How Blockchain Technology is Transforming the Data Center Infrastructure

June 18, 2018

Even though cryptocurrency is still a controversial discussion topic, there seems to be a consensus that blockchain, the technology behind cryptocurrency, is revolutionary. Companies like Google and Goldman Sachs are actively investing in blockchain firms. So data centers and cloud hosting services need to prepare themselves to serve the requirements of these new blockchain-based companies. These businesses will need a lot of data center resources and cloud management services in the coming years.

Blockchain: A Simple Introduction

The journey of modern blockchain started with a 2008 white paper called Bitcoin: A Peer-to-Peer Electronic Cash System. The paper described a form of digital cash that can live on a distributed network without any centralized authority. The blockchain is the technology that supports this system.

A blockchain is basically a distributed digital ledger or database. The whole network contributes to its creation and maintenance. So there is no central authority who can manipulate the blockchain.

In a blockchain environment, when two parties have a transaction, they advertise it to the network. Various network nodes pickup multiple transactions and organized them into blocks. Then miners use their computers to add this block to the ledger or blockchain.

Miners need a lot of computing power to add the blocks to the blockchain because each block comes with a mathematical puzzle attached to it. Solving this puzzle takes computing resources. Miners are interested in this task because they are rewarded with tokens for adding a block to the blockchain.

The blockchain is an important technology due to its implications for business transactions. Before blockchain, a trusted third-party like a bank or a government institution was the only way to guarantee the integrity of a transaction between two parties. Blockchain eliminates that need. It opens up the possibility for business transaction between parties across the world. Strangers can transact with each other across countries and borders without the help of any financial or government institutions.

Blockchain-related Concerns for Data Center and Cloud Hosting Companies

The rise of blockchain technology means data center and cloud management services have to adjust to the changing realities on the ground. Here are some issues that data center managers should be aware of:

Elevated Demand for GPUs

Miners provide the computing power for blockchain cryptographic calculations. As the popularity of cryptocurrencies and blockchain-based applications increase, there will be more demand for computing power.

Data managers should be aware that blockchain-based calculations are best performed on graphical processing units (GPUs). AMD and NVIDIA graphics card prices have surged due to the rise in blockchain-based applications. Data center and cloud hosting services who want to serve the blockchain market need to keep an eye on the graphics card prices. They also need to think about how to optimize their infrastructure to accommodate GPU-based servers and higher network traffic.

Concerns About Blockchain Hackers

Cybersecurity has always been a concern for data centers. But the promise of riches from the cryptocurrency market has given rise to a new level of threat for data centers.

In January of 2018, hackers stole more than $500 million worth of cryptocurrency from the Tokyo-based cryptocurrency exchange Coincheck. As the blockchain industry grows, hackers will become more active and they will try to explore every vulnerability. So data centers need to invest in their cybersecurity infrastructure.

Fundamental Changes to Data Center Architecture

Today data centers are built as centralized cloud hosting services. But scientists and entrepreneurs are working on technology that can leverage the power of blockchain to create decentralized clouds.

Decentralized cloud management services will have different architectural needs. So data center managers and operators need to be aware of the shift in data center designs to stay relevant in the future.

In Conclusion

The blockchain is a technology that is predicted to have large implications for industries like finance, health, government, medicine, manufacturing, logistics, transportation, and more. With more blockchain-based applications, there will be a large demand for data centers with the right infrastructure. So data centers and cloud hosting companies need to prepare to stay competitive.