Blockchain-as-a-Service (BaaS) – As more and more organizations take a close look at blockchain, implementation-related questions come up. Building a blockchain network involves complexities. However, cloud computing has come to aid! Blockchain-as-a-Service (BaaS) platforms are the results of the convergence of cloud computing and blockchain. What are BaaS platforms, and what purpose do they serve? How can one use a BaaS platform? What are their pros and cons? Read on, as we answer these questions.
A brief recap of blockchain
As we have explained earlier, blockchain is a new technology. Cryptocurrencies are its most popular application, however, blockchain has use cases in supply chain management, education, financial services, etc. Blockchain offers the following values:
• Ease of sharing information via the distributed ledger of blockchain;
• Security via digital signature and encryption;
• Immutability via cryptographic hash functions and consensus algorithms;
• Efficiency via autonomous smart contracts.
A quick recap of cloud computing before we talk about BaaS
You already know about the cloud computing platforms like AWS (Amazon Web Services), Microsoft Azure, and Google Cloud Platform. Cloud computing providers offer computing resources over the Internet, and companies and consumers use them. There are 3 types of cloud offerings, which are as follows:
Infrastructure-as-a-Service (IaaS): This kind of cloud offering includes computing infrastructural resources like servers, networking, etc. Users build their applications from the ground up. Amazon EC2 (Elastic Compute Cloud) is an example of this.
Platform-as-a-Service (PaaS): Cloud computing providers offer servers, networking, operating system, middleware, runtime environment, and various cloud-based services. Users code their applications and bring their data. AWS Elastic Beanstalk is an example of this.
Software-as-a-Service (SaaS): Many software providers now provide their products over the Internet via cloud computing platforms. Users don’t need to install any software. Gmail is a popular example of this.
Cloud computing offers many advantages, e.g.:
• It eliminates upfront investment in costly IT infrastructure.
• Cloud computing providers offer pricing models like “Pay-as-you-go”, which means that consumers only pay for what they use.
• Users don’t need to work on provisioning and managing IT infrastructure since the cloud provider handles that.
The background: Why BaaS?
If you develop a blockchain application on a public blockchain network like Ethereum, then you focus on application development. You don’t need to build the network. Such blockchain development projects don’t require you to focus on the IT infrastructure. You build your app on the existing blockchain network like Ethereum.
Businesses often can’t build their applications on public blockchain networks. Such blockchain networks allow everyone to join, therefore, businesses can’t ensure data privacy for their sensitive information. Historically public blockchain networks have struggled with scalability. Their transaction throughput has not been high enough. Developments and network updates are seeking to address these problems and we are seeing newer blockchain networks launch and increase competition.
Businesses use enterprise blockchain frameworks to develop their blockchain applications. They need to build their blockchain network from the ground up. This involves servers, networking, etc. Blockchain is a new technology, and building an entire blockchain network from scratch is costly and time-consuming.
Enter BaaS platforms. A BaaS platform utilizes cloud computing. Such a platform allows customers to build, deploy, and operate their enterprise blockchain networks and applications. A BaaS provider takes care of the IT infrastructure of the blockchain network, whereas, the customer develops the application.
How a BaaS platform works
Think of a web hosting provider. Assume you plan to build a website. You sign-up with a web hosting provider like InMotion, and you choose a hosting plan.
The web hosting provider provides you with the computing resources like servers. In some cases, they might install relevant software. E.g., the hosting provider might install WordPress, the popular open-source CMS (Content Management System) for you. The provider might even complete some preliminary configuration-related tasks.
You build the website according to your requirements. You provide the necessary content. The web hosting provider supports you for any infrastructure-related issues, and it manages the infrastructure.
Now, let’s assume that you are building an enterprise blockchain network. You sign-up with a BaaS provider. It provides you with the necessary computing resources like servers on the cloud. The BaaS provider might install an enterprise blockchain framework of your choice, e.g., Hyperledger Fabric.
You build your blockchain network, and you build your blockchain applications on top of it. Naturally, you bring the data. You manage the application, whereas, the BaaS provider manages the underlying IT infrastructure on the cloud.
The pros and cons of BaaS
A BaaS platform can offer the following advantages:
Cost savings: You don’t need to invest upfront in IT infrastructure since the BaaS provider offers computing resources.
Time-to-market: Your time-to-market improves since you don’t need to manage the IT infrastructure.
Ease of use: Blockchain is a new technology, however, there are two sides to this! Blockchain application development can be complex. You can’t modify smart contracts after you deploy them, which makes the quality assurance activities very crucial.
Blockchain application development projects use niche technologies. Finding the right developers can take time. However, these challenges belong to the application development aspect only.
The other aspect is the IT infrastructure. You need to take care of servers, P2P (peer-to-peer) networking solutions, encryption solutions, consensus algorithms, etc. That’s a lot of work, and BaaS providers take care of these.
Effective use of software development manpower: A BaaS platform manages the IT infrastructure side, therefore, you can focus on application development. Your architects and developers can concentrate on implementing the business logic.
The disadvantage of using a BaaS is that you need to store your data on the cloud infrastructure controlled by the BaaS provider. Many companies need to comply with stringent regulations concerning the location of data storage. If you operate under such regulations, then you need to exercise caution before choosing a BaaS provider.
The global market for BaaS
With the growing interest in blockchain, many companies are looking at BaaS platforms keenly. They expect that BaaS platforms will make it easier for them to implement blockchain. As a result, the market for BaaS platforms is growing.
A MarketsandMarkets report estimates that the global market for BaaS will grow from $350 million in 2017 to $15.455 billion by 2023. That’s an impressive CAGR of 90.1% during the 2018-2023 period!
The following are a few key BaaS providers:
• NTT Data
Blockchain promises a lot, however, implementing enterprise blockchain can be hard. Not only application development but you need to manage the IT infrastructure. Cloud computing can be of help. BaaS (Blockchain-as-a-Service) providers use cloud computing to make enterprise blockchain implementation easier for companies. BaaS platforms offer several advantages, and they have a growing market. Analyze your requirements carefully, and check whether a BaaS platform can be of help.
See companies and suppliers of Blockchain Cloud Computing & Infrastructure.