The Future Is Decentralized — How Decentralized Compute Is Becoming an Industry Favorite

Over the past decade, the prominence of cloud services has dramatically risen, driven by hyperscalers like Amazon, Google, and Microsoft. Yet, as these tech giants seize more of the market, businesses quickly realize that the disadvantages of a dominant and centralized cloud market may be too large to overlook.

As organizations search for alternative options, there has been a mass movement to decentralized cloud systems. Decentralized compute and storage is a digital system where cloud services are distributed across many different nodes, without a centralized system that stores everything. A decentralized ecosystem provides security and scalability benefits while providing more control to individual businesses about how and where their data is stored.

The prominence of blockchain technologies is only increasing, with experts predicting a CAGR of 28.2% between 2023–2030. This increase would represent a sizable jump from a total market value of $59.26 billion to a staggering $337.04 billion by 2030.

Considering the cloud computing market is worth upwards of $600 billion USD, its disruption with decentralized technology could represent a dramatic shift in the digital narrative of this age.

Challenges with Centralized Cloud Computing

One of the most significant problems with centralized cloud computing services is that a select few companies hold enormous power. With millions of businesses around the world utilizing these services, a few companies have an almost complete level of monopoly over the market.

In centralized systems, businesses must entrust the security and privacy of their sensitive records to these providers. Centralized cloud governance ecosystems create a number of issues for businesses:

• Imperfect Reliability — When partnering with a centralized cloud provider, your business operations are directly tied to their performance and availability. Even recently, Microsoft’s outage left thousands of companies across the globe with limited access to cloud services, frustrating operators and preventing them from continuing with business operations. Centralized systems create single points of failure that can significantly impact the functioning of your business.
• Security Risks — When using centralized structures, cybercriminals have one concentrated point where they can target their attacks. Cloud provider breaches are more common than one might expect, with Google recently accidentally leaking user data to outside parties.
• Data Privacy Concerns — Partnering with a centralized cloud provider places your company’s data in their hands. While there are protections in place to keep your data safe, there are barely any repercussions when a cloud provider is found to breach these contracts. Most recently, Amazon was found to be ignoring the GDPR, which keeps customer data safe, yet was only fined a tiny percentage of their overall yearly revenue.

While centralized systems have been the default option for the last few decades, the rise in the availability of decentralized cloud services is now questioning this tradition and forcing companies to experiment with other, potentially more cost-effective and sustainable, options.

Advantages of Decentralized Compute

Decentralized cloud infrastructure provides a powerful alternative to centralized systems, leveraging distributed storage and compute nodes to offer businesses permissionless access. A decentralized cloud system offers businesses the same access to highly scalable cloud technology, providing them with the ability to rapidly scale up or scale down based on their compute needs.

However, decentralized compute and storage go beyond centralized cloud systems by offering several other benefits:

• Greater Reliability: Decentralized systems utilize a distributed data architecture, ensuring that there is no one single point of failure. In the event of the failure of a primary node, there are thousands of secondary nodes with duplicate data sets that are ready to step in. Equally, a distributed compute system ensures that accessible resources are always ready when a company needs them. The distributed structure is effective in providing a high degree of reliability for those who rely on cloud services.
• Improved Performance: Distributing data architecture as close to the end-user as possible helps to reduce latency in a system and improve performance. Especially for businesses that operate on an international scale, the ability to draw on resources that are geographically proximal to the end user will lead to more sustainable and reliable cloud performance.
• Cost-Effective: Decentralized compute and storage are much more cost-effective than centralized infrastructure. As decentralized cloud services are cheaper than their centralized counterparts, moving to a distributed system could represent a significant decrease in expenditure on data services. Considering Gartner foresees a 20% increase in demand for cloud services, the availability of a favorable alternative will decrease costs and give agency back to businesses.

The baseline technology that sustains decentralized compute systems is already available to businesses. Offering a significant number of advantages over centralized structures while providing more control to a business, it’s unsurprising that this technology is being seen as the future of the data and cloud services industries.

Current State and Growth Potential

Research conducted on behalf of the Leibniz Centre for European Economic Research suggests that overall adoption of blockchain technologies is still at an infancy stage, with only around 0.88% of firms using it actively. However, when surveying industries that are faster to adapt to new technologies, like banking and finance, this figure is radically higher. Around 4.5% of finance firms across the globe now rely on blockchain technologies in their organizations.

Of the percentage of firms that use blockchain technology, the vast majority are based within major financial centers, like London and New York. Typically, firms that move toward decentralized infrastructure are those with fewer barriers to adoption. While cost is not a preventative factor for large-scale enterprises with over 500 employees, hesitancy to move to a new system of operation typically is.

Source: Adoption of blockchain technology across industry sectors in 2024.

As decentralized options continue to prove viable, we’ll likely see the adoption rates of blockchain technology continue to accelerate. For example, the widespread usage of the Akash Network, a decentralized compute marketplace, has already become a cost-effective option for those looking for a cheaper and decentralized method of accessing cloud services.

When comparing the monthly costs of using AWS, GCP, Azure, and the decentralized Akash network, Akash was 82% cheaper than the most cost-effective hyperscaler option. Alongside the other benefits that decentralized compute offers businesses, this will likely present itself as a favorable option for cloud usage over the coming years.

Source: Price comparison hyper-scalers and Akash Network

Connection to tomi

Web3 infrastructure pioneer tomi is at the forefront of the decentralized compute revolution. tomi offers businesses in the Web3 space the ability to utilize decentralized storage and compute architecture, allowing them to align with the central driving force of blockchain systems and establish fully decentralized systems.

As a core pillar of the decentralized ideology of blockchain ecosystems, the ability for tomi to widen access to distributed storage and compute systems helps to bring Web3 users closer to their vision of a fully decentralized system. The central goal of tomi has always been to create a distributed internet that is free from the disadvantages that centralized technologies have caused.

With more businesses turning to decentralized infrastructure through options like tomi, a decentralized future of internet, storage, compute, and digital services is drawing ever closer.