing and data encryption come into play.
  • Cost: Cloud computing can be expensive, as businesses need to pay for storage and bandwidth. Blockchain is often seen as a more cost-effective solution, as no third-party fees are involved.
  • Data visibility: The data in the cloud is mutable, meaning anyone with the proper permissions can access and change it. The information on the blockchain, however, is immutable. Once a block is added to the chain, it cannot be altered.
  • Data security: When it comes to security, both cloud computing and blockchain have their advantages. In the cloud, data is stored on central servers protected by firewalls, whereas blockchain uses cryptographic methods to secure data.
  • Speed: Cloud computing can process large amounts of data quickly. However, blockchain can be slow due to the consensus mechanism used to verify transactions.
  • Security: In a 2022 survey, half of respondents said that their company had some sort of cloud attacks due to which they had to spend extra money on dealing with security gaps. Phishing remains the most common cloud security attack. It is evident that the cloud is vulnerable to attacks and hacking. Meanwhile, blockchain is comparatively secure due to its decentralized nature, cryptographic hashing, and consensus mechanism.

It would be wrong to say that the cloud is not secure or that blockchain is impenetrable. However, it's worth noting that the cloud has come under fire for security breaches in recent years, while blockchain remains largely unhacked.

Thus, combining the two can be a better solution for enterprises since blockchain can enhance cloud computing.

Benefits of Blockchain in Cloud Computing

Blockchain has many features that can amp up the functionality and safety of cloud-based systems. A few notable benefits of using blockchain technology in cloud computing include:

Increased Security

One of the most significant advantages of using blockchain is that it is incredibly secure. With blockchain, data is stored in ledgers across a network of computers rather than in a central location.

The decentralized structure makes it virtually impossible for hackers to penetrate the system and tamper with data. In addition, each transaction is authenticated and verified by the network before it is added to the ledger, so it's nearly impossible to commit fraud.

Improved Efficiency

Another benefit of using blockchain is that it can help improve efficiency in cloud-based systems. Because blockchain is a distributed database, it can help reduce the need for mediators and intermediaries.

This, in turn, can help speed up transactions and improve the system's overall efficiency.

Enhanced Scalability

Blockchain technology is also highly scalable. Because it is a distributed database, blockchain can easily be scaled up to accommodate more users and transactions.

For example, if a company wants to expand its cloud-based system to include more users, it can add more computers to the network.

Improved Traceability

Blockchain can also help improve traceability in cloud-based systems. With blockchain, each transaction is tracked and recorded in a public ledger.

Traceability is mandatory for businesses that deal with sensitive data, such as healthcare and finance. By tracking each transaction, companies can ensure that the data is confidential and secure.

Reduced Costs

By eliminating the need for intermediaries, blockchain can help reduce administrative costs. Similarly, blockchain-based systems are often more automated than traditional systems, which can further reduce costs.

The increased efficiency of blockchain can also help reduce energy consumption and save businesses money.

Simpler Programming Models

Businesses moving to the cloud often need to rewrite existing applications. However, with blockchain, businesses can use simpler programming models that are compatible with the cloud.

This can save time and money when transitioning to the cloud.

Improved Interoperability

Interoperability means that different systems and applications can work together. Blockchain can help improve interoperability by creating a standard format for data.

Thus, different systems have a standard for communicating and sharing data.

Overall, blockchain has the potential to revolutionize cloud computing. Blockchain can help businesses take their cloud-based systems to the next level by increasing security, improving efficiency, and enhancing traceability.

Examples of Blockchain Addressing Enterprise Cloud Computing Problems

Some main cloud computing enterprise challenges include security, data privacy, scalability, and interoperability. The decentralized nature of blockchain technology has the potential to provide solutions to all of these issues.

Here are some examples of how cloud storage blockchain applications can help different industries.

Healthcare

HIPAA Journal's data indicates that an average of 1.95 healthcare data breaches were reported in 2021 every day. Since the healthcare industry deals with confidential patient information, centralized data storage makes it a prime target for hackers.

A blockchain-based healthcare application can help mitigate these risks by encrypting and decentralizing patient data. In addition, such a system would make it much more difficult for hackers to access and tamper with sensitive information.

Blockchain can also be used to create a secure record of medical diagnoses, treatments, and procedures. That would make tracking a patient's medical history easier and prevent fraud or errors.

Banking

The banking industry is another sector that faces serious security challenges. For instance, a 2017 data breach of Equifax's record resulted in 148 million compromised records. As a result, the company was fined $575 million.

The banking sector can secure customer data using blockchain-based applications. For example, a customer's identity could be verified through their digital signature. Blockchain can also be used to process transactions and prevent fraud.

Supply Chain

Supply chains generate important data that needs to be managed effectively.

A blockchain application can help manage supply chain data more effectively and ensure the authenticity of products. For example, a product's journey from the manufacturer to the retailer can be tracked using blockchain. That would help reduce the risk of counterfeiting.

The use of blockchain can also help streamline the supply chain by reducing the need for paper documentation.

These are a few examples of how blockchain can address enterprise cloud computing problems. Many other industries can also benefit from this technology.

Limitations of Cloud Storage Blockchain Applications

Although there's considerable scope for blockchain in cloud computing, there are still a few limitations of blockchain technology when it comes to cloud storage applications.

Novelty

Because blockchain is still a relatively new technology, there are not many vendors offering solutions and services related to it. That can make it challenging to find the right solution for your needs.

For example, if a healthcare company has specific data privacy and security requirements, finding a blockchain solution that meets all those requirements may be challenging.

Complexity

Another challenge with blockchain is that it can be complex to set up and manage. For example, if you want to use blockchain for data storage, the whole workforce needs to be trained to use and manage the system.

Additionally, because blockchain is decentralized, there needs to be a consensus mechanism so that all parties involved can agree on the state of the data. It can add an extra layer of complexity to an already complex system.

Will Blockchain Replace Cloud Computing?

Considering the current trends, it's unlikely that blockchain will replace cloud computing altogether. However, the two technologies can complement each other.

For example, blockchain can secure data stored on a cloud computing platform. Additionally, blockchain's decentralized nature can help make cloud-based applications more robust and resilient.

Ultimately, it's up to each organization to decide whether or not to use blockchain in conjunction with cloud computing.

Hire Blockchain Developers

There's an enormous potential for integrating blockchain in cloud computing and vice versa. But the most compelling aspect is how these two technology paradigms can work together to create new opportunities that were not possible before.

However, enterprises need to hire the right professionals with the necessary expertise to develop, operate and manage these new technologies. That's where a talent marketplace like Revelo comes in.

Revelo provides companies access to pre-vetted remote tech talent with the right skills and experience for the job. With Revelo, you can focus on your business and eliminate the hassle of tech recruitment.

Fill out this form if you’re ready to meet with one of our representatives today to hire a blockchain cloud computing expert.

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