Earlier this week, an outage at Amazon Web Services (AWS) led to temporary downtimes for a vast number of web apps and services, including end-to-end encrypted messenger Signal. In response, many technologists pointed to the situation as yet another example of the supposedly decentralized internet’s reliance on centralized infrastructure.
While crypto is supposed to be a decentralized alternative to much of that centralization, particularly in terms of financial applications, even that segment of the web experienced large amounts of downtime. Centralized exchanges, such as Coinbase and Robinhood, were inaccessible for a period of time, which should not be viewed as too surprising, but it didn’t stop there.
AWS is down and then the internet stops working. But the blockchain, it never goe … wait a minute. Scratch that. This sector is a joke. Everyone preaching decentralization and censorship resistance but in reality … it's all 100% reliant on the cloud. pic.twitter.com/6yUHP5bll3 — Lefteris Karapetsas (@LefterisJP) October 20, 2025
Actual crypto infrastructure, such as web-based wallets and so-called decentralized finance (DeFi) applications, was also inaccessible. Perhaps most troubling, entire blockchain networks stopped working, as the vast majority (all?) of the nodes on those specific networks were running on AWS.
The True Innovation of Blockchain for Fintechs
Financial decentralization was the key innovation made by Satoshi Nakamoto with the launch of the Bitcoin blockchain in 2009; however, decentralization was not the end goal, it was a means to an end. Previously, centralized digital cash systems were shut down by governments or simply failed and went bankrupt over time, so the use of the decentralized blockchain structure is what enabled Bitcoin to persist as an experiment with a new monetary and financial system. In this way, Bitcoin is often compared to the peer-to-peer file sharing protocol BitTorrent, while previous digital cash systems are closer to Napster in their designs.
For fintechs that are interested in crypto, much of the innovation of blockchain technology has to do with regulatory arbitrage. Users are able to onboard themselves to blockchains much more easily than traditional financial institutions, as the process works much more like downloading an app rather than signing up for a bank account or applying for a credit card. In this way, fintechs appear to be more interested in the lack of anti-money laundering regulations around blockchain-based activity than anything else.
Well yeah, they need to call it a stablecoin and say blockchain a few times so they don’t have to do KYC/AML compliance on every transaction. — Kyle Torpey (@kyletorpey) October 10, 2025
Coinbase’s Base blockchain is a clear example of this sort of phenomenon, as they collect all of the fees generated by the Ethereum layer-two network they developed without having to collect detailed personal information about the users. Of course, Coinbase claims it will increase the level of decentralization found on the Base blockchain over time, allowing other parties to collect fees for participating in what’s known as transaction sequencing.
Notably, Base is one of the blockchains that became inaccessible during the AWS outage earlier this week.
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