What is BaaS and Who provides it?

Blockchain as a Service (BaaS) is an intriguing trend in the blockchain ecosystem that aims to ease adoption for enterprises

Ramy Caspi
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Blockchain deployment is still gathering steam, but cloud providers are already moving to offer it as an enterprise service. That could help companies who don't want to take on the expense of a new architecture or find developers to deploy and maintain it.

Fascinating new technologies are emerging these days. Everybody talks about cloud, containers, big data and machine learning. Another disrupting technology is blockchain. You might have heard about blockchain as the underlying infrastructure of Bitcoin. But Bitcoin is just the tip of the iceberg.

While heavily hyped, blockchain technology has the potential to offer a new paradigm for the way information is shared; tech vendors and companies are rushing to figure out how they can use the distributed ledger technology to save time and admin costs.

A Deloitte survey conducted towards the end of 2016 concluded that Blockchain technology would become a crucial business focus for most industries in 2017. The survey, which involved 308 senior executives who were knowledgeable about blockchain, found that most of them placed blockchain among their organizations’ highest priority. 36% were convinced blockchain has the potential to significantly enhance system operations, by either increasing speed or reducing costs. 37% recognized blockchain’s formidable security features as the main benefit. The remaining 24% were of the opinion that it has the potential to facilitate new revenue streams and business models. While there is a consensus amongst enterprise tech decision makers that blockchain has immense potential to reshape entire industries, the adoption plan is not as clear or direct.

Building enterprise solutions powered by blockchain is not a simple undertaking. The setup and subsequent operation of a blockchain environment involves major development and infrastructure challenges. Blockchain as a Service (BaaS) is an intriguing trend in the blockchain ecosystem that aims to ease adoption for enterprises. The idea behind it is that customers can leverage blockchain cloud solutions to create a network of their own applications and smart contracts while the cloud provider handles all the heavy lifting needed to keep the infrastructure operational.

BaaS provides blockchain capabilities as a first class Platform as a Service (PaaS) services. From a functional perspective, a BaaS model enables developers to create solutions that effortlessly combine the aptness of blockchain with typical infrastructure and platform services like storage, messaging, middle-ware, and other functional building blocks of complex software solutions. Additionally, BaaS facilitates a seamless model to manage and scale a blockchain topology without the deployment of any proprietary infrastructure.

BaaS offerings are particularly attractive because many enterprises can look to their current cloud providers to offer them use of the nascent technology.

Paul Brody, Ernst & Young's (EY) Global Innovation Leader for Blockchain Technology, said the BaaS platforms will make it easier for companies to both test and deploy distributed ledgers.

"We're testing out all the development and deployment offerings of these different clouds and we've just launched our OpsChain [operations and supply chain] offering on SAP's cloud platform and SAP Leonardo," Brody said via email. "Our hypothesis is that while the BaaS/SaaS...deployment platforms are very useful and make management and deployment easy, it's integration to ERP that will make it possible for enterprises to take full advantage of the value created by blockchains."

Benefits of BaaS

Traditional Ledgers are centralized. You have some person or thing that owns it, usually a third party or a middleman that writes it down and approves. Blockchain safely distributes these ledgers across multiple parties and do not require any middleman. This is kind of one of the big innovations of Blockchain and why it is super-important. The technology maintains multiple replicas just like a peer-to-peer file sharing system. The same ledger across all. Anyone changes one and it doesn’t actually affect the others unless it’s accepted.

Decentralization has great benefits and this fundamentally changes processes and models that eliminates intermediary, so you lose those middlemen and allows industries to redefine or create new business models. It reduces fraud so no people in the middle are able to change things, so it’s highly secure and transparent, making it nearly impossible to change historical records, because if you change something it should actually disseminate all the way through and it will not verify. It increases speed and efficiency so it simplifies the transaction by using algorithms. It increases revenue and savings as you eliminate the middleman, you eliminate some paperwork and you save a lot of time and money.

However as you all know removing a central authority is risky, so it is great if you’re the central authority. Now you’re like hey we’re fine we’re good, but what happens if you have a lot of other people putting their fingers into your database? So where’s the master who maintains that record? That is a classic crypto problem where you have a lot of generals that are surrounding and trying to attack and a couple of those generals might actually not really want to attack, they might be on the other side and they might put out information that is false and corrupt the entire attack. So how do you actually create an encryption algorithm that ensures this doesn’t happen?

Blockchain actually solves all of these problems. It replaces authority (Centralized figure) with cryptography (security). It takes all the people parts out. What is needed is an electronic payment system based on a cryptographic proof instead of trust. Allowing any too willing parties to transact directly with each other without the need of a trusted third party

There are many examples of blockchain applications already being released as a service, known as Blockchain as a Service (BaaS). These include but not limited too, the IBM Blockchain, the Microsoft Azure Blockchain, the Amazon AWS Blockchain, and the R3 Corda Blockchain.

Amazon AWS Blockchain Technology

Amazon is literally everywhere. This tech giant has its deep claws in almost every global economic interface, ranging from real estate to food to pharmacies and even to blockchain technology. Amazon (AWS) – In May of this year, Amazon announced a collaboration with the Digital Currency Group, one of the largest investors in blockchain firms. The agreement will provide Blockchain as a Service to members of DCG’s portfolio so they “can work in a secure environment with clients who include financial institutions, insurance companies, and enterprise technology companies.” The two sides forged the partnership with the expectation of providing such a service so the blockchain providers in DCG’s portfolio can work in a secure environment with clients that include financial institutions, insurance companies, and enterprise technology companies. 

According to Scott Mullins, AWS’s head of worldwide financial services business development, AWS is working with financial institutions and blockchain providers to spur innovation and facilitate frictionless experimentation.

IBM Blockchain Technology

IBM Blockchain empowers businesses to digitize transaction workflow through a highly secured, shared, and replicated ledger. It is a public cloud service that customers can use to construct secure blockchain networks.

IBM Blockchain has joined The Hyperledger Project to evolve and improve upon earlier forms of the blockchain.
IBM Blockchain Platform
 states itself as the only fully integrated enterprise-ready blockchain platform designed to accelerate the development, governance, and operation of multi-institution business networks.

IBM claims their blockchain product is built in a highly auditable way to track all of the activity that happens within a network, which would give administrators an audit trail in the event something did go awry.

IBM claims to be the only fully integrated enterprise-ready blockchain application. Their application is designed to increase the efficiency of multi-institution business networks, and make all activities within the system easily traceable. “What the internet did for communications, blockchain will do for trusted transactions,” says IBM CEO, Ginni Rometty.

Microsoft Azure Blockchain Technology

Blockchain as a Service (BaaS) by Microsoft Azure claims to provide a rapid, low-cost, low-risk, and fail-fast platform for organizations to collaborate together by experimenting with new business processes – backed by a cloud platform with the largest compliance portfolio in the industry.

As an open, flexible, and scalable platform, Microsoft Azure claims to support a rapidly growing number of distributed ledger technologies that address specific business and technical requirements for security, performance, and operational processes. They additionally claim that their intelligent services, such as Cortana Intelligence, are able to provide unique data management and analysis capabilities unlike any other platform offering. 

Recently, Microsoft became a member of IC3, The Initiative for CryptoCurrencies & Contracts. With this membership, Microsoft expects to advance blockchain enterprise readiness and collaborate with the IC3 team in cryptography, game theory, distributed systems, programming languages, and system security. Offering the service will allow “customers and partners to play, learn, and fail fast at a low cost in a ready-made dev/test/production environment” according to Marley Gray, a director in Microsoft’s Cloud and Enterprise organization. In April, Microsoft also announced partnering with the R3 Consortium of 43 banks to help spur distributed ledger amongst the R3 members.

Hewlett Packard Enterprise (HPE)

Hewlett Packard Enterprise (HPE) blockchain-as-a-service (BaaS), offers a way to test the nascent technology without the cost or risk of deploying it in-house. The BaaS offerings could help companies who do not want to build out new infrastructure or try to find in-house developers, which are in hot demand. Raphael Davison, Worldwide Director for Blockchain HPE, said “Enterprises interested in blockchain are realizing that public cloud alone does not always meet their non-functional requirements. As they look to scale, they recognize that, for mission-critical processes, on-premise infrastructure must be part of the mix of traditional IT, private and public cloud that’s needed to meet the requirements of enterprise-grade blockchain workloads.”

R3 Corda Blockchain Technology

Recognizing that the power of distributed ledger technology lies in its network effect, R3 worked with the industry to build the largest collaborative group (approximately 100 financial institutions) of its kind in financial markets – the collaboration that then churned out the Corda platform.

Oracle Blockchain Cloud Services

Oracle is enabling its customers the ability to leverage its Oracle Blockchain Cloud Service. The advanced, enterprise-grade distributed ledger cloud platform helps customers increase business velocity, create new revenue streams, and reduce cost and risk by securely extending ERP, supply chain, and other enterprise SaaS and on-premises applications to drive tamper-resistant transactions on a trusted business network. Part of Oracle Cloud Platform, Oracle Blockchain Cloud Service delivers an enterprise-grade blockchain platform with industry leading resiliency, scalability and security. It is fully managed by Oracle and provides customers rapid provisioning and simplified operations with built-in monitoring, continuous backup, and point-in-time recovery. “Blockchain holds the promise to fundamentally transform how business is done, making business-to-business interactions more secure, transparent, and efficient,” said Amit Zavery, senior vice president, Oracle Cloud Platform. “Oracle Blockchain Cloud Service provides enterprise-grade blockchain capabilities and is able to accelerate innovation for on-premises ERP and cloud-based SaaS and PaaS customers. Enterprises can now streamline operations across their ecosystem and expand their market reach with new revenue streams, sharing data and transacting within and outside the Oracle Cloud.”

R3 Corda is a specialized distributed ledger platform for the financial industry that provides APIs and codes for companies to build up blockchain-like applications, and is aimed at creating more efficiency in existing global financial markets. With Corda, participants can transact without the need for central authorities, creating a world of frictionless commerce. Corda represents the biggest shared effort among banks, insurers, fund managers, and other players to work on using blockchain technology in the financial markets. As reported by CoinDesk, Japanese financial giant Mizuho Group intends to use Corda to "digitize documents like letters of credit and bill of lading invoices," a process it believes can reduce fraud, increase transparency, and enhance the shift away from paper records.

Recently, R3 released version 1.0 of Corda, the product of two years of work, code contributions from over half the consortium's 100 members, and more than $100 million in capital raised. In May of 2017, major financial institutions hedging their bets on the distributed ledger technology announced to fund the global banking consortium R3 with a whopping $107 million for global technological development and to bring Corda Enterprise to global institutions.

Rubix by Deloitte

Rubix provides solutions for clients to understand and capture the power of blockchain for their businesses. The solution allows to prototype, test and build customized blockchain and smart contract application for any use case. As Inbae Ahn, Managing Partner at AdelphaTech Software Inc, commented, "Rubix is to blockchain what AWS is to infrastructure. We can build blockchain-based apps more rapidly on Rubix because its blockchain as a service API allows us to focus on user experience and business domain.”

Rubix’s customized blockchain architecture is designed to be a fully functional private network that can be managed and administered for an organization’s needs. Rubix blockchains have a variety of powerful and customizable features and settings which are aimed to be used in enterprise environments.

SAP Cloud Platform Blockchain Service

With SAP Leonardo, a digital innovation system that meaningfully integrates next-generation technologies to help its customers redefine their business – includes ready-to-use blockchain technology and the SAP Cloud Platform Blockchain service. SAP Leonardo was originally released in January as an IoT platform, giving customers a place to track sensor data from connected assets and start to gain insight quickly. As Mike Flannagan, senior vice president of analytics at SAP put it: “Leonardo is about accelerating time to value by finding generalised, common business problems across an industry. “It’s about taking a business problem, which is specific to one customer, find the elements of that problem which are common across the industry, then defining the elements of a methodology, the technologies used to solve that problem and package those up and make them available as an accelerator for the next customers”.

Stratis

Stratis offers simple and affordable end-to-end solutions for development, testing, and deployment of native C# blockchain applications on the .Net framework. Development. The Stratis Development Platform allows businesses and organizations to develop blockchain applications in C# utilizing the Microsoft .NET Framework. The company can assist in defining blockchain strategy and in integrating its solutions and capabilities according to business requirements. Testing. The Cloud Stratis platform allows developers to quickly provision full blockchain nodes to test their applications. The Cloud Stratis platform can also provision blockchain nodes for Bitcoin, Ethereum, and Bitshares, if the developer wants to develop an application specifically for one of these existing blockchains. Deployment. The Cloud Stratis platform allows businesses and organizations to test and deploy their blockchain-based applications in the cloud, without having to maintain the network or full clients themselves. The implementation of the blockchain can be tailored to their needs and accessed via lite clients or APIs. Stratis service partners include Microsoft Azure, Ledger, Poloniex, Changelly, and more.

Blockchain as a Service (BaaS) Market Trends 

Blockchain shows significant promise for emerging fintechs to break down traditional barriers and remove friction from the value chain. Based on its very definition, blockchain will be able to accomplish this through the trust that is explicit in the centralized ledger. Trust in the financial system has always been critical, and just as trusting traditional financial institutions to safeguard accounts, extend credit, and facilitate payments has historically kept the wheels of commerce turning, the trust provided by a centralized ledger can fuel emerging fintechs. A great way to leverage the possibilities available in blockchain technology is to offer blockchain-as-a-service.

As of February 2017, “blockchain” was the second most-searched term on Gartner.com, having increased in volume by 400% in the last 12 months. Between 2015 and 2016, the number of Gartner client inquiries grew by more than 600%, proving that the interest in this rapidly developing market is increasingly exponentially.

The Blockchain market is set to grow at a CAGR of 61.5% by 2021, with transparency and immutability as the driving factors behind the exponential growth of the blockchain market.

Tech giants have jumped on the bandwagon and are providing BaaS through their built-in platforms and collaborations.

BaaS is set to grow further and become the latest revolution in the fintech industry worldwide, which is why BaaS should be on your radar if you are looking to compete in this universal movement of crypto tech and the mass adoption of blockchain technology as a service. 

Resources:

Blockchain As a Service: Providers and Trust (pdf)