Adopting Blockchain As A Service: Incentives For Business Applications

Utilizing Blockchain Technology has countless advantages for service and enterprise, but how is it driving widespread adoption, and how can your company benefit?

What is blockchain?

Blockchain has been called everything from “the new backbone of the internet” to “the future of internet transactions.” Beneath all of the hype, blockchain is in simple terms, a distributed ledger.

In a traditional bank ledger, there must be a central entity that maintains a record of your finances. The countless instances in history where banks dropped the ball, such as the recent Chase bank controversy, show that this system has some flaws. Whenever one entity is responsible for records with incomplete accountability, problems will occur.

Blockchain has no such problems. Records are added to an immutable network database that cannot be altered, so any attempt at foul play is immediately obvious, and it isn’t limited to the slow channels characteristic of typical ledger-based communication.

Essentially, when you request a transaction, the transaction is broadcast to a network of computers, or ‘nodes’. The network verifies the transaction, and this is recorded as a “block” on the unalterable “blockchain”. Now you have a permanent ledger among all of the nodes that can be referenced at any time.

This distributed database technology has uses in countless verticals, from logistics to data center software. For any information transfer or authentification over a network, blockchain is invaluable.

Some of the most obvious business applications are in identity management, smart contracts, Governance, risk, Compliance (GRC) Management, Financial Services, Payments, insurance, supply chain management, and distributed storage.

Unfortunately, despite the numerous incredible applications for blockchain, it isn’t a simple plug-and-play technology.

Adopting Blockchain As A Service

Setting up a blockchain system is a fairly involved process. You need back-end IT infrastructure, bandwidth management & resource allocation, sophisticated data security, and hacking prevention systems. The process is generally too intimidating for many of the companies that could benefit from the technology.

That’s where blockchain-as-a-service (BaaS) comes in. BaaS is a set of cloud-based services that help customers create, deploy and manage blockchain networks. Essentially, cloud companies are already positioned to host blockchain protocols for companies without sufficient infrastructure to do it themselves.

IBM recognized this market opportunity and began to host blockchain protocols based on the hyperledger fabric. The hyperledger fabric was an open-source contribution from Digital Asset and IBM that provides the foundational framework for blockchain. Soon after IBM's trailblazing decision, Amazon, HPE, Oracle, and Microsoft all began to offer their own BaaS based on the same hyperledger platform.

While the blockchain component for each of the BaaS options is based on hyperledger, each company added their own set of security services and unique features. At the same time, the cloud component of the service helps simplify a complex set of technologies, making it more accessible than trying to do this alone in a private data center.

Another problem that initially prevented businesses from blockchain adoption was the lack of blockchain programmers. With such a small talent pool, organizations had difficulty creating proprietary solutions. Now, IBM and Co. offer significant education, developer tools, and powerful frameworks to help get blockchain implementations off the ground.

Because it has been so helpful for enterprises since its inception, the BaaS market is predicted to grow to $15 billion by 2023, with the financial services, insurance, and manufacturing industries specifically expected to drive the most growth.

What’s Holding Widespread BaaS Adoption Back?                   

A prevalent issue in the world of blockchain is the permanence of additions. Therefore, if a vulnerability is discovered in the code, it can’t be remedied without migrating to a completely new smart contract, which isn’t an easy process.

Possibly the biggest obstacle is the more decentralized a blockchain is, the harder the system must work to securely process transactions. Many developers struggle to find a blockchain that’s sufficiently decentralized without creating a bottleneck.

Thankfully there are countless projects being developed to resolve this—such as sharding, which allows the blockchain’s nodes to split up into subnetworks which could compute in parallel.

Other obstacles like data storage laws, legacy infrastructure, scaling limitations, and legal issues will continue to present a challenge in the adoption of blockchain, but the technology simply provides too much incentive and because of this, widespread adoption in the future is almost certain.

How Can You Take Advantage Of BaaS?

The most critical thing you can do to take advantage of blockchain for service, or for enterprise, is to educate your team about the technology. Blockchain and its capabilities are constantly changing and evolving, so it’s important to familiarize yourself with the latest options and how other companies in your space are leveraging the technology.

But once your company can utilize the technology, there are significant benefits. Financial companies have enjoyed cutting transaction times from days to hours. Documents which previously had to be delivered physically for security purposes are instantly accessible. The sky's the limit. Let’s just make sure we pack a parachute first.

Kyle Bittner is the Business Development Manager for Exit Technologies, an R2 certified, global IT asset disposition company (ITAD). Kyle is constantly working to improve processes and business strategy. He tweets at @ExitTech.