News
Blockchain-as-a-Service (BaaS): Meaning and Main Players
What is Blockchain-as-a-Service (BaaS)?
Blockchain-as-a-service (BaaS) is the creation and management of third-party cloud-based networks for companies that build blockchain applications. These third-party services are a relatively new development in the growing field of blockchain technology. The application of blockchain technology has gone far beyond its most well-known use in cryptocurrency transactions and has expanded to address secure transactions of all types. As a result, there is a demand for hosting services.
Key points
- Blockchain-as-a-service (BaaS) refers to third-party cloud-based infrastructure and management for companies building and operating blockchain applications.
- BaaS works as a sort of web host, managing the back-end operations for a blockchain-based app or platform.
- BaaS could be the catalyst that leads to widespread adoption of blockchain technology.
Understanding Blockchain-as-a-Service (BaaS)
BaaS is based on software as a service (SaaS) model and works similarly. It allows customers to leverage cloud-based solutions for build, host and manage theirs Blockchain apps and related functions on the blockchain. At the same time, the cloud-based service provider keeps the infrastructure agile and operational.
As an extension of the broader blockchain ecosystem, BaaS is seen as a driver of blockchain adoption across businesses.
Major players in the BaaS space include:
- Microsoft: Partnered with ConsenSys to introduce the Ethereum blockchain as a service on Microsoft Azure in 2015.
- Amazon: Amazon Managed Blockchain was introduced, a service that “makes it easy to build and manage scalable blockchain networks” using open source frameworks, including Ethereum and Hyperledger Fabric.
- R3: A consortium of global financial institutions that has produced a distributed financial ledger called Corda.
- Payment: Specializes in sending and receiving payments between companies.
- Hyperledger Foundation: A non-profit organization that created Hyperledger, an open source distributed ledger that can be customized for enterprise uses.
- IBM: Used Hyperledger Fabric to build the IBM Blockchain Platform, its blockchain-as-a-service.
Consumers and businesses are increasingly embracing blockchain technology. However, the technical complexities and operational overhead involved in creating, configuring, and managing a blockchain and maintaining its infrastructure often act as a barrier.
BaaS providers offer external services that allow a user to set up all the necessary blockchain technology and infrastructure for a fee. Once it is set up, the provider continues to manage the complex backend operations for the customer.
The BaaS operator typically provides support activities, such as bandwidth management, appropriate resource allocation, hosting requirements, and data security features. The BaaS operator frees up customers to focus on their core work: the tasks they need the blockchain for.
Blockchain-as-a-Service (BaaS) Example
Below is a graph showing the working model of Blockchain-as-a-Service Hyperregister Cello is a blockchain module toolkit and BaaS utility system that provides an operational dashboard for implementing, managing, and operating a blockchain.
Image by Julie Bang © Investopedia 2020
In fact, the role of a BaaS provider is similar to that of a web hosting provider. The website host creates and runs all the website content on their own servers. They may hire support staff or sign up with an external hosting provider like Amazon Web Services or HostGator. These third-party companies take care of the infrastructure and maintenance issues.
BaaS could be the catalyst that leads to broader and deeper adoption of Blockchain technology in various industries and businesses. Instead of building and managing their own blockchains, a business, large or small, can now simply outsource the technically complex work and focus on their core business.
Is Blockchain SaaS?
Blockchain is similar to software as a service, programmed and operated by an entity that rents its software and services.
What is the future of blockchain as a service?
Enterprise blockchain solutions continue to be developed, with many companies building in-house solutions or turning to blockchain services. It is likely that many more will look to blockchain solutions and turn to BaaS to keep development costs low.
What is an example of a blockchain service?
The Hyperledger Foundation has created an open-source blockchain that businesses can build on to meet their specific needs. IBM has used Hyperledger Fabric to create its Blockchain Platform, a blockchain service it offers to businesses.
The bottom line
Blockchain as a service is a business solution to the costs of developing a blockchain for a specific business or use. Many large technology companies have created and marketed this service, and many more are being created.