Blockchain and Decentralized Computing: an Intimate Link

The transition from mostly centralized computing, where all operations are carried out by a single piece of hardware acting as the foundation for the digital infrastructure, to decentralized designs happened naturally as personal desktop computers became widely available to businesses allowing them to optimize computation loads and make many processes more efficient by utilizing distributed and paralleled designs.

Despite the rapid shift to decentralization in the early 1990s with many offices installing individual computational machines on all workstations, many processes started converging again when cloud technologies became a thing with corporations trying to cut costs by simply moving their IT infrastructures to the cloud or simply getting the service from established providers like Amazon Web Services.

While many think that centralized designs are inherently better and can be used efficiently to reduce the overall need for distributed systems, the opposite looks true. Many contemporary centralized systems suffer from similar weaknesses which simply cannot be addressed due to their fundamental features.

The benefits of decentralized computing

The contemporary push toward decentralization in key industries is often dictated by the inadequacies of legacy centralized systems that restrict operations, create vulnerabilities, and can be exploited by grifters and power-hungry individuals. The idea of centralizing computation, data handling, and many other critical processes of the modern digital infrastructure conflicts on many levels with the idea of personal freedom of expression, privacy, and liberty in general.

Centralized systems have multiple glaring issues that are somewhat addressed by existing decentralized designs:

• Data storage and censorship. Over 57% of UK citizens say that they are often forced to keep their opinions to themselves because they are afraid of judgment. This hostile social environment was created by deliberate censorship by corporations, governments, and powerful institutions including the academia and legacy media. Decentralization can solve these issues by creating unique environments, building distributed computing and data-handling networks, and making sure that all information remains immutable and resistant to censorship.
• Improved security. It is true that modern decentralized systems are still vulnerable to various types of exploits and hacker attacks. For example, the DeFi sector is under pressure to deliver effective solutions to prevent theft and fraud caused by faulty smart contract design. However, distributed networks do not have one thing that makes them much better for data storage and computing — a single point of failure. If a cloud provider suffers an outage or experiences an attack, all the data and resources will be threatened.
• Transparency and democratization of IT infrastructures. To understand how decentralized computing changes the IT industry, you simply have to look at existing platforms offering infrastructural solutions like blockchain-based storage or decentralized computation for machine learning. These are systems that are designed to provide users with easy access to data and resources while allowing anyone to verify the integrity of the network and its data-handling procedures. This level of transparency is what makes decentralized computing attractive to many libertarians, tech geeks, and forward-looking investors.

Cost reduction across the board. While massive centralized platforms offering cloud services may monopolize the market and increase prices, decentralized projects are often designed in a way that makes pricing fair by rewarding hardware providers with rewards based on utilization and demand. It is a good system that ensures the affordability and accessibility of resources that are necessary to build contemporary digital infrastructures.

These distributed computing advantages can be incredibly useful to end users and allow enthusiasts to participate in the global IT industry without the need to use overpriced solutions from tech giants like Amazon and Google. With the current focus on AI technologies having alternative hardware providers is essential to keep the development of artificial intelligence a public endeavor with advanced hardware and massive computational resources available to institutions and individuals interested in the technology.

Blockchain and decentralized computing

One of the biggest pushes in the direction of total decentralization of computational resources is happening in the blockchain industry where the idea of distributed computing is closely intertwined with DeFi. The latter is a massive ecosystem offering the necessary financing to various projects focused on building advanced platforms. Many crypto enthusiasts believe that the development of the industry depends on the speed of adoption and the rate of UX improvement.

The reason why it is an important development in the tech industry is that many decentralized platforms offer independence from institutions and organizations that can potentially take control over hardware and data stored in the cloud. The obvious solution here is to implement a decentralized autonomous organization (DAO) which is a way to make governance democratic and allow individual users to actively participate in the development of the platform they are using.

Examples of decentralized computing platforms

The blockchain industry has matured enough to provide the necessary space and resources to a rich selection of startups that want to offer unique products that utilize the power of decentralization. While the main focus of legacy media and social media buzz is on DeFi protocols, you can also invest in a wide range of projects like RWA protocols, real-world infrastructure projects, and other interesting platforms that tokenize or decentralize hardware and real assets.

In the world of cloud computing, some decentralized protocols are offering a great alternative to services usually controlled by massive tech corporations:

• Render Network is a highly specialized protocol allowing users who are interested in video editing, VFX, and 3D modeling to significantly reduce the time needed to render their creations using all sorts of software. The platform works by offering rewards in native tokens to hardware providers. If you have a compatible GPU that spends a lot of time idling, it is a good idea to rent it out to the platform and collect currency that can be sold on the open market.
• Akash is a similar platform that also offers computational resources collected from users renting out their GPUs. This protocol is slightly more flexible and versatile than Render Network as it allows users to utilize available GPUs in numerous activities including machine learning, video rendering, and more. You can also customize applications and make them run using the computational power offered by Akash.
• Taubyte is also an interesting choice for users interested in using GPUs for various purposes at a fraction of the cost that is usually associated with machine learning and rendering. It is one of the main technological solutions for decentralized computing aimed at developers and AI startups that want to significantly increase the speed of development and deployment of their applications. Taubyte is a highly customizable platform that has solutions for all types of computational work.

These are true decentralized platforms that distribute the load across a massive network of individual providers. GPU owners are incentivized to provide their hardware in exchange for rewards that can be traded on speculative markets. In other cases, protocols issue utility tokens that can be either sold or used to purchase computational resources. It can be a good tradeoff for some developers to rent out GPUs when they are not in use (for example, during night) and use generated rewards to pay for additional computing speed later on.

Key technologies for decentralized computing

A blockchain-based decentralized computing protocol has three main components that together create the foundation for its framework. While particular details of how these components are used may differ greatly between different projects, they usually remain the same across all contemporary distributed computing projects.

Here are these three “magic ingredients”:

1. Blockchain itself is a hugely important component of any decentralized platform. While it is possible to use networks that are designed as standalone projects and can host other applications, many platforms simply choose to utilize the available technology as it is cheaper. At the same time, many chains already have a strong user base allowing startups to quickly gain traction. Ethereum, BSC, and PolkaDot have the necessary infrastructure to build a distributed computing protocol.
2. The consensus mechanism is an essential part of a blockchain that ensures that the distribution occurs fairly and that transactions within the protocol are easily verifiable and retain integrity. Some blockchains use proof-of-work or proof-of-stake approaches that are quite popular in the crypto industry as the biggest chains employ them. However, other solutions are also readily available in alternative networks like Polkadot, Cosmos, and many others.
3. Smart contracts are often used to ensure that transactions can happen without any human intervention ensuring that users comply with the network’s rules. Dapps use these tiny programs to automate many processes and provide utility. For example, you can simply pay for GPUs with tokens and immediately gain access to computational resources without the need to be verified by middlemen or go through other processes since validation occurs automatically.

Decentralized platforms overview

This sector of the industry is still growing and will reach maturity in the future if the demand for computational resources keeps increasing too. The current landscape of the sector is not as diverse and versatile as the DeFi or RWA sectors. However, you can still find a plethora of different options offering unique products.

Let’s crunch some numbers that will give you a better understanding of the industry:

• Currently, 13 different decentralized platforms offering computational resources and services are tracked by Alchemy. You can also find other platforms on DeFiLlama and other aggregators. For instance, DeFiLLama tracks 196 protocols that are adjacent to the distributed computing sector with some notable examples like MorpheusAI and DaVinciGraph being some of the most prominent projects.
• Blockchain integration with decentralized computing is happening rapidly as the demand is expected to increase dramatically due to the expansion of generative AI platforms. For example, the AI computing market may reach an impressive $36 billion by 2026 with the generative AI sector forecasted to comprise over 32% of this value by the same time.
• The public spending on cloud technologies may reach over $679 billion by the end of 2024. AWS alone is bringing in over $91 billion annually and controls a significant portion of the global market. At the same time, margins reach 60% for Amazon and Google meaning that there is more than enough room for competition that can offer similar services for a lower price.

The risks and challenges of decentralized computing can be summarized in two main issues:

1. Difficult onboarding leads to slower adoption which is a problem that plagues the whole blockchain industry including DeFi, RWA, and many other services. It is simply too hard to use them for a regular user without any technical know-how.

The lack of a clear direction for distributed computing. While the demand for cloud-based services keeps growing, it is still hard to find development teams and individual users who are aware of decentralized platforms or can switch from AWS, Azure, or Google to them without any issues.

The main takeaway

The future of the sector is quite bright considering the fact that many projects have survived through the crypto winter and continue growing their clientele. However, the industry is still immature and requires higher adoption rates and the growth of demand for their services across the board.