Web 3.0 and the SME Cloud
Peering into one potential future of China's enterprise cloud
Rather than report on recent cloud news today, I wanted to devote some space to an article on Web 3.0 and its relationship to enterprise cloud that caught my eye a few days ago.
The article, published in Jiemian by the Beijing-based SK News Agency, speculates on how the increasing adoption of blockchain technology can help small-to-medium enterprises (SMEs) struggling to affordably protect their data with current cloud solutions. I’ve translated the piece in full below.
The concept of using blockchains as distributed databases in enterprise contexts has been discussed for quite some time, so in many ways this article can also be applied to a more general and international context. Regardless of whether you’re newer to this topic or just want a refresher, the article contains plenty of food for thought. Feel free to share your thoughts on the piece and its arguments in the comments.
What Lessons Does Web 3.0 Have For SME Cloud Services?
Sometimes a small technological advance can kickstart a revolution in a massive industry.
by Ning Xi
Zheng has been rather annoyed lately. His company has started its second round of digitalization reforms, and R&D wants to combine the admin, client, and marketing and ad systems.
As the chief engineer and informatization lead, he’s already pulled overtime for more than a week straight.
However, the design plans he submitted to the board of directors were all ultimately rejected. The reason was that the VP in charge of sales didn’t want customer information uploaded directly to a cloud database due to the risk of the data leaking.
The problem here was that although the server and private database that Zheng personally set up had no issues in terms of confidentiality and security, it was discovered through testing that without the support of tremendous internet bandwidth and cloud server cache resources, the results would be far from ideal in a real-world situation.
This forced the whole plan to a halt. After all, an SME can’t fund its informatization department if it can’t go online. After days of overtime, Zheng was unable to come up with a suitable solution.
Zheng’s problem is one that many informatization leads at SMEs encounter. In truth, it’s a manifestation of the conflict that exists between business needs and data security.
When all is said and done, today’s enterprise cloud services are technologically centralized. Businesses rely on the resources that cloud service platforms offer, such as online databases and cloud servers, and they leverage relevant online tools to construct their own data-enriched service systems and features so that they can achieve their respective goals of informatization.
This is all adapted from the traditional business models found at shopping centers. Enterprise cloud service platforms can be seen as another kind of digital shopping center; the products they offer are the things that cloud services need: tools, storage spaces, bandwidth, and more.
Large enterprises, as well as other companies with enough investment, can guarantee the security of their data by deploying a hybrid cloud and setting up high-quality server rooms with sufficient network bandwidth. By storing their data offline and running their external-facing services online, these businesses can flexibly handle the reality of expanding internet services while solving their own data security issues.
For SMEs, setting up a hybrid cloud is too much of an investment. They have no choice but to find a balance between data security and costs. It’s increasingly likely that they’ll set up fully-equipped voice services, but the obsession with data security is something they just can’t shake.
To a certain degree, solving the pain points of informatization and data security that SMEs face seems all but impossible given current cloud service patterns and frameworks. After all, an SME’s top priority in informatization is to guarantee the smooth development of their business. They certainly cannot give up on business development just because they need to guarantee data security. However, if a new technology was available to take care of both issues, it would certainly be the first choice of any SME.
Only one solution comes to mind — one that will break current technological frameworks and patterns while taking an ideological leap forward.
Right now, Web 3.0 may be the two-pronged solution that Zheng and other informatization leads at SMEs are hoping for.
01 | What is Web 3.0?
The world typically refers to the static browser-based internet of the 90s, developed by English computer scientist Tim Berners-Lee, as Web 1.0. It was a read-only model of the internet accessible through browsers.
This is where the familiar concept of “going online” came from.
Eventually, all sorts of platforms arose: Facebook, Twitter, as well as China’s Weibo, WeChat, and Douyin. These platforms promoted an interactive internet, especially as it coincided with the gradual rise of mobile internet. Online users could read information as well as write it, even becoming creators of content themselves. This is the extremely popular Web 2.0.
Over the following years, the industry searched for the next generation of internet technology. There were essentially three different directions. The first was the “Knowledge Graph,” linked to the Semantic Web developed by the aforementioned Tim Berners-Lee; nowadays, this is tightly coupled to AI technology. Another was human-computer interaction, which has already developed theoretically into the metaverse. The last of these was blockchain technology.
Most people believe that the next generation of the internet will be a fair and transparent network in which people can interact with one another without worrying about the loss of security or privacy. It will combine the powers of AI and big data to make the internet both more intelligent and more semantic.
Currently, an increasing number of industry insiders tend to view blockchain technology as the core of the Web 3.0 era. The reason behind this is that knowledge graphs and human-computer interaction are both internet application models to be explored in the future. Only with the combination of blockchain with Web 3.0 can there emerge an era-defining model for the way the internet operates.
After all, blockchain technology will advance the process of collecting and storing data on a network. With the help of AI and IoT (the Internet of Things), this technology will collect all concentrated data and convert it into information that hackers cannot copy or intrude upon.
Whether we are discussing knowledge graphs, human-computer interaction, or the metaverse, data storage and exchange have become the core of all business. The data operation model built upon the foundation of blockchain technology will bring about a massive data operating system that will be able to support the development of innovative applications such as knowledge graphs and the metaverse.
But there is a problem. As mentioned earlier, blockchain technology will collect all concentrated data and transform it so that hackers cannot intrude upon it or copy it. In addition, Web 3.0’s signature trait is its pro-privacy and anti-monopoly model. This won’t be encouraging for centralized platforms that control their users’ data.
The industry will see a shift toward decentralization and privacy. As users control how to view their data, the monopoly of tech giants will end, and data privacy hacks will decrease and eventually vanish.
For SMEs leveraging cloud services to handle informatization and resolve their data issues, this is incredibly appealing.
02 | The path of hesitation and solution for SMEs
When it comes to the cloud service market, the biggest strategic issue for SMEs is their concern for their own business and the security of their data. This is one reason why so many large-scale businesses are increasingly flocking to hybrid cloud.
But SMEs will always unconsciously feel unsafe putting their business and data completely on the cloud. After all, constrained by costs and expenses, these SMEs cannot construct their own massive data centers to attain the high security provided by a hybrid cloud. Instead, they can only rely on the data safeguards that cloud service providers offer.
As a result, many SMEs have no choice but to store the entirety of their clients’ information, as well as their corresponding business information, in the space offered by cloud service providers.
From Zheng’s experience, it’s easy to see that this is an obstacle for management at SMEs, as well as a key focus for decisions made under the impetus of informatization.
Informatization at businesses has led to the current era of digitization and intelligentization. As a result, all data must be openly accessible, leverage companies’ AI decision models, increase these models’ learning capabilities, and ultimately be able to support decision-making.
Data security will inevitably become a focal point for all SMEs during this process.
Web 3.0 just so happens to solve this through its distributed storage model.
Following the popularization of a blockchain-based Web 3.0, SMEs can fully rest assured about deciding to use cloud services. This is because their data will be stored entirely on a blockchain, not on space belonging to a cloud service platform. Businesses’ data security will be guaranteed.
A blockchain makes all of its data available, but without the authorization to generate or access data, other individuals lack the key to decrypt it. As a result, SMEs can feel safe while storing all of their operational data on a blockchain.
In addition, they simply need to deploy a small offline database that stores the indices to their data, which they can check while accessing this data in the future.
When using a blockchain, only the party at a company who knows the location of its user data and user-generated data can provide each user with authorization when their respective information needs to be changed. They do this by comparing the index of the user-generated data with the user’s corresponding registration information
Not only does this solve the issue of secure storage for businesses’ operational data; it also elevates the security of data that is of great national concern to an especially important position.
03 | User data: Available but unidentifiable
As companies engage in the large-scale use of user data, countries are taking further legal steps toward protecting this data. Given these circumstances, many leading companies are seeking technology that makes user information “available but unidentifiable.”
At the seventh China Internet Rule of Law Conference, held on November 26, 2021, Wei Tao, the vice president of Ant Group and the chairperson of the company’s technology safety and security committee, was invited to give a talk on the topic of data security and personal privacy protection.” Wei Tao stated that privacy computing technology attaining “availability and non-readability” was the key to realizing the balanced development of personal privacy protection and the data factor industry.
According to Wei Tao, unlike “availability and invisibility,” the paradigm of “availability and non-identifiability” takes things a step further. “We must first fulfill the need for anonymity: being unable to identify any specific natural person. In addition, it must be computable. For example, if data could not be computed or data value could not be generated, the data factor industry would be unable to develop further.
The issue is that under the internet’s current conditions, exploration of these technologies requires a complex process involving authorization, encryption and decryption, calculation, and data transmission and coupling just to accomplish a small part of this.
On the other hand, the system built on top of Web 3.0 just so happens to guarantee that this can be accomplished smoothly, simply, and efficiently.
After all, user information is completely encrypted on the blockchain. Any other company lacks the authorization to probe this data. Without the user’s permission, it’s impossible to see this data’s true contents.
However, companies can index their data. During the encoding process, these indices can serve the same role as the corresponding user data while the system operates. Naturally generated indices demarcate the allocation of user data; in addition, when a company’s internal system obtains a user’s encoded data, it will translate this data again, resulting in an encoding that only the system can interpret. This can replace the need for the user’s original data to participate in the system’s access and use of user data.
This solves the most fundamental technological issue of the “available but unidentifiable” paradigm.
In addition, with the increasing usage of AI in society, the collection of data and the deep learning operations run on this data have become crucial conditions for many AI systems.
In this situation, the “available but unidentifiable” paradigm can guarantee that deep learning can still be carried out on this data while also not exposing user identities, thereby safeguarding the privacy and security of personal information.
In addition, “available but unidentifiable” user data will guarantee the benign development of the other two core applicational directions that Web 3.0 might take: knowledge graphs and the metaverse.
04 | The evolution of cloud services
Since Web 3.0 is decentralized, if enterprise cloud services gradually migrate to this type of system in the future, cloud service providers may need to adjust their business models.
Since the fundamental technical model of the internet will have changed, the core service providers that are built on this model will doubtlessly need to adjust their own business models and structures, and even their technological foundations.
From how things look now, Web 3.0 cloud service providers may quite possibly change from “market” and “warehouse” models to “parking lot” and “internet highway” models.
For one thing, because deployment in Web 3.0 requires more highways and network access points, platforms should set up more data exchange centers to accelerate and unblock the circulation of blockchain data.
Regarding businesses’ core data needs for offline storage, platforms will also need to establish more storage terminals and reduce existing barriers in the communication and exchange of data between cloud service platforms and businesses, so that companies can quickly swiftly adapt the services provided by cloud platforms into their own business.
For data storage in particular, software/hardware decoupling, easy extensibility, automation, and policy-based or application-driven patterns are prerequisites for cloud platforms to transition to the blockchain.
In the end, the blockchain is a technological concept and not a protocol. In theory, different blockchains built from different consensuses, and hard forks resulting from differences in consensus for the same blockchain, are unable to interact with one another; one can only create an ecosystem around a single blockchain. However, this goes against the goal of decentralization; thus, the industry needs inter-blockchain technology.1
When Web 3.0 users in different blockchain ecosystems need to communicate with one another, inter-blockchain technology will play an important role. For this to happen, cloud providers need to create lower-level protocols.
Let’s take business applications as an example. Future cloud service platform systems should not be limited to upper-level applications, nor should they be tied to lower-level software. This will make it possible to achieve unstructured interoperability among data protocols.
Cloud service systems will also make use of full user-mode frameworks. They will be able to coexist within a single operating system, support the deployment of flash memory or hybrid SSD/HDD storage nodes, and permit every instance in a group to use different hardware configurations. This heterogeneous use of hardware is a good fit for diverse, complex scenarios in blockchain server rooms.
Future cloud platforms will offer distributed storage services according to iSCSI protocols. They will be able to integrate with various virtualized platforms, database systems, and application systems, essentially achieving everything needed to move to the blockchain.
05 | Closing remarks
The strategic core behind all of these changes is to find out how today’s cloud service providers can shift their platforms to fulfill a completely service-based role, provide all sorts of tools required by businesses, and ultimately become partners to businesses rather than providers.
Ray Dalio, the author of Principles and founder of the hedge fund Bridgewater Associates, has said, “Everything runs on its own hidden, intrinsic principles. In other words, chain after chain of cause-and-effect relationships decide the direction of the world. If you explore these cause-and-effect relationships — not every single one, but at least the majority — you will without a doubt possess the key to the world’s treasures.”2
This means that if an industry wants to upgrade, it must understand the essence of the current period so that it can find this period’s internal rules and derive its own strategies and tactics.
It currently looks as though the enterprise cloud service market has encountered the type of transformative change that only comes every 50 years. Cloud service platforms must leverage the newest technology and the newest thinking to fully understand and analyze the industry’s lower-level logic to uncover a developmental model for moving to the blockchain.
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You may be interested in reading about Coinbase’s Inter-Blockchain Communication Protocol, which aims to achieve just this.
I was unable to find the original quote, so I’ve translated it back into English. Feel free to get in touch if you can find Dalio’s original words.