The purpose of this master thesis is to define cloud computing and to introduce its basic principles. Firstly, the history of cloud computing will be briefly discussed, starting from the past and ending up to the current and future situation. Furthermore, the most important characteristics of cloud computing, such as security, privacy and cost, will be analyzed. Moreover the three service and three deployment models of cloud computing will be defined and analyzed with examples. Finally, the advantages and disadvantages of cloud computing will be evaluated so as to help understand why the structure of cloud computing is worth using. When referring to cloud computing, the first thing that comes to mind is the matter of security. So, in the second part of my master thesis, the security in the service models Infrastructure-as-a-Service (IaaS), Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS) will be analyzed. Security benefits as well as security risks will be thoroughly examined. Cloud computing is a new internet-based technology enabling users to access resources via the Internet. To do so, Internet users have to pay for the services they receive depending on the use. There are two pricing models. The first pricing model is based on pay per use while the second on subscription. As a result, many billing factors play a really important role in the way a user is charged. Charging customers for a cloud service automatically makes the billing system vulnerable to malicious users, who will possibly take advantage of the vulnerabilities of the service in order to attack and use it for free. Thus, privacy is violated.