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Blockchain in Cloud Computing: Essence, Benefits, and Use Cases

23 Mar 2022

17 Min

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Blockchain is not only limited to cryptocurrencies; it also brings new opportunities for business digitization. One of the most disruptive innovations, which is fast-paced, is the use of blockchain in cloud computing. New developments at the crossing of these technologies bring added business value, but getting it is a separate task, laborious but interesting.

We could not stay ahead and created a guide for everyone who wants to take advantage of the trend. Look through it to learn about blockchain technology in cloud computing, its benefits for businesses, and how to integrate blockchain technology into the cloud to succeed.

Understanding the Concepts: How Blockchain Is Used in Cloud Computing

Before talking about the possibilities of blockchain technology for cloud computing, let’s start with the respective definition of blockchain.

What is Blockchain

From a technical perspective, blockchain means distributed ledger technology that was first applied to act as a public digital ledger of cryptocurrency Bitcoin for economic operations. Put simply, it’s a decentralized, unchangeable, and shared database. The concept of blockchain is founded on a peer-to-peer network architecture in which any single centralized authority does not power transaction data.

Transactions kept in a chain of blocks are publicly available to all blockchain network participants in a trustworthy manner. Blockchain employs cryptography to verify data transactions' legitimacy, which guarantees the sustainability of linked blocks against alterations. The greatest thing about blockchain technology is that it reduces the risk of any technical transaction, excludes fraud, and provides transparency in a scalable way for numerous uses.

Deep dive into innovative solutions: Read how smart contracts in blockchain can help you improve and secure business processes

Blockchain vs. Cloud Computing

Today, corporations seek better document management solutions, where blockchain and cloud computing come into play. But what actually distinguishes them? And can they interact? Let's see the key differences between blockchain and cloud computing:

  • A cloud is a cyberspace where users can access information online. In turn, blockchain implies an encrypted system that utilizes various styles of encryption and hash to keep data in secured databases. The system spreads these data records over different nodes and makes a consensus on the position of the data they include.

  • The blockchain does not offer any service as it is a decentralized, shared ledger that keeps the record of the derivation of a digital asset. On the other hand, cloud provides services in three formats: Platform as a Service (PaaS), Software as a Service (SaaS), and Infrastructure as a Service (IaaS). Cloud doesn’t guarantee complete data integrity and tamper-free data. In contrast, blockchain assures the avoidance of data tampering without relying on a 3-rd party centralized entity.

  • The cloud computing implies all the data saved in the organization’s centralized set of data centers. On the other hand, the blockchain is based on the principle of decentralization, which means all the information isn't stored in one place. Besides, data in the form of records are changeable in the blockchain, whereas data located in the cloud is changeable.

  • Commonly, cloud computing runs on a conventional database structure where the kept data is located in the machines involving parties. In turn, blockchain means a reliable online database registry of different transactions where members can change the information by getting the approval of each party engaged.

Blockchain vs cloud computing

Data management specifityCloudBlockchain

Data access

Users can acess data online

Use data encryption and hashing

Viability of data

Data is mutable

Data is immutable

Data control

Centrilized (relies on 3rd parties)

Decentrilized (not involve 3rd parties)

Data integrity

Not guarantee the full data integrity and tamper-free data.

Full data integrity, tamper-free data

Security

Vulnerable to cyber attacks

Strong data security

How Blockchain Enhance Cloud Computing

What is blockchain in cloud computing? Blockchain technology provides advanced solutions to address challenges in cloud computing relating to decentralization, data privacy, and network security. Let’s see how exactly this tool can improve cloud solutions.

Enhance security

Security and privacy are considered one the leading cloud computing challenges. According to the research, 64% of respondents indicate data leakage as their biggest cloud computing security risk. Blockchain technology enables encryption of data accounts and advanced databases protection.

Improve visibility

Visibility is another widespread cloud threat. Blockchain assists in building a decentralized and shared trust model that enables more transparency. Public blockchain increases the visibility of every action taken and reduces the hampering of data. Information once saved in a chain of blocks can't be altered by any person.

Simplify traceability

Misusing information from anyone's computer on a blockchain network does not impact the data kept on the other network devices, hence assuring data integrity and authenticity. Besides, the data held on a blockchain is permanently there. Therefore, it enables easy data traceability as to where, when, and how it is being applied and by who.

Exclude third parties

Cloud computing relies on third-party providers, which may lead to massive data loss in case of failure of these providers. On the other hand, blockchains are managed by codes and don't engage 3rd parties, thus being a good motivation for cloud computing blockchain integration.

Blockchain in Cloud Computing: Reasons of Its Popularity

The incorporation of blockchain provides a wide range of opportunities for cloud computing. It allows for better data security, easy traceability, improved system interoperability, and much more. Let’s see how organizations can capitalize on blockchain technology.

Increased Data Security

Point-to-point encryption enables data security during its transfer and security. Blockchains of transactions are a reliable method to help keep the transaction data and the sequence of the transactions. Robust P2P allocation of identical blockchain copies across a cloud computing system brings a third layer of security. Decentralized data storage is better for a single-point data storage design that is at risk of data leakage. Data files are split into encrypted fragments, and then these parts are stored in various nodes, perhaps across the globe.

Permanent Audit Trail

Another advantage of blockchain technology in cloud computing is the enduring audit trail. Blockchains make a permanent record of transactions. One of the significant functions of blockchain technology is proof of history (PoH). PoH supports a verifiable delay function. It submits a time record to the cloud computing network that doesn't need any credibility from the users. Blockchain not only allows for an audit trail of all the transactions in the correct order, inserting a PoH function makes a permanent timeframe on the transactional information.

Decentralization

A significant trend is to bring computing to the edge, where data is handled at the network's periphery, as close to the original source as possible. For example, IoT devices don't require checking in with a centralized server to process data. Facial recognition nodes may entail encrypted data of authorized users and only require checking in with servers if a facial match is not detected. A node may perform independently until it requires checking for upgrades. With numerous copies of the facial recognition databases located in geographically-diverse cloud storage, getting access to an official copy is faster.

Faster Disaster Recovery

The record of the transactions is spread widely when utilizing blockchain technology. A blockchain is valuable because it is made public or shared with many authorized users. Any failure within one network node doesn't affect the remaining blockchain copies. All the other nodes continue operating and upgrading the blockchain while any node is crashed. Based on the transactional record of the blockchain trails (especially if they have a certain timeframe), any network node that fails can easily reach the current blockchain database status when the node gets back online.

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How Blockchain Address Business Problems

Many businesses already make use of blockchain solutions. Here are some examples of how different industries can benefit from cloud computing blockchain interconnection.

Healthcare

Many healthcare establishments still entrust their sensitive information (credit card data, patients’ data, testing records, etc.) to centralized systems, which often leads to data leakage and security concerns. Adopting blockchain technology can reduce data loss cases. You can make a decentralized log of private data and protect the information by applying unique secure codes.

Supply chain

Supply chains generate and request a wealth of data to ensure effective operations at every transportation step. Using blockchain in logistics management, you can boost your revenue and prevent security issues due to real-time visibility and control. In addition, blockchain solutions contribute to improved interoperability, data transparency, and more accurate product tracking.

Banking

Today there is still a problem with international payments. With so many verification steps required, it becomes a tedious procedure. However, blockchain can accelerate the money transfer process while guaranteeing high security of transactions. This is because blockchain works with the distributed ledger that helps to handle payment once the transaction is registered.

Real estate

Real estate trading still remains a nerve- and time-consuming process. It involves a set of tiresome paperwork, many intermediaries, fraud susceptibility, property search difficulties, etc. Smart solutions can efficiently solve major real estate problems. Blockchain in real estate can help improve purchase/selling due diligence, reduce the need for agents, and lower the entrance for real estate investing. Moreover, using smart contracts enables a secure and smooth transaction process.

Examples of using blockchain solutions in different industries

How blockchain can be used in various domains

How to Implement Blockchain in Cloud Computing: Challenges and Steps

After considering all the advantages of blockchain technology in cloud computing, let's observe the implementation process more precisely.

Define Business Needs

The primary step includes defining your aims for blockchain implementation. For example, you may want:

  • Increase data security
  • Build fully decentralized storage
  • Improve overall business performance by forming a new cooperation ecosystem with unlimited data sharing capabilities
  • Enhance the efficiency of ownership tracking of goods and services, etc.

Then, parallelly with these questions, you need to set up a row of requirements to help you achieve those goals.

Estimate Data Volume and Usage

Successful blockchain technology adoption is based on evaluating the existing data. Massive data loads collected should be structured to obtain more precise and detailed information helping to reach specific business objectives, so the inefficient and useless data should be removed, and the base should contain only clean and valuable resources.

Pick Cloud Deployment Model

You should choose the proper cloud model when implementing blockchain: public, private, or hybrid.

Public cloud. Computing resources are owned and managed by providers. However, the cloud infrastructure is available to the public and can be applied by more than one organization when obtained dynamically. Microsoft Azure and Google App Engine are good examples.

Private cloud. It is aimed to satisfy the demand of single clients, giving ownership on data and its security. The infrastructure and applications are deployed on the enterprise’s own on-premises data center. Being more expensive than public cloud solutions, the private model is more customizable and provides strict data security and compliance options. The Eucalyptus System is a prominent example of a private cloud architecture.

Hybrid cloud. A hybrid cloud environment merges the operating efficiencies of the public cloud and the information security capabilities of the private one. Hybrid clouds assist in combining IT resources while enabling companies to distribute the workload between environments according to their IT and data security requirements. The major challenge is to build and handle such a solution. Amazon Web Services is the best example of a hybrid cloud and one of the popular tools for joining cloud computing with blockchain.

Choose Cloud Solution Architecture

Before integrating blockchain solutions, you need to think of what architecture to choose. These days, the specialists suggest paying attention to an advanced architecture based on microservices. Classic solutions tend to be monolithic, so all the changes demand system rearrangement. As it's a complicated and costly process, the benefits of microservices architecture such as scalability, resilience, and fast development projects are commonly used for cloud-based solutions.

Find Reliable IT Partner

This phase comprises choosing a dedicated development team that helps you incorporate blockchain technology in cloud computing. The primary hiring options you can choose are the following.

Freelancers

The cost-efficiency of this option makes business owners come to hire freelancers. Still, there are some drawbacks you should be aware of. For instance, you’ll have to evaluate their competence yourself, provide a clear project specification, manage the whole process on your own, etc. Moreover, one freelancer can't provide full cycle software development services. and may simply abandon the project without explanations.

In-house team

This option implies employing specialists and gathering them under the same roof. However, assembling an in-house team is associated with additional expenses such as premise rent, necessary hardware/software purchasing, regular salaries paid regardless of the number of assignments, etc. Thus, this option is perfect for big corporations.

Outsourcing companies

It can be challenging to find blockchain experts in the local market. In this case, outsourcing the project is a great way to get the required expertise for a reasonable price. Outsourcing companies already have a team of certified specialists who will rapidly deliver your solution under defined requirements. With outsourcing, you only pay for the work done with no need for extra outgoings. Thus, software development costs decrease, yet the execution and product quality remain flawless.

It’s worth mentioning that the most popular IT hub for hiring the development partner is Central Europe. This region gains popularity due to the following reasons:

  • Affordable rates
  • A vast pool of professionals
  • Excellent IT education
  • High proximity
  • English proficiency

Work with experienced tech partner

We will assemble a team of cloud experts and build a solution fitting your business needs

Deployment and Integration

Once you have a software development partner, it’s time to develop customized blockchain solutions under selected tools and frameworks that can be modified to suit your unique business needs. There are many cloud service providers like Amazon Web Services, Oracle, Alibaba Cloud, etc., that have initiated blockchain cloud services to help companies with their smart projects.

These services vary depending on infrastructure, platform, and app development capabilities. Nonetheless, all of them aim to simplify the use of open-source DLT (Distributed ledger technology) frameworks such as Ethereum, Hyperledger Fabric, and Quorum. After the blockchain powered system is built, it should be implemented into existing business processes. It’s critical to optimize the data flow to prevent its duplication or failure.

Support and Maintenance

Blockchain-based solutions are complex interconnected systems that may require multi-tier technical support options and maintenance services. This work may comprise performance improvements, code optimization, software deployment, adding new functionality, version updates, etc.

Blockchain Integration Challenges

As you’ve noticed, there are significant reasons to interconnect blockchain with cloud computing. However, there are some specificities you should be ready for.

Challenges of integration blockchain solutions

Challenges of blockchain technology implementation

Technical Complexity

One of the major blockchain implementation challenges is technology complexity. The mechanism of integrating blockchain in cloud computing requires an execution of complex mathematical issues to transfer and process data, as well as secure the network. It, in turn, requires powerful computation hardware, including electricity and human resources. This leads to high operational costs, slowing down the broad adoption of blockchain-based systems.

Unavoidable Security Flow

On the one hand, cloud computing lays the ground for blockchain as a high-security solution. On the other hand, hackers can change consensus architectures and avoid new transactions from receiving confirmations for malicious access. Without appropriate transaction management, blockchain can put data leakage and system damage at risk.

Lack of qualified specialists

Lack of expertise is another limitation of solution integration. Blockchain technology is relatively new and is growing at a fast pace. Currently, there is a shortage of specialists who have the required skill sets to work with such technology. As a result, the demand for blockchain-savvy experts is enormous. So, if you plan to hire the right people to deliver blockchain solutions, you will need to pay large salaries to them. Outsourcing software development is a perfect way to fill the talent gap and attract specialists with a unique experience.

The Future of Technology for Business: Prospects for Corporate Cloud Computing

It's also worth talking about cloud computing blockchain adoption's potential to strengthen your decision further. It’s predicted by the research that the global cloud computing market size is expected to reach $947.3 billion by 2026. About 90% of the predicted data generated soon will be neither saved nor stored. It is larger compared to the forecasted data center traffic made per year by a factor of four.

Meanwhile, there is an increasing demand for computing power from various industries to run enterprise-based applications and process high volumes of data. Therefore, a new form of a decentralized cloud that can empower blockchain computing would be required. This gap could be filled with blockchain powered decentralized solutions.

Global cloud computing market growth

Cloud computing market value prediction

One more thing. To give you a more clear understanding of the principles of blockchain operation, let’s see how some projects/companies master this technology.

Ankr

The Ankr project means a decentralized cloud solution that provides the infrastructure to run apps at a low cost compared to traditional cloud service providers. And Data Centers the infrastructure to produce new revenue streams from their under-exploited capacity. It will be gained by ensuring a high level of service accessibility, easy integration, and secure interaction. However, the virtual machines that form the basis of cloud computing consume many system resources to work, take minutes to launch and incur complicated software resource management. As a result, the Ankr team has delivered a new consensus mechanism named Proof of Useful Work (PoUW) that enables a high-security standard with minimum energy waste.

Dfinity

The DFINITY Foundation stands for a not-for-profit company building technology for the Internet Computer blockchain. In most blockchain projects, a transaction verification process based on mining is an energy-consuming procedure. In turn, Dfinity applies a variation of the proof of stake algorithm (called Threshold Relay) to reach a consensus. In Dfinity's version, nodes generate a random number, called a "random beacon." It is utilized to pick the next group of nodes and to drive the platform's protocols. The organization offers a dedicated fund (Beacon Fund) to create decentralized applications that utilize the principles of the open internet or foster tokenized governance and decentralized finance.

Solana

The Solana project implies designing a novel blockchain architecture based on a new concept, Proof of History (PoH). PoH employs a verifiable delay function to give the network a precarious sense of shared time. Additionally, transaction processing on Solana is managed by GPUs (graphic processing units), an approach that responds to Moore's law. According to this law, the number of transistors in an integrated circuit doubles every two years, thus enabling much greater computational power. This mechanism, used along with a Proof of Stake (PoS) consensus algorithm, contributes to highly-scaled infrastructure. The infrastructure allows for different use cases, including decentralized cloud computing.

How much does it cost to deliver software solutions worldwide? Check our IT consulting hourly rates comparison guide

Blockchain as a Service

Blockchain as a service (BaaS) is an emerging trend. It means a third-party cloud-based infrastructure that assists in developing and managing blockchain powered apps. In other words, it runs the back-end part of blockchain solutions. The service works like any other ready-made solution: a service provider sets up the necessary infrastructure and handles it for you. You pay a certain fee to receive all the services. Today, Amazon managed blockchain, R3 Corda service, and SAP Leonardo are among the leading BaaS providers.

BaaS is a good option if you’re pressed on budget and want to integrate blockchain technology in cloud computing as fast as possible. However, template solutions are limited in functionality and may not cover your unique business needs. Besides, you’ll still need to cooperate with a blockchain-savvy vendor that helps you accelerate the deployment and address some issues related to launching.

Who Is Implementing Blockchain in Cloud Computing Today

To realize such functionality, blockchain technologies are developed around platforms, infrastructure, APIs, and management tools. The cloud computing network offers all these technology components and services and blockchain app development and integration capabilities. Let's look at the leading cloud service providers that assist in delivering blockchain projects.

Amazon Web Services (AWS)

Amazon Managed Blockchain is a leading provider for cloud computing blockchain integration. The service stands for a fully managed platform that assists building and managing private networks applying the open-source DLT frameworks such as Hyperledger Fabric and Ethereum. The service reduces the overhead needed to make the network and automatically scales to satisfy the requirements of thousands of apps processing millions of transactions.

Key features:

  • Fully managed
  • Two types of frameworks: Hyperledger Fabric and Ethereum
  • Backed by AWS Key Management Service
  • Secure interactions with VPC endpoints
  • Augmented ordering service with Amazon QLDB technology

Check our case study: Building AWS server architecture for Occaz, a French service for buying used cars safely

Quorum Blockchain Service

Quorum Blockchain Service (QBS) is also a ready-managed ledger service working from the Microsoft Azure Account as a managed app. QBS allows enterprises to launch and maintain flexible blockchain networks. This implies selecting and deploying a ledger, adding new members, assigning node identities, linking nodes, setting up user permissions, and much more. The service offers a variety of open-source Ethereum tools to choose from, such as Truffle, MetaMask, Nethereum, Solidity, etc.

Key features:

  • Building and managing the blockchain networks
  • Offloading network operations
  • Creating, testing, and debugging smart contracts
  • Integration with SaaS, services, systems and, data required

Oracle Blockchain Cloud Service

Oracle Blockchain Platform Cloud Service means a pre-assembled platform for handling smart contracts and maintaining a tamper-free distributed ledger. Based on the open-source Hyperledger Fabric, it makes it easy to create secure and verifiable apps that distribute immutable, trusted data with suppliers, banks, and any other relevant entities. The service has broad applicability across multiple industries with deep integration to Oracle's leading apps.

Key features:

  • Ready managed service
  • Integrated identity management
  • Data encryption
  • Multi-cloud interoperability
  • Comprehensive monitoring

Cleveroad Expertise

Before cloud computing blockchain integration, it’s significant to choose the vendor that is experienced in such services and always keeps up with upcoming blockchain technology trends. And Cleveroad professionals are ready to help you with your project.

Cleveroad is a professional software development company from Central Europe with a wide experience of 10+ years in delivering any scale custom solutions for clients globally.

By cooperating with us, you’ll be ensured with the following benefits:

  • Software engineering team consists of AWS-certified, secure-oriented developers and solution architects.
  • Knowing peculiarities of main cloud services, including Amazon Web Services, Microsoft Azure, and Google Cloud Platform.
  • Software development expertise in multiple domains, including Fintech, Healthcare, Logistics, Retail, Education, and other business domains.
  • Experience with leading blockchain frameworks: Ethereum and Hyperledger Fabric.
  • Signing non-disclosure agreement (NDA) per request.
  • Proficient QA engineers that verify the product operation on every development stage.

Cleveroad experts understand the peculiarities of blockchain technology and are ready to help deliver and integrate a robust blockchain system that allows for security and faster processing of data and transactions.

Boost your business with blockchain

Integrate smart solutions with Cleveroad software development team to improve business efficiency

Bottom Line

Blockchain is increasingly penetrating cloud computing, and it's already called Сloud 2.0, so this trend should not be taken lightly or overlooked. How fast the company implements this technology and how experienced the provider is, depends on the business’s profitability in the long term.

Frequently Asked Questions

Both blockchain and cloud computing are smart solutions that bring significant benefits to businesses and accelerate digital transformation. However, these technologies are not interchangeable. They reinforce each other. Blockchain is a decentralized, unchangeable, and shared database. Cloud computing is more about delivering computing services, comprising servers, databases, storage, etc. Cloud computing uses blockchain peculiarities to increase data security.

Blockchain and blockchain networks may be part of a cloud service. The incorporation of blockchain in cloud computing allows for better data security, easy traceability, improved system interoperability, decentralization, faster system discovery, and much more.

Blockchain offered as a service is a cloud-based third-party platform that helps to build and manage blockchain powered applications.

There are many tools and frameworks enabling cloud computing blockchain integration. Amazon Web Services, Oracle, and Alibaba Cloud are the most popular providers that offer blockchain cloud services. All these services aim to simplify the use of open-source frameworks (such as Ethereum, Hyperledger Fabric, and Quorum) needed to build blockchain powered solutions.

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