Cloudflare Flameout: Another Central Point Of Failure?

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Something slightly scary happened to the cryptosphere yesterday, at least if you spend as much time online as we do. Around 9:50 ET, Crypto Briefing’s website was replaced by a 502 error….as were CoinMarketCap, Decrypt, and many other websites hosted on Cloudflare’s cloud-based servers.

Then, just as our writers resigned themselves to an unexpected day off, the internet started working again.

Most people regard internet downtime as a chance to get outside, but if you were trying to buy the dip it was terrifying. Despite the industry focus on censorship resistance, the Cloudflare downtime demonstrated just how easy it is to shut the taps of the cryptocurrency economy, as leading trading venues like Kraken, Poloniex and Coinbase became inaccessible. 

Sure, there were other exchanges and you can always trade on a DEX, but for casual investors the entire crypto market became simply inaccessible. CoinDesk even had to warn investors not to use its price API.

As Crypto Briefing contributor Sarah Rothrie wryly commented, “An entire industry predicated on decentralization cannot access any service because Cloudflare’s centralized servers are broken.”

Decentralizing The Internet

The fact that the crypto economy still has vulnerabilities is nothing new, and the discovery of new points of failure are unlikely to take anyone by surprise.

But there are also several cryptocurrency projects seeking to reduce those vulnerabilities, by spreading responsibilities among a distributed network. Much as Bitcoin (BTC) puts your money outside the control of a central bank, these projects can put web content and data outside of any central server.

As NKN’s co-CEO Bruce Li points out, centralized services have inherent weaknesses such as DDOS attacks, hacking, and poor scalability at peak traffic. “Cloudflare is a great company and highly competent technically,” he noted, “so it is more an architectural or system level weakness that no centralized system can avoid.”

And, Li added, many blockchain projects still rely on centralized services such as AWS and Azure, including some which are supposed to be decentralized.

NKN, short for “New Kind of Network,” seeks to replace centralized content servers with a peer-to-peer web of interconnected devices. “We have some test results showing that decentralized CDNs [Content Delivery Networks] like nCDN is not only more secure, but also performs better or comparable to centralized CDNs like Akamai,” Li said. At present, the network has reached 20,000 consensus nodes.

NKN isn’t the only potential solution to web centralization. “Today’s outage highlights the need to avoid central points of failure, in network connectivity in general and for crypto markets in particular,” explains Wes Levitt, head of strategy at Theta Labs. Theta is a cryptocurrency project seeking to create a decentralized, peer-to-peer network for online content.

Levitt noted that such events are becoming more frequent, with similar crashes affecting Cloudflare, Verizon and Google last month. “There’s just a lot that can go wrong,” he noted, “even when we’re talking about the best-in-class service providers.”

Decentralization can’t completely cure the illness, but it can speed along the recovery, Levitt argued.

“Decentralized CDNs like Theta Network can’t fully prevent outages like these, but they can mitigate the damage by allowing networks to adapt in real-time and reduce downtime,” Levitt said. “In the case of Google’s regional outage in June, a P2P network like Theta could have allowed data from unaffected regions to propagate to those on the East Coast experiencing downtime, bridging the gap in service until Google’s service was restored.”

That may not completely eliminate the need to rely on centralized web services, Levitt admits, but it may reduce our dependence on them. “We envision decentralized networks complementing and strengthening their centralized counterparts, not replacing them outright,” he said.

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