As continually escalating volumes of data continue to intersect with the need for faster response and action, centralized processing structures and human intervention will increasingly serve as impediments to the delivery of new applications and end user capabilities. 

With the emergence of distributed data center networks that push their boundaries closer and closer to the end users of the services they house, the structure, and the capabilities, of databases will evolve as well. The security of this data is obviously a major concern, and blockchain is one potential methodology to maintain the integrity of stored data.

The great chain is guided by our hand
– Wikimedia Commons/Toni Lozano

Blockchain defined

At a very basic level – Blockchain resolves the problem of a lack of trust between counterparties. Frequently described as “an operating system for data,” blockchain is a concept rather than a technology.

Rather than a centralized structure in which all information is maintained in a few large databases, blockchain is a distributed database that is used in both public and private applications. In this structure, each batch of valid transaction data is stored within its own “block.”

Each block is linked to its predecessor and continues to grow as new information blocks are added. Due to their distributed nature, blockchains offer no single point of failure or hackable entrance and, thereby, offer a higher level of security than many existing database-driven transactional structures.

How blockchain works

Blockchain structures operate based on five specific elements:

  1. Distributed database: Each party on a blockchain has access to the entire database and its complete history, enabling any node to verify any, and all, information
  2. Peer to peer transmission: Communications are made between all peers, so that each node maintains its own updated version of the chain
  3. Transparency: Each transaction is visible to everyone with access to the chain. Each node/user has a 30 plus character alphanumeric address
  4. Tamper proof records: Blockchain records cannot be altered
  5. Programmable action: Since all the information in a transaction is digital, users can program algorithms and rules of action based on the transaction information

Since data is stored across its network, a blockchain eliminates the risks - i.e., data loss, corruption and theft - that are inherent in centralized data configurations.

For example, since blockchain networks lack a central point of vulnerability they are much more difficult for hackers to identify a primary entry point that can then be exploited for further attack.

Every node in a decentralized network has its own copy of the blockchain, and data quality is maintained via massive database replication with no single node being “trusted” more than any other.

Blockchain in the data center

From a data center perspective, the smart contract capability of a blockchain would seem to lend itself to the automation of “rules-based” operation and management functions including:

  • Capacity planning
  • Cooling
  • Asset management
  • Virtualization

In taking over responsibility for applications like those listed above, a blockchain-based management system would potentially deliver enhanced transparency and cost savings in terms of operations.

In the cloud

Many blockchain advocates believe its mode of operation is best suited for the cloud. The thinking on this proposition is that although the cloud itself is distributed and fault, tolerant, it still operates using a centralized methodology under which a central entity is responsible for cloud operations. The decentralized nature of blockchain would provide more autonomous operations and a higher level of data security due the establishment of multiple databases throughout the cloud “network.”

One limitation to a blockchain-based cloud is that with decentralization comes the need for heightened security governing the inter-node communications, thereby necessitating the use of highly secure transmission protocols. These protocols could then increase the demand on physical and computing resources which could make a blockchain transaction costlier than that of today’s cloud-based operations.


Blockchain development is a comparatively new methodology that appears to offer the potential to develop and implement secure, verifiable transaction-based applications from both a public and private perspective. The value of its core strengths have already begun to be embraced by financial organizations, with a number of major banks initiating their own pilot projects.

In regard to its impact on data centers and the cloud, although its potential to deliver decentralized environments and to automate a variety of data center functions, these capabilities remain largely speculative at this point. For the near future, users seeking to develop and implement their own blockchain applications appear to fall within the purview of the major cloud providers. Still in the early stages of development, blockchain appears to be a methodology for applications development that will have an extended maturation process.

Chris Crosby is the founder and CEO of Compass Datacenters