Blockchain vs The Cloud: Which Is Better?

The cloud is actually a physical location where files are stored. Blockchain can be described as millions of people’s computers. There is no actual server for the blockchain.

It’s common to describe the cloud as simply somebody else’s computer. Though not entirely accurate, it does convey the idea that the cloud is actually a physical location where files are stored and computing is done. It’s a powerful server is the gist of it.

On the other hand, the blockchain can be described as millions of people’s computers. There is no actual server for the blockchain. All of the transactions are shared by anybody who has downloaded the blockchain.

This is the one major difference but there are others as well. In this article, we will go over what those differences are so you can decide where you should focus your attention. 

Security

Every transaction that happens on the blockchain is registered and verified before being sealed with encryption. Whether you are buying Bitcoins, sending them to somebody else, or building an app on the Ethereum blockchain, nothing can change the transaction details. 

This is because if it is changed, it would be noticed by everybody else who has the blockchain on their computer and would need verification for the transaction to be resolved. Any input changes on a hash will result in a change of the output. If the input never changes, then the output never will either no matter how many times the algorithm is run.

In the case of a cloud server, there is one server that can be breached and nobody would know until it was too late. There are no so-called “miners” that verify the transactions so security is much laxer on a cloud server than on the blockchain. There is always a vulnerability in any server which can be hacked. Some are more difficult than others, of course, but a very sophisticated hacker, group of hackers or even nation-state actors can find a way in if they are dedicated enough. 

The blockchain is virtually hackproof for this reason but the cloud is something that can be accessed by sophisticated hackers. 

No middleman

A server or the cloud has a centralized management system. It could be the bank that uses it to store their customers’ data or it can be a hosting company that keeps the data from websites on their network. In any case, there is one governing body responsible for how it operates.

The blockchain is totally decentralized and there is no middleman at all. Nobody decides on their own authority how things are going to work on the blockchain. It is a very democratic process that is generally governed by the consensus of its miners or other users of the blockchain itself. 

This means that it is much more efficient when it comes to organically going in a certain direction rather than relying on one authority to make all of the decisions. Even transactions can happen much faster because of this system as opposed to credit card or debit card payments that require more processing time since they go through many different processes.

The whole point of cryptocurrency is to put the power of finance into the hands of the people. Anybody can be their own bank thanks to cryptocurrency. They can lend out the money they have without being at the mercy of a bank or central authority and buy as much of the coins as they see fit. And all of it at a very low cost since the only fees are to pay the miners who are verifying the hashes. 

Transparency

Because the blockchain exists on potentially millions of computers, anybody can see exactly what is happening on it at any given time. The cloud is a mysterious and vague place that is hidden away from sight. Nobody knows what is happening to your data or other information there. 

This lends itself to being much more trustable and can be used in different applications in which transparency is vital. Fraud can happen on the blockchain of course, but it is more difficult to do and everybody sees that it happened right away. There are no secrets on the blockchain. 

Transparency is the reason that the blockchain is becoming more widespread in industries like supply chain management and healthcare. 

In the case of supply chain logistics, it is the perfect way to make sure that there is no miscommunication between the parties involved in getting a product to market. From the manufacturer to the recipient, and everybody along the way, there is a visible trail to which everybody has access. 

Healthcare administration is responsible for a lot of waste of resources from time to money. And it is mainly because of the lack of sharing of information between entities. On the blockchain, transparency helps everybody have access to the same information. With it, a pharmacy can make sure that a patient is not prescribed the wrong medication because they have the same information the doctor has. On the same token, if somebody switches insurance providers or even doctors, their information goes with them thanks to the blockchain. 

Cost

Another downside to cloud computing is the cost. Giants such as Amazon and Microsoft have the market cornered to provide servers for complex operations like rendering video for gaming and other high GPU computations. As such, they can charge whatever they want which ends up costing companies a lot of money.

Since the blockchain is on millions of computers, a lot of complex computations can be done by using idle computing power from individual computers rather than one central server. 

This cuts costs down to a fraction. Rather than be beholden to these corporate giants that can charge whatever they want, most of the processing gets done by ordinary computers since there are so many of them using the blockchain. As more companies end up occupying the blockchain space, the more access there will be to this computational power and the costs will reduce even further. 

*This article has been contributed on behalf of Paxful. However, the information provided herein is not and is not intended to be, investment, financial, or other advice.