What is Web3?

During the recent De-Fi boom, masses of people and influencers have made claims that Web3 is decentralised. However, ChainofSecrets believes this thought approach for web3 currently being decentralized is very fairly primitive. While Web3 can certainly seem decentralised at a quick glance, when taking a deeper look into how web3 actually operates on a foundational level it shows the opposite.

Is Web3 Decentralized? The Truth About Cloud Service Providers and Blockchain

The blockchain world started with the idea of decentralization. Bitcoin, the first and most popular cryptocurrency, was created as a decentralized alternative to traditional finance, free from government and financial institution control. However, as the blockchain industry has grown and evolved, decentralization has become less of a priority.

Nowadays, more than 95% of blockchains operate on centralized cloud service providers (CSPs) like Amazon Web Services, Google Cloud, and Microsoft Azure. The blockchain industry is heavily reliant on these cloud services for hosting nodes, storing data, and providing infrastructure for dapps and NFTs.

While blockchain transactions are decentralized and secure, the infrastructure supporting them is not. Most blockchain transactions require multiple steps, from wallet transaction approval to on-chain confirmation and reception of in-dapp features. In many cases, this process never leaves the same datacenter location and stays within one physical building or within one centralized company's cloud resources.

The use of CSPs for blockchain infrastructure raises important questions about the level of decentralization in Web3. Despite the decentralization promise of Web3, the reliance on centralized cloud services undermines the security and privacy of the blockchain. In theory, a single CSP could gain control over a significant portion of the blockchain network, effectively centralizing it.

Moreover, the reliance on CSPs creates a single point of failure for the entire blockchain network. A CSP outage could bring down the entire blockchain, causing significant financial losses and damage to the blockchain's reputation.

In conclusion, while blockchain transactions are decentralized and secure, the infrastructure supporting them is not. The heavy reliance on centralized cloud service providers raises questions about the level of decentralization in Web3. The industry needs to prioritize decentralization and find solutions that reduce reliance on centralized cloud services while maintaining the security and scalability of the blockchain.