Many companies eagerly await the chance to utilize the benefits of blockchain to improve their security and enhance their information infrastructure. However, even though these businesses are ready to begin transitioning to the benefits of blockchain technology, many struggle to overcome a major hurdle in the process—the resources needed to make the transition.

This is where cloud-based and decentralized solutions come into play. Companies who offer blockchain services aim to help facilitate a smooth implementation of blockchain solutions into business models for their clients.

Their goal is to help clients not waste resources attempting to create and run an independent blockchain project. Instead, these businesses can outsource this to a platform that provides the infrastructure necessary to make it happen easily.

What Is Blockchain as a Service?

 Blockchain as a service (BaaS) provides blockchain solutions that enhance businesses. What does that look like exactly? Well, right now if you wanted to incorporate blockchain into your business model, you’d need to bring on an R&D team to develop a blockchain for your company’s needs. This would be an expensive and time-consuming process that could expose your company to a massive loss if it fails.

Instead, you can use one of the many available platforms for blockchain as a service (BaaS) for exactly what you need from the blockchain. All a company needs to do is create an account and then chose what the services it needs. The BaaS platform provides the architecture for companies to essentially choose what they need with a few simple clicks rather than starting from scratch.

In essence, a company can create and use their blockchain without stumbling through some of the pitfalls. This is very similar to how website hosts allow you to create websites on their platforms. The provider focuses on the complex processes like coding and servicing behind the curtains, allowing businesses to prioritize enhancing their brand.

Types of BaaS

There are two types of BaaS models with distinct differences.

  • Centralized BaaS is the current mainstream solution for traditional businesses. These are cloud-based platforms with companies that offer up their servers for processing power to run the blockchain services for businesses. Payment and control of information pass through a centralized source while companies can quickly access the interface needed to utilize the blockchain. They also accept fiat currency as payment instead of crypto.
  • Decentralized BaaS platforms have the benefits of a decentralized network such as allowing users to control their data and prevent interference from third-party companies that store data. They’re more secure as well because of their decentralized nature. And these platforms use tokens to cover usage fees instead of fiat currency.

Examples of BaaS

The primary three centralized models for BaaS come from familiar companies.

  • IBM’s Blockchain: focuses on revolutionizing advertisement, supply chain management, and environmental responsibility. They also hold a significant amount of blockchain patents, second only to Bank of America.
  • Microsoft’s Azure: boasts a network expanding over 52 regions as a trusted cloud provider aimed at providing custom blockchain solutions to enterprises. It provides a safety net for customers to easily fail, cutting the costs of development.
  • Amazon’s AWS: targets companies involved in “Healthcare and Life Sciences, Financial Services, Supply Chain Management, Security, or Compliance” by offering up the “largest global infrastructure for building end-to-end blockchain platforms” that scale cost-effectively.

There are prominent decentralized contenders as well.

  • NXT (NXT): offers customizable blockchain solutions for businesses but suffers from scalability and payment issues as an older cryptocurrency.
  • Ardor (ARDR): built off the NXT platform, it provides users with what they call “child chains” that build off their main chain, allowing users to tailor a blockchain to suit their specific needs without causing bloating.

Major tech companies have an advantage to BaaS decentralized startups. They can leverage their community standings to back their centralized services. This is helpful when dealing with a technology that is still new and not fully mapped out yet. These companies have the ability to source a range of developers who can improve the architecture used to integrate the tech into various aspects of business, making it versatile and approachable for all levels.

If you wanted to incorporate supply chain management into your business, then all you would have to do is create an account with one of these companies and select what you need, then pay. That’s it.

Why Does Blockchain as a Service Matter?

Blockchain as a service is a vital component for future integration of the blockchain because it allows for ease of access, speeding up the adoption of the technology by businesses. While the interface still takes time to navigate, it is nowhere near as complicated as starting from scratch for your company. This allows for companies to rapidly access the infrastructure needed to gain a market advantage.

Who Needs Blockchain as a Service?

Not every company needs blockchain tech. At the moment, it best serves any company that needs to transfer data between parties seamlessly and safely. Companies that deal with customer data, transactions, or processing at the core of their interactions would benefit from blockchain tech.

Drawbacks and Future of BaaS

The current drawback of BaaS is centralization. The major players are traditional tech companies, IBM, Microsoft, and now Amazon. Blockchain was created to move away from centralized forms of governing and trust-based systems. Even though these companies make it accessible, the drawback is that because you’re using cloud services with these companies, your data is siloed and under their control. This shortcoming violates blockchain’s traditional aim—decentralization.

The alternative, decentralized systems like ARDR, struggle with scalability issues and payment issues, along with functioning outside of fiat payments. This can make companies who aren’t fully bought into cryptocurrencies shy away from utilizing them.

Going forward, the field of BaaS shows potential for incredible growth. One study carried out by Research and Market showed that “The global blockchain market size is expected to grow from USD 411.5 million in 2017 to USD 7,683.7 million by 2022, at a Compound Annual Growth Rate (CAGR) of 79.6%.” Whether or not that will be primarily dominated by centralized business models or decentralized is still up in the air. However, for now, Big Tech has a head start over decentralized platforms.

About the Author

Daren is a cryptocurrency investor, miner, and blockchain developer. He researches the latest trends and technology in decentralized products and services.

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