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Understand the uses of blockchain in data centers

Blockchain is most famous for its cryptocurrency applications, but data centers can employ it for a variety of business-related reasons -- including increased security.

As with any trend, blockchain technology has a fair share of pros and cons, especially in the context of the data center. However, blockchain's rising influence can provide organizations with a competitive advantage when they apply it appropriately.

Today, blockchain technology is one of the biggest trends in the industry. According to an online survey of more than 600 business decision-makers commissioned by Casper Labs and performed by Zogby Analytics, 86% of respondents said they would have more interest in deploying blockchain if there was a hybrid option for their organizations to securely migrate data between private and public environments. The use cases for blockchain most cited by those surveyed are security and managing copy protection and databases.

Recent blockchain technology

Blockchain is a highly secure and immutable record-keeping technology. Bad actors can't break into the system or forge the data stored on it. This distributed ledger technology records transactions and related data in multiple places at the same time, which prevents a single point of failure and validates every piece of information it stores.

Compared to traditional databases that store data in rows, columns, tables and files, a blockchain is decentralized and managed by computers in a peer-to-peer network. It stores data in chained blocks; during a transaction, each block of data is sent to every computer node in the network, where it's authorized and then attached to the blockchain securely. Once added, a block can't be changed.

The validation process ensures the data is unique and legitimate with timestamps to prove it. Should someone try to swap out a block, copy it or change its state, the network of computers that constitute the blockchain receives an alert immediately and no one can add new blocks to the chain until the issue is addressed.

Security is easily blockchain's biggest advantage, followed by resilience. Each block is continually reconciled by a network of computers. If one node fails, it can't bring the entire system down because all the other nodes have a copy of the ledger.

Top 10 blockchain benefits for businesses
Blockchain's unique characteristics can increase trust, security, transparency and bring other benefits to businesses.

There are several types of blockchains and a variety of uses across industries. The finance industry is currently leading blockchain adoption because of the way the technology simplifies and locks down the transaction process.

Image of a table listing the 4 types of blockchain, their advantages, disadvantages and use cases.
There are four main types of blockchain. They vary by how open or closed they are, which affects their speed, privacy and security.

How blockchain is transforming data center architecture

With regards to data center architecture, blockchain takes a different approach to data storage.

Blockchain uses decentralization to manage and store data. The blockchain network can consist of dozens, hundreds or thousands of computers spread across the world in various locations. For a blockchain breach to succeed, hackers would have to take down multiple computers in the network -- and even then, blockchain data storage is encrypted, which minimizes the security risk.

These advantages directly compete with traditional data center storage. Data centers house massive amounts of data in a single location. This centralization puts them at risk of natural disasters and outages in the local area. To add some redundancy and prevent data loss, organizations might copy data and store it in other locations. However, this process can be time-consuming and costly, and it creates a surplus of information that also needs protection.

The rise of blockchain also demands more reliable power, high-performance equipment that can process blocks of data quickly and more intensive cooling to keep that equipment from overheating during intense computations.

Blockchain data storage can deliver higher levels of security, reliability, redundancy, resilience and transparency. Its distributed nature enables users to have a higher degree of control over where they store their data, which affects accessibility and availability, too.

That said, accessibility and availability can become a detractor from the decentralized approach. To retrieve a block of data, the different nodes on the network must sync, validate and pull the block. This can take a significant amount of time, depending on the nodes' locations and loads. Traditional data centers can deliver much faster speeds and higher levels of data availability.

The security of the blockchain, while quite advanced, isn't perfect. As more users adopt the technology, bad actors will get better at finding and exploiting holes in blockchains. For now, however, it provides much better data security over in-house and cloud storage.

Image of a bulleted list of blockchain security tips.
Use these security tips to keep bad actors from exploiting holes in your blockchain technology.

Finally, cost is a big factor that determines whether organizations might choose to adopt blockchain. Although blockchain becomes more popular every day, it's still not widely deployed by organizations -- at least not at the same level as cloud storage, which is cheap and available in many forms today.

How data centers can stay ahead of the curve

For data center teams seeking a blockchain approach, start by reevaluating the data center infrastructure. Consider how to pivot resources and begin implementing and moving toward a decentralized architecture. Begin thinking about how to set up a peer-to-peer network that can handle a blockchain workflow.

The rise of blockchain also demands more reliable power, high-performance equipment that can process blocks of data quickly and more intensive cooling to keep that equipment from overheating during intense computations. The faster users can write and validate blocks, the better. So, make sure to factor in these requirements and invest accordingly.

The traditional data center architecture must fundamentally transform to meet blockchain's demand for higher traffic and availability, including having staff on hand with specialized blockchain skills. This presents a big undertaking; but, by planning for it now, organizations can keep pace with increasing data processing needs and adapt to client needs as they adopt new business strategies to integrate the blockchain.

Editor's note: This article was updated in July 2024 to improve the reader experience.

Jacob Roundy is a freelance writer and editor, specializing in a variety of technology topics, including data centers and sustainability.

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