There are two emerging usage models for cloud use that I am seeing emerging: Opaque Clouds and Transparent Clouds.
Opaque Clouds are clouds where users store pre-encrypted data to the cloud, such that the cloud operator has no visibility into the users' data. In this model, the encryption keys are owned and managed by the end user, and the cloud operator is not able to provide any value-added services that require access to the plaintext of the user's data.
Transparent Clouds are clouds where users submit data to the cloud (which may be encrypted during transmission and/or when stored), but the cloud operator is capable of having access to the users' data. In this model, the cloud operator either manages the encryption, or has access to the key repositories where the users' keys are stored. While transparent clouds can still be secure, there are additional security risks, as the cloud operator fundamentally must have access to the users' plaintext.
Both of these models have merits and use cases where they make sense. For example, if a first transparent cloud is using a second cloud to provide a second geographic location for data storage, the first cloud may store data into the second cloud in opaque fashion. A second scenario may be where a cloud user stores data to a cloud for the purposes of data sharing with another trusted user, but the cloud itself is not trusted. In this case, the keys would be shared between the two users, but the cloud would be unable to see the data stored.
Ultimately, I believe that opaque cloud storage will co-exist with transparent clouds, as both can operate concurrently with the same infrastructure. (translucent clouds?) As different use cases determine the security sensitivity of the data, and many of the cloud provided value added services (search, indexing, discovery, data mining, format conversion, etc) are quite compelling, it's going to be an interesting set of trade-offs between cloud security and cloud value.
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