Blockchain has been on everyone’s lips not only since this year and there is still a lot of ignorance about what blockchain is. Especially the crypto currency Bitcoin, which is based on the blockchain principle, has caused a real hype in the meantime. However, cryptocurrencies are by no means the only area of application for a revolutionary technology – the block chain. Some software providers are now providing “Blockchain as a Service” (BaaS), for example by means of a cloud solution.
This offers companies several advantages at the same time, as there is no need to acquire, maintain and further develop an appropriate IT architecture. In addition, they bring know-how into the company without having to develop the complex technology behind it completely in-house. In short: Blockchain as a Service lowers the entry hurdle in this area and allows companies to gain initial experience.
What is behind the trend theme Blockchain?
Simplified, the block chain is a decentralized database whose data structure allows information to be stored and distributed over a network of servers. This allows a growing number of transaction data records to be kept. Each participant can store new information in the block chain, but cannot delete or overwrite old information. The most important aspect of this is that the information is stored on many different servers at the same time. The transaction data is stored in blocks in a complex hash procedure and chained with the existing ones. In order for a new block to be appended to the chain, other network participants must first validate it. Despite the lack of central authority, it is secured in such a way that it is permissible. Once the block chain has been added and validated, a block can no longer be removed, edited or overwritten.
Block chain as a service reduces the risk for companies
Blockchain as a Servive (Blockchain as a Service) allows companies to initially test blockchain technology without great risk in the context of Minimum Valiable Products (MVP) or Proof of Concepts (PoC) – unlike if companies had to launch this technology in-house. Blockchain as a Service offers an advantage above all to companies that do not have the IT capacities themselves to develop and operate their own blockchain infrastructure and cannot find suitable personnel. Developers with the appropriate expertise are currently in high demand, as there are currently only a few experts with the experience to handle this technology due to its relatively young age. In order to avoid avoid avoidable mistakes in the initial phase, companies can join forces with established blockchain as a service provider who already have experience and share this knowledge – within the framework of consulting or freely available resources.
In principle, the principle of how information is stored in a block chain is considered very secure, but it also has some pitfalls during development. Much depends on the application software and cryptography in a block chain. Problems arise especially when companies develop appropriate application software but do not use proven algorithms or tested code. This makes it all the more important to test technology before it is used productively. Blockchain is therefore not a do-it-yourself project for most people. Rather, they are dependent on the expertise of other companies and experts.
Blockchain as a Service Provider
In the meantime, larger companies and software providers are also offering usable block chain solutions, primarily because the demand for such solutions has grown strongly in the wake of media coverage of Bitcoin.
One of the first companies to offer Blockchain as a Service was Microsoft in 2015: The Azure Cloud Service delivers a whole range of blockchain protocols straight away. These include so-called Unspent Transaction Output based protocols (UTXO for short) such as Hyperledger, but also sophisticated Smart Contract protocols such as Ethereum. Hewlett-Packard Enterprise (HPE) now also offers Blockchain as a Service solutions, which are largely aimed at companies in the financial services sector. FinTech companies are among those who were the first to adopt blockchain technology. Oracle has also released a Blockchain as a Service solution based on the Hyperledger project of the Linux Foundation. The Hyperledger Project offers Fabric 1.0, a collaboration tool for building blockchain-based enterprise networks. One of the blockchain as a service providers is IBM, whose service enables money exchange across borders. IBM provides this solution via the Bluemix Cloud platform. SAP also offers Blockchain as a Service on the digital Leonardo software platform.
Blockchain and smart contract platforms such as Ethereum and NEO have opened up their technology to decentralized app development (dApp), enabling other developers to develop, test, and market new applications and those based on them.
As a result, companies now have much greater choice and a wide range of options. The range of Blockchain as a Service Providers today extends from large, well-known companies to small, innovative start-ups. This makes it much easier for companies to find a service provider who can provide a solution that meets their needs – and their budget. The availability of providers is therefore no longer a problem.
A good blockchain as a service strategy does not only focus on technology
Companies and their partners need a block chain strategy. However, not all application scenarios are suitable, especially those that generate a large amount of data. The technology provides resources, for example, for the security of data, payments and automation, which can benefit a wide range of business areas and types of companies that need to be particularly tamper-proof or can do without intermediaries. However, it should be borne in mind that the implementation of Blockchain can fundamentally change the way companies work. How these changes are handled and how the appropriate training of employees must be provided must therefore always be part of the strategy. The focus is therefore not only on the technology itself.
However, expectations should remain realistic and the decision-making level must clearly communicate the advantages that the block chain can bring to the company. It should also always be made clear that block chain offers more than the basis for crypto currencies – this must also be communicated to employees. Various rules and regulations must also be observed. Often the same factors apply as for the use of the cloud. In some areas of application, for example, it may be legally necessary for data to be stored in a certain jurisdiction. This is quite problematic in the block chain, considering the block chain infrastructure described above.
It is therefore important for companies to weigh up the difficulties and advantages of using block chains. Companies also have to make a decision about which business areas block chain technology should be used for and for which it makes sense. Of course, it is difficult for a company to take all this into account when implementing such a new technology for the first time. Therefore, block chain as a service partner with the appropriate experience makes sense.
What makes Blockchain so interesting – and I would like to mention this briefly at the end – is the fact that it is a technology that is constantly evolving. The possibilities and areas of application of Blockchain are by no means exhausted and the corresponding platforms will continue to expand their performance.