AWS servers host a significant portion of Benzinga’s cryptographic computing power

Jeff Bezos should probably buy Ethereum: AWS servers host a huge chunk of crypto computing power

despite of Bitcoin (CRYPTO: BTC) is popular as the most popular cryptocurrency in the world and one with the highest market capitalization, (CRYPTO: ETH) It is much more important for the continuous development of the Web3 ecosystem.

Since smart contracts started gaining momentum to transform traditional contracts into their digital equivalents, the Ethereum network has been the preferred choice for developers and entrepreneurs creating decentralized applications (dApps) and more specifically decentralized finance (DeFi) applications.

However, with crypto-analytics platform Messari revealing that more than two-thirds of active nodes on the Ethereum blockchain are hosted on central servers, with more than 50% of those contributed by Amazon, there could be stark implications for the startup ecosystem that relies on it. On the world’s largest blockchain network in the event of a hostile takeover.

According to the latest data, 66.1% of all active nodes are hosted on third-party servers. More than 54% of them rely on Amazon Web Services, which is part of Inc. (NASDAQ: NASDAQ:).

Other cloud computing service providers include:

  • Hetzner Online GmbH (10.58%)
  • Google Cloud (6.91%)
  • OVH SAS (3.39%)
  • Oracle (NYSE:) Cloud (3.35%)

Together, with AWS, they host more than 50% of all Ethereum nodes responsible for handling the network’s large transaction load.

While there are 15 other centralized cloud providers that cater to an additional 15% of Ethereum nodes, they remain far less critical to the operation of the Ethereum network, with negligible risks in the event of a shutdown.

For a truly decentralized blockchain network like Ethereum that recently made a significant shift in its consensus mechanism, relying on cloud servers puts the network at the mercy of these providers and it is worth asking: Can Ethereum claim full decentralization when more than half of its nodes are hosted using the services of Ethereum? Cloud Computing?

Understanding the Horror of Third-Party Cloud Services Before delving into the cause of the hype around reliance on cloud servers, it is important to understand that blockchain networks and cryptocurrencies are touted as the future of online transactions, largely because they transfer decision-making power from central entities to the network A wide range of individuals governed by society.

While blockchains such as Ethereum, Ethereum, and others are making continuous efforts to provide transactions that are untrustworthy and cannot be tampered with through their protocols, allowing their nodes to run across cloud servers belonging to giant companies such as Amazon (NASDAQ: AMZN), the alphabet (NASDAQ: NASDAQ :), inspiration (NYSE: ORCL) and other Web2 companies put these networks at enormous risk.

In the event that one or all of these service providers refuse to provide service to their nodes, these networks may experience a central point of failure and risk ransom by third-party cloud providers.

While the chances of such an event occurring are slim, it cannot be completely ruled out that a company like Amazon could impose its terms or even buy the network, especially when one considers their tendency to aggressive business practices to gain or simply control a larger market share.

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Can Ethereum Handle Mass Node Closing?

Blockchain networks like Ethereum are not susceptible to a single point of failure (SPOF) due to their architecture. But they rely entirely on nodes to validate transactions and rely on at least 51% of them operating without any malicious intent.

So, while AWS’s potential refusal to serve Ethereum nodes could paralyze the entire network, the popularity of the Ethereum network among miners and its transition to a Proof-of-Stake (PoS) consensus model with the latest integration ensures that it can quickly restore its network’s transaction capacity.

Indeed, PoS blockchains are better equipped to thwart any such shutdowns than Proof-of-Work (PoW) blockchains, explaining why an increasing number of PoW blockchains are planning or considering a switch to a PoS model.

Despite the many safeguards in place, relying on centralized cloud hosting services may not be ideal for networks like Ethereum and the risk of someone as powerful as Jeff Bezos Blockchain protocols such as Ethereum will continue to be dominated by force.

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© 2022 Benzinga does not provide investment advice. All rights reserved.

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