Business3 #005: 💡 How Bitcoin Becomes The New Public Cloud

Over the past decade, cloud computing has revolutionized the way businesses operate, providing them with flexible, on-demand access to computing resources and data storage.

I saw this first hand as a marketing manager at Google Cloud while working on Google Cloud Platform and Workspace.

I had the amazing opportunity to be part of the teams to launch products like TensorFlow and Meet, and fought unsuccessfully to prevent Google Apps for Work from being rebranded as G Suite. 🙄 But I digress.

Large tech companies like Amazon, Google, and Microsoft dominate the cloud computing market. They provide services that many businesses rely on.

For example, Twitter and Deutsche Bank use Google Cloud Platform, while OpenAI and LinkedIn store their data on Microsoft Azure.

The cloud computing market is worth a lot of money—$570 billion currently, and it's projected to reach $1.6 trillion by 2030.

However, there are downsides to the success of cloud computing:

1. Consolidation: The power and influence of a few big companies in the industry is concerning. They control a significant portion of the tech industry.

2. Questionable security: Cloud providers are attractive targets for hackers. Every year, more than $1 trillion is lost due to data breaches. User data is poorly managed and constantly at risk.

3. Lack of digital ownership for end users: Users have to give up control over their data in order to access the internet. They essentially mortgage their data without owning it.

Additionally, internet companies profit from user data without sharing much of it with the users themselves. The data of a typical adult in the US is valued at around $2 to $5 per month in digital advertising, making it a billion-dollar asset that users don't benefit from.

However, a new era in the digital world is dawning, one where blockchains could potentially displace traditional cloud providers. At the heart of this transformation is Bitcoin, the pioneering decentralized digital currency built on a blockchain.

Bitcoin and Blockchain: A Primer

Bitcoin was created in 2009 with the blockchain serving as its underlying technology. A blockchain is a distributed, decentralized ledger that records all transactions across a network of computers. This eliminates the need for a centralized authority, offering a high level of transparency and security.

Bitcoin, the first use case of blockchain, has shown the world the potential of this technology, beyond just a medium of financial transactions. Now, innovators are finding ways to leverage blockchain as a new form of cloud storage, leading to the proposition of Bitcoin as the new public cloud.

The Decentralized Cloud: The Future of Data Storage

With growing concerns around data privacy, transparency, and monopolization of the internet by a few tech giants, the need for decentralized solutions has never been more pronounced. This is where blockchain, and specifically Bitcoin, come into play.

Using a blockchain-based cloud storage solution, data is broken into small pieces, encrypted, and distributed across a global network of computers. This makes the data highly resilient, difficult to tamper with, and resistant to downtime. Companies like IPFS, Arweave, and Filecoin are already innovating in the decentralized storage space. But unlike traditional cloud providers, this decentralized model also means users maintain ownership of their data.

The Economic Proposition

One of the most compelling aspects of a blockchain-based cloud solution is the potential for cost savings. Decentralized cloud storage can leverage unused storage space around the world, leading to a competitive market for data storage and potentially lower prices.

Furthermore, using blockchain could mitigate the risks and costs associated with data breaches. As each data piece is encrypted and distributed across the network, an attacker would need to breach multiple nodes to obtain a complete dataset, which is both time-consuming and cost-prohibitive.

Monetizing Decentralized Cloud

In the current model, cloud providers like AWS are the principal benefactors of the economic value created by data storage. In a decentralized cloud model, value could be more equitably distributed across the network.

Users could be incentivized to lend their computing resources to the network, effectively earning Bitcoin for their storage contributions. This not only provides a new revenue stream for individuals and businesses but also fosters a healthier internet ecosystem that respects data ownership and privacy.

Investment Potential

As an investor, investing in Bitcoin now means getting ahead of the trend and being part of the transition to the decentralized internet. As more companies and individuals turn to blockchain-based solutions for their data storage needs, the demand for Bitcoin, as both a currency and a technology, is likely to rise. This has been central to my VC firm, Gossamer Capital’s, investment thesis.

Furthermore, investing in start-ups and companies at the forefront of blockchain-based cloud storage solutions could yield significant returns, as these services are likely to gain market share from traditional cloud providers.

In Conclusion

It is important to remember that this space is still emerging, and while the potential is vast, so are the challenges. Regulatory uncertainty, technological barriers, and the need for robust security measures are all hurdles that need to be overcome.

However, given the inherent benefits and the broader trend towards decentralization, it is becoming increasingly apparent that Bitcoin, or at least the technology underpinning it, could become the new public cloud. As investors, we are presented with an opportunity to capitalize on.

That’s all for today, friends.

See you next week.

Jonathan

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