!(https://hackernoon.com/hn-images/1*IlqN3eykgWvKK0G6mGc7sg.jpeg)\n\nIn addition to cryptocurrencies, blockchain technology has given rise to multiple decentralized compute and storage networks. These networks seek to allow individuals and companies to buy and sell compute resources from one another through the exchange of digital tokens. They come in many different forms and present a significant opportunity for prosumers to host a wide range of resources and “mine” tokens that commoditize those resources. Although there are significant advantages to these networks, enterprises must have confidence that their data is protected. This cannot be accomplished in a decentralized manner without hardware that is secured from adversarial operators. (Breuer, Bowen, Palomar, & Liu, 2018)\n\n### Multi-Sided Platforms\n\nIn recent years multi-sided online platform models have been utilized by companies such as Ebay, Amazon, Uber and AirBnB. These platforms match customers with sellers by using various auction systems. Uber gives the user a predetermined price for the various levels of transportation services while AirBnB allows the host to dictate the price for the service. Many of these systems have successfully disrupted oligopolistic markets by linking consumers with sellers in a way that is user-friendly, simple and efficient.\n\nDecentralized cloud platforms follow similar multi-sided platforms that “get two or more sides on board and enable direct interactions between them.” (Hagiu & Wright, 2015) These business models lower the barrier to entry for computation and storage resource providers by providing an auction for cloud services on a common platform. The auction systems also drive competition amongst providers forcing them to continually upgrade their systems to ensure their business. The results are lower costs and better performance for the user.\n\n### Bitcoin Auction and Competition\n\nBitcoin is the first fully decentralized autonomous computational platform that links the miners who process and secure transactions to those that use hold and spend Bitcoin. The Bitcoin platform, as most Proof-of-Work cryptocurrencies, operates as a randomized auction where a right to win the auction is allocated based on the amount of relevant computational power on the system. The auction winner is awarded a preset number of Bitcoin that diminishes over time. Since the chances to win the Bitcoin are increased with the amount of computation on the system and the value of those rewards are so great, it has led to an extremely competitive environment that is 40X more powerful than all the [TOP500 super-computers](https://www.top500.org/lists/2018/11/) combined. To put this into perspective the Bitcoin system is running at around 40 GW of power while AWS (Amazon Web Services), which has over 50% of the public cloud services market, is running at most 8 GW of power to its servers. This means that the entire cloud market is under ½ of the power being supplied to the Bitcoin network.\n\nThe Bitcoin auction system rewards computational power with Bitcoin, but the work being done is specific to securing the transactions on the system. In this manner, the attribute that is being measured and verified by the platform auction is this specific computational power that is only relevant for BTC and other SHA-256 coins. Decentralized clouds environments, by necessity, must measure many variables to reliably provision a variety of workloads efficiently. The variables include storage capacity, computational power in its various forms, speed of systems, bandwidth, and latency. Once the decentralized network can measure the different variables, verify each of these components, while efficiently updating state to the rest of the network then an automated auction platform can be built around those variables. (Wang, Tianfield, & Mair, 2014)\n\n### Specialization of Hardware\n\nThe wide-scale adoption of all decentralized networks depends on access to computer equipment and systems that are more secure, efficient, and reliable while being less expensive than Cloud and Artificial Intelligence installations owned by major corporations. [Node Haven](http://nodehaven.com) is architecting a modular, AI and cloud compute system, that will be fully secured from the base silicon all-the-way up the entire platform stack. This architecture will enable enterprises with the capability to handle classified, confidential, and critical data with uncompromised storage and processing integrity. Based on Gen-Z memory architecture, Haven hardware will enable cyrptocurrency miners and datacenter operators to compete in Cloud and AI markets, whose annual revenue is over 30 times larger than the value of all cryptocurrency mined coins in 2018. By effectively securing the entire stack, [Node Haven](http://nodehaven.com)’s architecture removes the barrier to entry to compete for these commoditized compute and storage services, creating an arms race condition between traditional core datacenter build-outs and emerging class of crypto-mining power houses.\n\nA decentralized cloud environment opens up competition amongst hardware vendors, to beyond the few corporation (Amazon, Google, Microsoft, Alibaba) capable to procure and build-out hyperscale datacenter to potentially 1000’s of providers all with varying level of expenses, facilities and capital resources. Open-source hardware consortiums, such as Gen-Z, flourish in this climate as they present a way for far superior systems to be built. They also allow compatible parts to be put into competition amongst manufacturers, further driving down capital costs for participants.\n\nCompute, in the form of Cloud, has gone through a period where centralization has provided a few large companies significant advantages. In recent years, these incumbent companies have built a competitive edge over the entrant compute providers through their use of accelerators. These accelerators come in the form of GPUs, FPGAs, and ASICs, such as TPUs (Tensor Processing Units), that are similar in some ways to modern cryptocurrency mining equipment. In addition to Cloud offerings, accelerators are used in search engines, high performance computing (HPC) as well as artificial intelligence environments. Although some of the equipment is easily accessible in the form of GPUs to consumers, the proprietary applications that integrate the different devices are limited to monopolistic scale installations that seek to maintain their advantage over the competition and maximize profit margin.\n\nAs the decentralized Cloud and AI marketplaces mature the ability to target specific algorithms on a global basis will drive specialization of hardware. Because of this specialization, the hardware landscape will transform much the same as did Bitcoin mining hardware. Accelerators (GPU, ASIC and FPGA), because of their speed and efficiency, will replace the server CPUs that traditionally processed data.\n\n[NODE Haven](http://nodehaven.com) will address other forms of monopolistic control in the compute market. For example, the compute and storage miners will utilize the consortium-led memory architecture called [Gen-Z](http://genzconsortium.org). [Gen-Z](http://genzconsortium.org) allows multiple types of compute resources to access memory in ways that bypass the CPU or more specifically the server processors. This will release the stranglehold that the CPU manufacturers have over the server market and reduce reliance on any one company for the system to function. This follows a fundamental core value of [NODE Haven](http://nodehaven.com) where decisions and incentives are made that encourage competition. This results in geographically diverse hardware deployment, increased speed, ease of software development, and lower cost for the end user which in turn increases adoption of the network. All of this leads to adoption of the token.\n\n!(https://hackernoon.com/hn-images/1*9NyGTdFl4GK_TM9gvXa5rg.png)\n\nHaven Network Effects\n\n### Haven Network and Platform\n\nTo enable the adoption of Haven hardware, Cloud and AI purposed machines will come pre-configured to operate on the Haven Network and Platform ready to earn NODE tokens. The Haven Network is a distributed/decentralized computing system that is accessed through the Haven online platform. The Haven platform is a user-friendly marketplace for compute and storage resources that utilizes the NODE token as exchange for services provided.\n\nThe goal with the Haven Network and Platform is to create a computer system that utilizes geographic market dynamics to drive equipment installations and allows public users to access those resources through a competitive and informed marketplace. Equipment owners, using the Haven back-end, set prices in NODE tokens for the resources that they own and operate. In places of high demand, rent and electricity cost we would assume that the price set by the equipment owner will be higher. In places of high demand but low rent and electricity there might be higher prices, but once the arbitrage is identified a competitor may build a facility within the area to increase the supply. In this way we expect supply to meet demand efficiently across the network in such a way that a purely centralized company would never be able. In this way, equity cannot compete with a token.\n\nThe NODE token effectively commoditizes compute & storage while allowing market demand & economics to choose where the installations are built. In much the same way, Satoshi gave the miners the power to process the transactions for transfer of value, the NODE token removes the mediation and power that these monopolistic Cloud and AI service providers would have over the processing of our data as well as the insights gained. The mediation of intelligence will only allow them to grow and increase in power. Based on recent performance of some Cloud providers their value is beginning to rival the GDP of even some countries. (Wilkons, 2018) The proposed solution distributes the power to the participants and allows the consumer to reap the rewards of the market efficiencies that are introduced.\n\nThe Haven Network will map all compute nodes on the system and authenticate every piece of equipment to ensure quality control. The Haven Platform will use this information to optimize applications deployed over the network. This will drive down application owner’s costs by serving exactly how, when, and at what redundancy needed. The flexibility provided to the application owner will give them the ability to scale their application as they grow and distribute existing applications globally throughout the network to serve the edge in a way that could not be replicated in any other fashion.\n\nThe Haven Platform will be deployed to Haven Network in a distributed manner that will not depend on any one specific machine or geographic area. This gives the opportunity for latent capacity to be used for optimization of the network even while waiting for an application to take advantage of their equipment. The equipment owners that are optimal for the deployment of the platform will be compensated in NODE tokens. This will ensure that the Haven Platform and Network are not subject to outages and are thus more resilient than centralized Cloud providers.\n\n### Conclusion\n\nIn the past network effects were primarily used to forgo the commoditization of the product or service so that one company can produce monopoly effects and extract value from the consumer. Token economies, such as one established by the NODE token, are however much different. Network effects within token economies open competition across business processes that were moats protecting monopolies. The Haven Network and Platform would allow entrants to compete for Cloud facility ownership, platform service development as well as hardware manufacturing.\n\nThe synergy between the hardware manufacturer and associated network building has been well studied. (Katz & Shapiro, 1994) Some of the most popular video game networks such as Nintendo and Sony have relied on a dual hardware and software model. In recent years, these video game systems have also incorporated online networks to allow their users to play video games with each other. The value of these networks is derived in part from the ability for the manufacturer to build superior equipment at a lower cost.\n\nIn addition to the synergy gained by designing the hardware and network together, we also introduce a network of equipment operators in the form of cryptocurrency miners. This added layer of competition will transform the way that cloud hardware is deployed. This complementary user group has caused the Bitcoin system to become larger than all supercomputers combined while they only target a combined $6B worth of total mined coins based on August 28th, 2018 prices. By allowing miners to compete in the Cloud and AI markets that are > $200B market it is presumed that an even greater ramp-up in the computational power will ensue. This will forever change cloud landscape and will have vast effects on humanity.\n\nCurrent Cloud providers purchase hardware and choose installations based on a strategy developed by the centralized corporation. The Haven Network, by introducing the competitive cryptocurrency mining model, relies on the community to build installations based on supply and demand. The monopolistic company with few competitors is incentivized to maintain high profit margin in areas of high demand. In contrast, the Haven Network promotes competition by allowing individuals and groups to set their own prices for resources. Participants will have the ability to identify areas with higher margins to build competing installations to serve in a market efficient manner. The result is more supply and less cost to the end-user. This in turn drives more end-users to the system creating more demand which is met with more supply.\n\nTo drive end-user adoption the platform will be open for third parties to implement their own proprietary Cloud, AI and IoT solutions and sell them on the platform. This has the potential to create a far greater set of tools than even AWS or Azure have on the platform while also incentivizing those companies to actively promote adoption of their solutions packaged with compute and storage on the underlying [Haven Network](http://nodehaven.com). Ultimately, we believe that today’s large Cloud providers will move their platforms over to the [Haven Network](http://nodehaven.com) due to its performance, cost and geographic advantages. It will be difficult to remain independent of the mature [Haven Network](http://nodehaven.com) when thousands of entrepreneurs are building facilities across the globe in a way that is impossible to recreate as a stand-alone monopoly. **The network effects will be simply too great to overcome.**\n\nWritten by Charles Dusek, Co-Founder of Node Haven.