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Is Blockchain-Driven Bandwidth the New Super Currency?

Courtesy of ZeroHedge. View original post here.

By financedude85

It may not be talked about as much anymore, but bandwidth continues to be a prime commodity that powers the internet. The rise of cloud computing may have created the notion that scaling up capacity is easy whenever an app or service demands more. However, the ability to scale up doesn’t mean that computing resources are limitless. 

Resource and hosting providers may also claim that they can provide “unmetered” and “unlimited” services but the fine print would actually say otherwise. These service packages still have limits. It’s not like one can subscribe to a $5-a-month hosting package and run YouTube on it. Bandwidth also comes with a price. 

Being finite and useful makes bandwidth valuable. The idea of bandwidth being “currency” has been floated around even a decade ago, back when peer-to-peer and streaming video were only emerging. Demand for bandwidth was rising and the global infrastructure was far from the size and complexity that it has today. 

The challenge then was to make the economics work. However, it’s only recently that such a concept could effectively be explored thanks to the emergence of the blockchain. Now that new blockchain platforms allow just about anything of value to be tokenized and traded like bitcoin, blockchain-driven bandwidth could just become the new super currency.  

Decentralized computing resources 

Decentralized computing resource provision through blockchain is now gaining traction. Blockchain can be used to effectively pool together computing resources and make these available to other users.

Sia and Filecoin, for instance, provide a decentralized file storage solution, by “renting” hard disk space to create a “decentralized Dropbox”. Golem allows users around the globe to rent their CPU processing power to other users seeking to enhance their computational capabilities, thus creating a worldwide supercomputer for hire.

Datum also offers database storage through the blockchain. These services allow users to tap distributed resources in order to safely store their data. Unlike traditional cloud storage where files and data can essentially be accessed by providers, a decentralized approach encrypts files and information and distributes data across the network. Only the owner could gain access to the information.

Aside from storage, other computing resources could also be tapped for other purposes.

Blockchain startup Gladius provides a platform for users to rent out spare and underutilized bandwidth to be used for content delivery and distributed denial-of-service (DDoS) mitigation to create a “decentralized CloudFlare”. The company’s vision is to use bandwidth to build a marketplace where people all across the world can buy and sell bandwidth to help safeguard (DDoS protection) and accelerate participation in a global (CDN) websites.

Max Niebylski, the founder of Gladius, – recently selected as one of the top ICOs to look at – said that his platform uses blockchain to remain fully encrypted.

"Gladius kills two birds with one stone utilizing unused resources to build a robust network to make websites load faster and yet still stay strong under network flooding attacks Typically, more people means less security and certainty. However, Gladius completely flips that paradigm by using numbers to our advantage. Using the blockchain to create a network of trust enables us to spread sensitive and vital information across the globe while remaining fully encrypted".

Among the advantages of a decentralized approach to resources are both cost and security. Decentralized resources are often cheaper since the costs of running the infrastructure are distributed among peers. Distribution also eliminates the single point of failure. In contrast to centralized resources where downtime or a cyber-attack on a resource provider could disrupt operations of all services which depend on it.   

Tokenizing through blockchain

Other ventures are already attempting to tokenize a variety of real-world assets. Blockchain ventures are tokenizing real estate, gold, and even art in order for these to be traded faster and easier than traditional means.

As tokens, even fractional ownership will be possible thus lowering the barriers to ownership and access. While token and cryptocurrency trading has yet to mature, blockchain’s ability to tokenize just about anything creates exciting opportunities for trading in digital commodities.

Blockchain tokens can now be created to represent bandwidth and other resources. These tokens can then be traded for other services within the platform or even for other cryptocurrencies and fiat currencies through exchanges.

Blockchain transactions are fast and transparent. As such, there is potential for the creation of a fair marketplace where prices of computing resources are determined by supply and demand rather than dictated by the dominant players.

In addition, the rise of bitcoin is proof that the market could already place value on virtual currency. Sky’s the limit if the currency represents something that has inherent value in computing such as bandwidth.

Rising demand

There is an ever-rising demand for such computing resources. Developments in other domains such as big data, analytics, machine learning, and the Internet-of-Things (IoT) push greater demand for bandwidth, storage, and processing time.

According to Gartner, adoption of cloud computing and security is expected to grow year-on-year for 2017. Public cloud services market is expected to grow by 18 percent. Spending on cybersecurity is also estimated to rise 7 percent.

In cybersecurity, for example, companies are struggling to keep pace putting up defenses against rampant cyberattacks. Due to the abundance of compromised devices that are hijacked to create botnets, DDoS attacks can be executed by malicious actors easily. Downtime caused by such attacks are costly and devastating so more organizations seek to adopt security solutions. However, the cost of such services remains prohibitive, especially for smaller businesses.

Security providers leverage their access to bandwidth and computing resources for their services. In turn, their top service tiers also command premium pricing. A blockchain-driven service like uses decentralized resources thus enabling packages to be customized and priced more accessibly.

A super currency?

So how could blockchain-driven bandwidth become a “super currency”? First, is the utility of bandwidth. The internet relies on bandwidth to function and this makes bandwidth inherently valuable. Second, there is an increasing demand for bandwidth and computing resources. Scarcity drives up prices of commodities. Lastly, blockchain can tokenize bandwidth making it tradable for other services or other stores of value. These make it quite the promising asset especially in a world that is shifting most of its activities to online and digital space.


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