Blockchain-as-a-Service (BaaS) What You Need To Know
Blockchain-as-a-Service (BaaS): What You Need To Know
August 27, 2020
Blockchain-as-a-Service (BaaS) What You Need To Know
Blockchain-as-a-Service (BaaS): What You Need To Know
August 27, 2020

Blockchain technology has reached everywhere these days, which rule over the marketplaces. It is happening because blockchain offers a lot of applications that provide a faster output and higher efficiency as compared to the traditional network. Since all enterprises have now started to experiment with the blockchain, it is creating a new kind of marketplace.

Blockchain-as-a-Service (BaaS) is a significant part of the blockchain economy and is contributing to the blockchain development. It has been introduced as a result of the high rate of technology disruption.

BaaS models have succeeded in making blockchain development simpler and safe for organizations whose core competencies are in fields, but not in IT. Using this new model can help organizations focus more on their core areas while worrying less about the development space.

Today, BaaS is utilized in industries such as fintech, IoT, supply chain, and telecommunications to give businesses exposure to the blockchain without getting their hands dirty.

In this article, we will discuss BaaS in detail.

What Is Blockchain-as-a-Service (BaaS)?

Blockchain-as-a-Service (BaaS) is the third-party creation and management of cloud-based networks for companies in the business of building blockchain applications. These third-party services are a relatively new development in the growing field of blockchain technology, The business of blockchain technology has moved well beyond its best-known use in cryptocurrency transactions and has broadened to address secure transactions of all kinds. As a result, there is a demand for hosting services.

Understanding BaaS

BaaS is based on the Software As A Service (SaaS) model and works in a similar fashion. It allows customers to leverage cloud-based solutions to build, host, and operate their own blockchain apps and related functions on the blockchain while the cloud-based service provider keeps the infrastructure agile and operational.

Its an interesting development in the blockchain ecosystem that is seen as boosting blockchain adoption across businesses.

Developers who have never worked with blockchain technology or platforms may leave a lot of security holes, and in return, it will harm the company itself. You should always approach blockchain experts before planning to implement blockchain within the business ecosystem.

Major players in the BaaS space include:

  • Microsoft, which partnered with ConsenSys to introduce Ethereum Blockchain-as-a-Service on Microsoft Azure in 2015.
  • Amazon, which has introduced Amazon Managed Blockchain, a service that “makes it easy to create and manage scalable blockchain networks” using open source frameworks including Ethereum and Hyperledger Fabric.
  • R3, a consortium of global financial institutions that produced a distributed financial ledger called Corda.
  • PayStand, which specializes in sending and receiving payments between companies.

How Does BaaS Works?

Consumers and businesses are increasingly willing to adapt to blockchain technology. However, the technical complexities and operational overhead involved in creating, configuring, and operating a blockchain and maintaining its infrastructure often act as a barrier.

BaaS offers an external service provider to set up all the necessary blockchain technology and infrastructure for a fee. Once created, the provider continues to handle the complex back-end operations for the client.

The BaaS operator typically offers support activities like bandwidth management, suitable allocation of resources, hosting requirements, and data security features. The BaaS operator frees the client to focus on the core job, the functionality of the blockchain.

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A BaaS provider’s role is similar to that of a web hosting provider. The website creators create and run all the website content on their own personal computers. 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 may be the catalyst that leads to wider and deeper penetration of blockchain technology across various industry sectors and businesses. Instead of creating and running their own blockchains, a business, large or small, can now simply outsource the technically complex work and focus on its core activities.

How to Choose the Right BaaS Platform?

Following are some of the factors that can help you choose the right BaaS platform:

Basic Features

Backend Services: Every enterprise has its unique needs for backend services. Building the oracles for integration is an obstacle for companies. Therefore, blockchain as service providers has to provide backend services like mainstream technologies and integrating popular services.

Enterprises should have at least some of the following from the BaaS providers.

  • Data Security: It is a basic and necessary requirement to ensure that application and user data stays within the boundaries of the platform and is not vulnerable to risks.
  • Costing Control: SaaS platforms come with a subscription instead of a one-time license. But BaaS is not based on any such costing model. They offer cost-effective solutions. But you need to check whether the costing includes hidden expenses or not.
  • Integration: Enterprises run on network layering that should contain multiple layers of processes, workflows, and data sources. Also, the back-end services should be able to integrate into the architecture. Therefore, it supports many applications without modifying the old legacy network.
  • Process Control: A scalable environment is essential for every application as it needs to maintain the original performance at all times. Moreover, the environment should have a guard mechanism that can control hacks, data flows, active monitoring tools, computing resources, and so on.

Rapid Provisioning: Rapid provisioning provides the ability to deploy blockchain networks quickly without any issues. Blockchain as a Service companies have to deal with a lot of pressure to install, deploy, and manage the environment quickly.
Also, the environment requires additional support; however, the variation of browsers, firewalls, database, hardware, and application servers make it complicated to achieve.

Exceptional Capabilities

Permissioned blockchains: If you have to build an enterprise-grade solution, permissioned blockchain is a must factor to consider when looking for BaaS providers. Though you might come across popular blockchain frameworks like Ethereum, it is a public network that does not offer proper applicability.

Explorer Tools and Block Monitoring: If you have a blockchain network and you don’t know how to manage it, the system won’t run efficiently. You would need to monitor or control the network.

Therefore, you would require the exploring and monitoring tools to manage the health of BaaS solution. Tools like Explorer can help you understand how nodes are working or there are any errors on the ledger. Make sure you select a BaaS platform that provides you with exploring and monitoring tools.

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Why Do Organizations Need Blockchain as a Service (BaaS)?

IT organizations across many industries are increasingly exploring the strategic advantages of adopting blockchain technology. However, the inherent technical complexities, lack of domain expertise, and the operational overhead costs involved in developing and operating the Blockchain, and maintaining the infrastructure often force key decision-makers to go slow on adoption plans. However, BaaS is currently being viewed as a potentially viable solution to this problem.

Choosing the right BaaS provider will give businesses the access to skilled Blockchain developers, process and governance experts as well as the entire cloud infrastructure for development and deployment, without having to worry about startup and overhead costs.

Also, a reputed BaaS partner in most cases is a rich source of practical experience and wisdom, which can be leveraged to make the systems more secure. It significantly limits the number of risks that one would have to deal with had it been developed in-house.

Criteria for Selecting a Blockchain-as-a-Service Partner

A lot of deliberations and evaluations go into the process of selecting a business vendor and when it comes to BaaS, this is going to be all the more rigorous because of the lack of readily available guidelines and best practices in the market. While the list of criteria can be endless, here are some broad pointers to consider when selecting a BaaS partner:

  • Prior experience in setting up Blockchain infrastructure/Market Credential: Always ensure that the BaaS partner has proven experience in developing and deploying Blockchain technology on a scale and environment similar to the one you are planning to execute. If possible, ask for credentials or recommendations provided by previous customers.
  • Commitment to Quality: Quality is paramount in any enterprise application or software implementation project. Blockchain is no different. Make it a point to probe the vendor’s commitment to quality, process, and standards.
  • Security Assurance: Look for potential gaps in security assurance in the proposed implementation plan. It is very critical as a minor bug may lead to serious repercussions. You must plan for the most robust output when it comes to distributed ledgers.
  • Choice of Operating Systems: Evaluate the vendor’s experience in deploying cloud-based solutions for operating systems similar to that of your organization. You also need to ensure that the new Blockchain infrastructure integrates seamlessly with your legacy systems.
  • Ease of Use: Make sure that the proposed blockchain-enabled systems and processes are user-friendly and easy to adopt. After all, you do not want a system that your employees find difficult to use or navigate, which in turn could affect adoption rates and negatively impact business results.
  • Pricing and Support: You only want to pay based on the overall value proposition delivered by the BaaS partner. Carefully analyze the pricing options and post-deployment support options and modalities. Pay only for the option that provides the most value for your organization.

Other Important Points you should Know about BaaS

  • Cost Savings: More often than not, businesses look for value beyond cost savings when they agree to partner with an IT service provider. The same also holds true for BaaS. However, the cost and effort advantage, in this case, is far more overwhelming to be second-grade by anything else. Outsourcing the tasks related to Blockchain implementation, operations, and maintenance to a BaaS partner can help businesses save costs and effort involved in recruiting developers, maintaining the headcount, and managing the team as well as expenses related to software, platforms, and infrastructure.
  • Focus on Customization: Since BaaS allows businesses to use ready-made platforms and templates, the in-house development team can primarily focus on their own business requirements and ensure the Blockchain service complements their needs. Once the Blockchain’s infrastructure is set-up, the BaaS partner maintains it, usually with bandwidth management, resource allocation, hosting, and security surveillance.
  • Staff and Resource Optimization: Limited on-premises IT means limited physical overhead in terms of equipment space, power, and cooling. It directly translates to reductions in staffing and firefighting instances. This allows the organization’s IT staff to focus on their core business and strengths and enables employees to participate in more critical and value-adding projects for the business.
  • Limited In-depth Knowledge: Blockchain is still an emerging technology and many of the organizations are yet to be equipped with an in-depth understanding of how the technology works. In this scenario, an implementation decision made with half-baked knowledge may put existing business processes at significant risk of failure and wasted investment.
  • Lack of Visibility and Control: In most of the cloud-based and plug and play BaaS models, the infrastructure, resources and the BaaS provider owns technical know-how. It may lead to communication breakdowns and a lack of understanding or limited visibility into the actual situation on the ground when technical issues arise. In times of critical events such as a service breakdown or external sabotage, the customer will have to depend on the information provided by the BaaS partner entirely. Sometimes, such instances may lead to mistrust between the two parties.
  • Business Continuity: Most service agreements are executed based on the assumption that the service provider or partner will be in business and would be in a position to support the business with the service as per the terms of the Service Level Agreements for as long as it is required or at least for the duration of the contract. However, in today’s dynamic business environment, it is not easy to assume for sure that the provider will stay in business. The same holds true for BaaS. If the service provider goes bankrupt within a few years of the Blockchain implementation or undergoes a merger with another company, then the chances of service disruptions may increase manifold.
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Conclusion

Blockchain-as-a-Service (BaaS) is a promising offer that helps enterprises become future-ready with scalable solutions built on the blockchain technology.

Thus, it provides you with an opportunity to assume the role of a leader and pioneer among your peers in the industry.

Image: Medium


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Ishita Bora

Ishita Bora is a Senior Content Creator at Digital Notice Media Labs with an experience of 1 year. She has completed her Master's Degree in Language and Linguistics in 2019 from Gauhati University, India. Her interest lies in blockchain technology and cryptocurrency space, as she loves writing about blockchain and other blockchain-related articles. Currently, she is working on blockchain-based news, reviews, featured articles, and guides.
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