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The recent Microsoft outage shows how vulnerable centralized systems are. The widespread crash of Microsoft’s Windows operating system worldwide is being seen as a validation of blockchain and decentralized technology.
“The Microsoft outage highlights the weaknesses of centralized systems; a single point of failure can lead to a widespread outage,” Zain Cheng, chief technology officer at Web3 development firm Horizen Labs, told.
As Cheng noted, the outage was widespread. On July 18-19, businesses, supermarkets, publishers, airlines and banks were brought to a standstill with 8.5 million systems experiencing a blue screen of death.
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In the aftermath, technical issues have been blamed on everything from CrowdStrike cybersecurity software to a regulatory deal with the European Union. However, the crypto community sees the problem as a more fundamental one: centralization.
“Everyone knows that single points of failure are dangerous, but these incidents are a reminder of the seriousness of these failures, and they only get worse as systems get more complex,” Cheng added. “In contrast, decentralized blockchain networks like Bitcoin and Ethereum remained fully operational during the outage, highlighting their resilience.”
“This incident demonstrates the benefits of decentralization; distributed trust and verification processes reduce common errors and increase system stability,” Cheng said.
Melting Trust
Regardless of the narrative and the exact nature of the system flaw, Microsoft and CrowdStrike are deflecting blame elsewhere.
It can be difficult to satisfy the public if their PR efforts fail to change public perception. Even if these companies’ efforts to change public perception fail, Levitt says there’s not much an unhappy public can do. “Ultimately, the CrowdStrike fiasco will lead to some erosion of trust in legacy systems, but there’s not much the average consumer can do — these are services you rely on every day, and there’s often no viable alternative (for now),” Levitt said. Cheng once again compared centralized and decentralized systems in terms of reliability.
“Public trust in centralized services was already steadily eroding, and the CrowdStrike crash only added to the frustrations. Critical services like airlines, banks, and stores were shut down, but DeFi [decentralized finance] continued to operate on decentralized platforms,” Cheng said.
Developers will need to invest significant time and effort into creating decentralized alternatives to existing systems. “As Web3 matures, the reliability and security of decentralized alternatives will become even more important. Individuals and businesses are increasingly looking for reliable and resilient solutions to meet centralized system failures,” Cheng said. “These events will likely increase interest and development in durable, decentralized alternatives, such as those built on blockchain networks,” Levitt said.
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