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Blockchain web hosting: advantages and limitations

Blockchain web hosting could be a promising solution for enhanced data privacy, security, and control. However, it is not without potential drawbacks.

The emergence of blockchain technology has sparked the development of web3, also known as the “semantic web.”

Web3 aims to incorporate blockchain technology, artificial intelligence (AI), and machine learning (ML) to create a permissionless, trustless, smarter, and more responsive Internet experience.

It means users could interact without intermediaries or authorization from governing bodies. Furthermore, the new web could make it possible to integrate newer, more immersive, and inclusive features such as metaverses, NFT-based games, decentralized finance (defi) infrastructures, and decentralized autonomous organizations (DAOs).

Emergence of blockchain web hosting

As web3 has gained more traction, hosting websites, apps, and other digital content on blockchains has also come to the fore.

The key selling point of blockchain web hosting is bypassing the need for a central server, thus securing greater data privacy and control. It offers an alternative to the overarching control exerted by large corporations and governments, a hallmark of web 2.0.

In blockchain web hosting, each node is responsible for storing a fraction of the data, which is then encrypted and duplicated across various nodes in the network. When a user seeks a specific piece of data, the decentralized system fetches it from the closest available node and delivers it to the user.

Proponents of the system insist it enhances security, redundancy, and censorship resistance. Additionally, they say it guarantees consistent accessibility to web files even with network disruptions.

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Advantages of blockchain web hosting

Let us examine in more detail a few benefits that may accrue from hosting apps and websites on blockchains.

Better control of personal data

Blockchain hosting enforces a decentralized approach to data storage, meaning it offers users potentially enhanced control and fortified security over their data. It also removes the reliance on a few major hosting providers, as is the case with web 2.0, where the space is dominated by the likes of GoDaddy, Amazon Web Service (AWB), and Google Cloud Platform.

Enhanced security

The decentralized nature of blockchain web hosting, coupled with cryptographic applications and blockchain-authenticated transactions, offers heightened security, significantly minimizing the risk of privacy breaches and ensuring an accurate and inviolable database.

Blockchain hosting solutions could also incorporate smart contracts to foster transparency and efficiency in hosting agreements, minimize potential disputes, and enhance the overall security framework.

Use of cryptocurrency

The most well-known use case for blockchain technology is cryptocurrency. These decentralized, digital, peer-to-peer (P2P) payment systems are independent of government control, although there is an increased push to regulate and streamline them.

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They also do not need intermediaries such as banks or payment processing companies to verify transactions, a feature of traditional finance that often complicates and increases transaction processing expenses.

Decentralized hosting providers are well-placed to welcome payment via cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH), potentially simplifying the process, reducing costs, and offering a robustly secure method for procuring services.

Lower operational costs

Incorporating blockchain technology into hosting services can lead to substantial cost savings for users and providers. Eliminating intermediaries and reducing dependency on relatively costly hardware could make these solutions more efficient and affordable for hosting websites and decentralized applications (dApps).

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Limitations of blockchain web hosts

Despite its touted benefits, blockchain hosting still has glaring shortcomings that may hamper its widespread adoption in the immediate future.

Technical limitations

  • Scalability: As more computers or nodes join a blockchain network, it can struggle to keep its performance top-notch. Because each node holds a duplicate of the whole blockchain, more data is copied as the network gets bigger, causing the system to lag and create bottlenecks.
  • Latency: In blockchain networks, information does not reach its destination in a straight line. Rather, it zigzags across nodes, each checking the data for accuracy before passing it along. While secure, the process can take time and create delays known as latency. In applications where real-time data transfer is paramount, these delays can negatively affect the user experience.
  • Transaction throughput: Blockchain web hosting services may also face issues with handling many transactions simultaneously. The main issue is that in order to add new data to the ledger, all network nodes must first reach consensus, which can slow down the network’s processing speed. This constraint can also lead to delays and problems in real-time data updates and user interactions for websites and dApps hosted on the blockchain.

Practicality and usability issues

  • Limited storage: Because blockchains work by having individual nodes keep a copy of the complete ledger, they end up storing the same amount of information in several places. This repetition of data may lead to a somewhat inefficient use of storage space since the information is not saved in just one place. It may limit the size and complexity of dApps and websites that a blockchain web host can hold, making it less appealing for large projects that require significant storage space.
  • Inability to store large files: A direct consequence of blockchain hosting’s limited storage capabilities is that the service may face challenges storing massive files and multimedia content, such as high-quality photos, videos, and sound files. Therefore, it may prove ineffective for content-rich websites and applications.
  • Standardization and interoperability: Another significant hurdle affecting blockchain web hosting is the need for consistent standards and cross-functionality. Various networks operate on different protocols and standards, making creating compatible solutions challenging. Another area for improvement is the difficulty in achieving compatibility with web 2.0, which predominantly follows a centralized model while web3 is decentralized. With web3 still in its infancy, internet users will still maintain usage of web 2.0 applications, and this incompatibility may affect web3 uptake in the foreseeable future.
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Complexity

It may require advanced technical skills to set up a blockchain hosting site. This may be beyond the grasp of many people, given the details of blockchain technology, setting up nodes, and guaranteeing component compatibility.

Furthermore, continuously maintaining a blockchain hosting environment that ensures network safety, reliability, and optimum performance can be resource-intensive and may require specialist knowledge, especially as managing a dispersed network of nodes comes with its own unique hurdles compared to running a centralized hosting infrastructure.

Regulatory challenges

Like with many new and rapidly evolving technologies, regulation around blockchain has struggled to catch up with its application. As such, businesses using blockchain hosting may find themselves on the wrong side of regulatory guidelines, especially those dealing with privacy and data protection.

However, given blockchains’ unchangeable and transparent nature, it may be difficult for decentralized hosting services to meet taxing data protection requirements such as the European Union’s General Data Protection Regulation (GDPR). This means blockchain hosting may be unsuitable for websites and applications that process sensitive personal data.

Moreover, with blockchain hosting services spanning several jurisdictions, they may come under different laws and regulations that may hinder cross-border data transfers.

Security concerns

There is no doubt that blockchain’s underlying principles, as a whole, make for a more secure web. However, like any nascent technology, it comes with its fair share of vulnerabilities that may present security concerns when used to create a web hosting service.

  • Lack of encryption and API query verification: Since blockchain technology still has limited adoption and support, many of its services use older web 2.0 infrastructure to allow users to interact with them, with most getting their information from the backend using standard application program interfaces (APIs). However, many of these API queries are not properly secured, leaving them open to potential attacks where bad actors can intercept data in the same way they do with unsecured web 2.0 apps. It means that there is no sure way to confirm that data from a web3 application is coming from the right source, even though the system is supposed to be based on implicit trust.
  • Smart contract hacking: Smart contracts are prevalent in certain blockchain networks, such as Ethereum, and can be integral to setting up a decentralized hosting service. However, just like any other software, they can have serious security vulnerabilities that can expose user information or, more commonly, result in financial losses.

H1 2023 Web3 Security Statistics

🚨Total losses from hacks, phishing scams, and rug pulls in Web3 reached $655.61 million in the first half of 2023.

Among them,
108 attacks -> $471.43M
Phishing scams -> $108M
110 rug pulls -> $75.87M pic.twitter.com/8Q9kmDETfQ

— Beosin Alert (@BeosinAlert) June 30, 2023

  • Slow updates: Finally, web3’s decentralized structure often makes it challenging to address identified security issues promptly. Any modifications require widespread acceptance within the network before they can be implemented. As such, building completely secure applications in this context can be a monumental task, with the consensus model inherent in blockchain networks prolonging the time required to rectify defects and inadvertently amplifying the impact of any security vulnerabilities.
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Evaluating the worth of blockchain web hosting

As we have seen, blockchain web hosting, a critical part of the emerging web3 landscape, touts significant data privacy, security, and control advantages while eliminating the need for a central server. However, it also introduces many challenges that question its practicality and usability.

  • Technical performance issues include scalability problems, latency, and limited transaction throughput.
  • Hosting large files and complex applications is difficult due to storage constraints.
  • The need for consistent standards and interoperability with the web 2.0 model complicates the transition to decentralized hosting.
  • The specialized knowledge needed to establish and manage a blockchain hosting environment may discourage less tech-savvy users.
  • Legal risks arise from unclear regulatory guidelines, especially concerning privacy and data protection.
  • Despite its touted security benefits, blockchain web hosting has certain vulnerabilities, such as a lack of encryption and API query verification, potential smart contract hacking, and slow updates.

Nevertheless, it’s crucial to remember that web3 and blockchain web hosting are still early-stage technologies, and these challenges represent opportunities for improvement rather than insurmountable hurdles.

Creating blockchain-friendly websites will, however, require components such as smart contracts to execute various functions and decentralized storage such as the InterPlanetary File System (IPFS) to distribute content to nodes in a P2P network. Additionally, the website must get a domain name from a blockchain-based domain system such as the Ethereum Name Service (ENS).

In the same way, a blockchain website’s data is stored on multiple nodes across a blockchain network, making it resistant to censorship and hacking.

Read more: 5 reasons why governments don’t accept web3



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