- Cloud service
Amazon Web Services (AWS), which runs around one-third of the internet, saw a massive outage. - Not only were centralised crypto exchanges hit, but decentralised players like
dYdX went down in the chaos that followed. - The time-sensitive nature of transactions on crypto exchanges has users questioning what ‘
decentralisation ’ truly entails.
Even though dYdX is decentralised, which is to say that it allows for direct peer-to-peer transactions unlike a centralised $4 where investors need to use the company’s designated wallet, it is still dependent on AWS — a centralised service.
Proponents argue that this undermines the entire objective of being a decentralised platform. The ideology is that a decentralised network can ‘technically’ never face an outage since the nodes are distributed among users. However, when the platform’s website front-end uses AWS — it negates this aspect.
Meanwhile, the dYdX exchange’s governance token (DYDX) , which had begun recovering after last week’s dip, fell by 5% again during the outage, and then recovered later the same day.
AWS’ glitches left customers unable to login or trade for a period of time. Retail traders are claiming losses of up to $200,000 due to multiple outages. Some have even started a$4 from Binance — the largest crypto exchange globally with transaction volumes of $23 billion, according to $4.
Since cryptocurrency and its derivatives are known to be volatile, trader strategies of ‘timing’ their buys and sells depend entirely on the exchange remaining accessible to monitoring. For example, on December 4, the ETH token on the $4 blockchain dropped from $4,100 to $3,600 within 50 minutes, before recovering most of the drop an hour later. Executing desired trades exactly in time, would have decided whether a trader profited or lost from the market moves.
To support such 24x7 operations that may see massive traffic increases in the space of minutes, large cloud-based providers such as Amazon’s AWS or Microsoft’s Azure have a number of features to increase reliability.
With server farms $4 the globe, they claim better reliability than smaller providers or self-hosted data centres. Yet they aren’t entirely immune to disruptions or human error, and have had many$4 over the years.
Because AWS powers almost$4 according to Statista,$4 affected a wide cross-section of the internet, including $4, Slack, and Amazon’s own shopping site.
When a person’s cloud backup or a fun website of cat memes is temporarily inaccessible, it is merely inconvenient. But when governments and large companies have business interruptions, the outages become a concern. Finally, a ‘decentralised’ service suffering an outage due to centralised systems, just adds another layer of irony.
Most of the big names on the Internet have not made a big deal about yesterday’s outage, as it is just one more disruption which is$4 (Service Level Agreement). However, the service disruption and the loss of retail investors’ money stood out as an egregious event for the cryptocurrency community.
Keep in mind the crypto community’s belief in a ‘ground-up’ architecture with a ‘decentralise’ philosophy. After all, crypto believers are drawn to Bitcoin because no single entity can control it. They have worked out how to transact money with each other without a central bank. They are drawn to a $4 which is not controlled by big corporations and is open to all. They are working out a decentralised internet$4 (ENS), decentralised file storage ($4), decentralised$4, and more with no external control.
Ironically, Coinbase chief product officer Surojit Chatterjee, told $4 that it wants the company to become the “AWS of crypto” with Coinbase Cloud, which will — again — be centralised.
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