Blockchain is a recent technology and is often termed as a distributed ledger technology. Enterprises are looking towards deployment of distributed ledgers and as a result of this some of the largest IT providers have launched what is called Blockchain-as-a-service (BaaS). This service enables the user to test the Blockchain technology, without the cost and avoid the risk of deploying in- house developers. First. Let us explain “What is Blockchain-as-a-service?”.
What is Blockchain-as-a- Service?
When an entity sets up all the Blockchain technology for your enterprise then that is termed Blockchain-as-a-service(BaaS). So, the company that offers BaaS, will provide all the Blockchain connected nodes. In fact, the provider of BaaS offers the backend for your business. However, there are some concrete reasons for companies to choose Blockchain.
What are the reasons for adopting BaaS?
There are 2 reasons why BaaS offerings are of particular interest to companies. The first reason is that some companies do not want to utilize the services of in-house developers and the second reason is that they are not willing to invest in new infrastructure.
The second reason can further be substantiated by facts. These are stated in the words of Bill Fearnley Jr, IDC’s Research Director for worldwide Blockchain Strategies. He says that there are few people with multiple years of deep, hands-on experience who are available.
Moreover, Blockchain technology offers a new paradigm shift in the way information is shared. The main purpose is, of course, to save admin costs and precious time for tech vendors.
Furthermore, BaaS offerings prove to be beneficial for their clients as they can simply make use of their Cloud providers, who can provide them with this nascent technology.
Finally, Fearney says that another reason for the adoption of BaaS is that the companies can cash in on the lessons learned by the provider, to incorporate security in their systems.
Next we explore the question “Is Blockchain a Big Deal?
Is Blockchain a Big Deal?
Blockchain is spreading across the entire fabric of our society. In the words of Gartner, Blockchain is the second-largest-searched-for term in Gartner.com. Moreover, if we just look at how ICOs are rising in popularity, then we find a market that rose to over $4 billion in just 2017.
According to Accenture, the potential for Blockchain in banking lies in
- 70% potential cost savings on central finance reporting
- 30–50% potential cost savings in compliance
- 50% potential cost savings on centralized operations
- 50% potential cost savings on business operations
According to Research and Markets, “The global blockchain market is projected to witness a significant CAGR of 71.46 % during the forecast period to reach a total market size of US$4.401 billion by 2022, increasing from US$0.297 billion in 2017. Drivers include transaction transparency and data incorruptibility.
Blockchain has proved to be disruptive for a wide range of industries like banking as well as in other domains like Cybersecurity, Government, Music and Arts and Academia. However, the most prominent among the above happens to be banking. In the words of IBM, 91 % of banks will invest in blockchain solutions in the area of deposit-taking by 2018.
BaaS is Proving to be Useful for Larger Enterprises because BaaS providers play the role of consultants for the technology. We will next provide insights on how BaaS is useful for larger enterprises.
First and foremost, we must start with Microsoft. The company was one of the first software vendors to offer BaaS on its Azure Cloud platform. In fact. Azure is supportive of many Blockchain protocols such as the Smart contract-based protocol like Ethereum, Unspent Transaction Output based protocol (UTXO) like Hyperledger. The Hyperledger supported by Azure are R3 Corda, Hyperledger Fabric, Chain Core and BlockApps.
Hewlett Packard Enterprise (HPE) is another tech vendor that offers BaaS. The SaaS on Blockchain that is offered by HPE is based on Corda from R3.
IBM also has its own BaaS. It is a Hyperledger BaaS system based on the Bluemix Cloud platform. Here the emphasis is on private consortium Blockchain.
Oracle has its BaaS that is based on the Hyperledger project from the Linux Foundation. SAP also has a BaaS offering based on the Leonardo Digital platform.
Importance of BaaS
“Technology becomes truly useful when it becomes invisible.” is what Deb Mukherjee, VP, Strategy and e-business on demand – IBM Global Services division stated.
BaaS enables Blockchain technology to be important because it provides this required invisibility. In fact, it is better described as translucent and not invisible. The BaaS provider will take care of the dirty back end of technology, without the business having to delve into the nitty gritty of the technology. BaaS is all about setting up an option for you – setting up the nodes for you.
In terms of demand, we have 23 million unique addresses just on the Ethereum blockchain. The fact that the demand for Blockchain connection outpaces the supply by 88,462 % makes a strong case for the demand for BaaS.
Despite a strong demand for Blockchain, there are still some drawbacks.
Drawbacks of Blockchain and Solutions
There is no doubt that Blockchain is an extremely impressive technology, but there are issues like spawning of computers – with the rise of the world of crypto mining. The solution lies in offering Proof-of-stake (PoS) and the Casper protocol of Ethereum which transforms the current Proof-of-Work (PoW) to Proof-of-Stake.
The next issue is “When will Blockchain attain the capability to handle 100,000 requests per second?” Today, strong blockchains like Ethereum are unable to handle the explosive growth of adoption.
Plasma offers a solution for this second issue in the form of a technique called sharding along with Lightning Networks (Raiden) that helps Ethereum to solve this scalability problem. This effort is led by Vitalik, the most prominent leader of Blockchain.
The third issue is the number of tokens that are needed by Blockchain. Polkadot is the project from Dr Gavid Wood that is trying to offer a solution. This solution comes as token interoperability, while using PoS. This way Blockchains will act seamlessly with each other.
We conclude by saying that the decentralization of blockchain is still not achieved fully and that remains the primary concern. BaaS offers the means to reach that final destination.