We're hearing a lot about Blockchain these days. Bitcoin's popularity soon spread to mainstream businesses. Blockchain is no longer in the infantile phase, and companies today can use it fully. Blockchain technology has revolutionized all industries, not just cryptocurrency.
Spotify has acquired blockchain startup to create blockchain solutions that use decentralized databases for connecting artists, licensing agreements and the numerous tracks available on its platform. Warranty is another example of the widespread use of Blockchain. It is a Blockchain application which allows customers to get information about the product they bought and prompt customer support in case of malfunction.
Blockchain has proven its usefulness by breaking free from the shackles of traditional business and entering mainstream operations in all industries. It will be much easier for a company to determine if it will profit from blockchain technology if they are aware of its advantages. We can then observe the changes it has made to several niches and even the whole world. Let's discuss BaaS in detail now.
What is Blockchain?
Blockchains are a series of linked blocks. The blocks are data-rich and immutable. Each block of a blockchain is uniquely identified or known as the hash. The hashes are used to connect each block with its predecessor. Three things are required to build a block:
- Digital data.
- The unique identifier (hash).
- It is connected to the hash block of its previous block.
A blockchain is a network that's distributed. Data on the Blockchain is stored and spread across many nodes (devices). The data is therefore stored in multiple copies. It can be called a distributed ledger. Blockchain is used in two of the most common use cases today:
- Bitcoin, Ethereum and other cryptocurrencies are all part of the cryptocurrency world.
- Filecoin, like Data Storage.
What Does Blockchain-as-a-Service (BaaS) Mean?
The Software as a Service (SaaS) paradigm was widely used before the Blockchain-as-a-Service (BaaS) concept was created. Due to the high cost of software licenses and deployments, several small businesses needed more access to expensive applications. Software as a Service (SaaS) was created to solve this issue.
BaaS was also created to assist small businesses that, due to cost constraints, could not manage and operate their decentralized Blockchain applications. In the case of blockchain-as-a-service, a third party is involved since one business or organization can provide other companies with the services of developing or managing an application on the blockchain network in exchange for a charge.
The BaaS architecture is a terrific approach to help businesses put their services and apps on the Blockchain with the least amount of expense because creating and maintaining Blockchain applications can be highly expensive. A business can use the Blockchain and run its applications without having to pay for the development and maintenance.
As expressed, we may say that Blockchain-as-a-Service is a cloud service provider or web hosting service that is specifically for Blockchain and its applications. Because of this, several cloud service providers, including Amazon and Microsoft, also provide the BaaS business model. As of today, blockchain technology does not just apply to cryptocurrency transactions but also helps secure other types of financial transactions.
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Use Cases of Blockchain-as-a-Service
These use cases demonstrate how Blockchain technology can be applied in various organizations to achieve transparency and immunity.
Healthcare
Blockchain has revolutionized the healthcare industry to an extent by maintaining a transparent and universal version of patients' medical data. Blockchain technology allows medical professionals to treat patients immediately because of organized records.
Blockchain also helps determine the authenticity of drugs. It is possible to trace the origin of any chemical or pharmaceutical. It has helped manufacturers to recall specific chemicals used in aids drugs.
Automotive
Combating counterfeit parts in the auto industry and managing the supply chain is the biggest challenge facing this sector. Blockchain platform as a Service comes to our rescue by providing records that are accessible from end to end for the transportation of auto parts. It helps automobile companies track and differentiate genuine parts from fakes.
Furthermore, the efficient flow of the industry has been disrupted by Blockchain-as-a-Service in manufacturing and supply chains. Businesses benefit from excellent production and less downtime because necessary components are readily available.
Transport and Logistics
Identification verification for goods and passengers is crucial in both the transportation and logistics industries. With a single token, passengers can easily and quickly complete their entire journey. The same is true for the cargo, as far as efficiency and reliability of verification are concerned. A fail-safe solution is provided by blockchain-as-a-service for businesses and other data silos.
Data Storage
When data is stored on a Blockchain, the risk of losing data is significantly reduced. Blockchain data storage is secure and immutable. This makes it an excellent asset for industries that are regulated, such as the real estate industry, healthcare, etc.
Document Tracking
Blockchain technology allows the creation of an immutable, distributed document tracking system. All participants can access the same data by storing documents in Blockchain. The papers are also secure because Blockchain is an immutable technology.
FinTech
Blockchain has automated the vast majority of financial business processes, bringing peace to average bank customers. The immutability of the Blockchain and its transparency will help to prevent disputes. Blockchain services now allow customers to use smartcards. Smart Cards are a way to settle funds faster without requiring central authority verification.
How Does The BaaS Model Work?
In essence, when a business (the client) enters into a Blockchain-as-a-Service agreement with an IT partner, the BaaS partner agrees to set up all necessary Blockchain infrastructure for the customer in exchange for a service fee specified in the contract agreement. Users can access the Blockchain via a web interface or API.
The goal is to allow users to create their decentralized applications and smart contracts without having to deal with the technical side of setup and maintenance. BaaS facilitates flexibility and scalability because users can easily modify network capacity or size.
Additionally, maintenance responsibilities such as resource optimization, incident management, system health monitoring, proactive security monitoring, and bandwidth management are included in contracts for the delivery of blockchain-as-a-service (BaaS). When using the Blockchain-as-a-Service model, customers are free to concentrate on their core business operations and competitive strategies while leaving the upkeep of the Blockchain infrastructure and its performance to the BaaS partner.
Ten Benefits of Blockchain as a Service Concept
Enhancing Automation
Automating enterprise operations will become a key driver. CIOs and other technology leaders should consider technologies that embrace automation. The instantaneous nature of blockchain transactions makes automation easy. This means that self-executing software can handle legal agreements such as smart contracts. When using a BaaS platform, automation can be achieved in internal processes such as starting a blockchain project or performing an audit. This will make enterprise operations more productive and efficient.
Read More: Best Features and Uses of Blockchain Application Development
Improve Data Security
A digital certificate is used to verify each person involved with every stage of the development process for a product or service classified. This digital signature is also combined with a hash which is unique and indisputable.
The benefits of blockchain technology include increased accountability, data integrity and transparency. This means that enterprises can rely on faster transactions and processes which are synchronized and unaltered. Smart contracts have become possible. Blockchain disruptive technology, which is based on cryptography, helps establish trust and minimize fraud by using digital signatures for identification and authentication.
A digital certificate with digital signatures and a hash unique to each transaction on the Blockchain can verify that every person involved in developing a product or service classified by your IT department is responsible for all steps. The credentials can be checked at each stage to prevent unauthorized transactions. Companies will use Hyperledger, a project based on blockchain technology, to improve enterprise processes. This includes tracking payer identity to streamline billing disputes.
Blockchains are also available in public and private versions. A public blockchain can be compared to the internet, while a corporate intranet is a private one. BaaS hosting platforms can offer private blockchains, as they combine private clouds and virtual private networks along with blockchain-based development platforms. When the pressures from the financial crisis return, and they will at some point, a mechanical processing structure will push the financial sector system over a cliff.
Private blockchains will appeal to businesses because they can track transactions in the virtual environments or user private clouds of their company (or those of its partners) without compromising data security issues. This allows data to be restricted to only authorized users and partners to reduce the risk of data breaches.
Cost Savings
The operational expenses of an enterprise can be a significant factor in reducing its profits. The advent of blockchain technology allows enterprises to save money by using it as a service. Blockchain technology, for example, can be used to popularize smart contracts. In other words, intermediaries, like accountants, lawyers or managers, who would usually be involved with reviewing contracts or service agreements, could be eliminated or reduced. The operational costs associated with the enforcement of the accords and payment can also be reduced.
Employing blockchain-as-a-service (BaaS), which also provides businesses with a secure way to use the technology, allows them to save time and money. Blockchain also reduces the costs of hiring developers to maintain and deploy software.
Blockchain eliminates third parties and intermediaries, saving businesses a lot of money. You don't require anyone to set up the exchange rules or policies because you trust your trading partner. It also saves time and money on the documentation process and revisions, as all parties can view one version of the ledger.
Simpler Processes
It can be challenging to determine if new technologies will work without conducting tests. Testing for quality is even more complicated when the technology in question is so complex. If your company decides to integrate a BaaS platform, you will be able to simplify the integration process. Blockchain technology is less complicated to use than systems using centralized platforms because of its decentralized nature.
Reduction in Ramp-Up Time
You will need to take into consideration the amount of time required to change systems and learn new complex information if your company is considering installing a blockchain. BaaS platforms can reduce the time needed to ramp up. A hosted BaaS will eliminate the extensive manual work of creating the private Blockchain. This also removes the requirement for enterprises to build back-end computing capacity.
Applications Development Opportunities
It is also a pain for enterprises to integrate blockchain technology. Suppose your IT department hasn't yet learned the technology. In that case, developing blockchain applications from scratch can be a complex process that takes a lot of time. BaaS platforms such as Microsoft Azure Blockchain as a Service offer services that help create blockchain apps. These application services can help your IT department streamline development to meet organizational goals.
Better Collaboration
Limitations that are inherent to third-party tools of collaboration can be a hindrance to the progress of an organization. BaaS platforms with private blockchains offer new opportunities for cooperation. An enterprise, for example, can create a private distributed ledger that contains employee profiles and is only accessible by authorized parties. The Blockchain allows members of the network to share confidential information, such as presentations and projects that are only visible to them. It will enable you to eliminate the use of intermediaries such as social media to improve productivity.
Transparency
Businesses are using blockchain technology to not only store and exchange valuable information but also to provide high levels of transparency and traceability for transactions that consumers today have become accustomed to.
Blockchain allows for greater transparency in transaction history. It is distributed ledger technology, so all the nodes share the exact copy. Everyone can easily access the data in a ledger on the Blockchain. Everyone in the network will be able to see any changes made to a previous transaction. All information on currency exchanges is therefore available to all.
Efficiency
The traditional paperwork process is laborious and prone to errors. Blockchains can automate and streamline these conventional methods, removing the possibility of mistakes and making trades more efficient. There is just one digital ledger. This means that parties do not have to keep multiple documents. When everyone can access the same data, it is much easier to establish trust. Settlements are also made more accessible and more seamless without the need for intermediaries.
Traceability
It isn't easy to track products in complex supply chain management. With Blockchain, all exchanges are tracked so that you can get a complete audit trail of where an asset originated. This allows you to track the journey of the products and verify their authenticity.
Drawbacks Of Blockchain
Every coin has two sides. Blockchain technology is still in its early stages. Still, it has some limitations that need to be addressed before the technology can be used widely for daily transactions.
- Scalability - Bitcoin's blockchain application is prevalent. It can, however, only process seven transactions every second. Hyperledger is capable of handling 10,000 and Visa 24,000. Scalability makes it challenging to envision the practical application of Blockchain. The verification and approval of a Bitcoin transaction can take several hours because each participant node must verify the transaction.
- Storage - The issue of storage arises because blockchain databases can be stored on network nodes indefinitely. The size of the blockchain database is only going to increase as the number of transactions increases. Personal computers cannot keep all the data that gets added. The Ethereum blockchain grows at a rate of 55GB/year.
- Privacy - Data stored on public blockchains is anonymous and encrypted, yet it's in all the nodes of the network. Everyone in the network can access this information. Someone can track the identity of an individual in the network using transactional data. This would be similar to how businesses use web trackers or cookies. Unfortunately, this proves Blockchain to be not 100% secure.
- Regulators - Financial regulatory regimes are one of the biggest challenges for blockchain implementation. Blockchain applications must define the steps to be taken in the event of fraud. This is not an easy task. For blockchain technology to become widely adopted, it will be necessary first to establish other regulatory aspects.
- Security - The creator of Bitcoin highlighted the "51% attack" when launching Bitcoin. This attack is simple - If 51% of nodes on a network are lying, then the lie must be accepted. Everyone in the decentralized network must be constantly on guard to detect any unwelcome influence.
These challenges could be resolved as the technology becomes more widely adopted. Blockchain enthusiasts and Blockchain developers will find ways to overcome these obstacles.
Read More: 5 Ways That Blockchain Technology Is Changing the Business World
How Does BaaS Help Businesses and Why is it Popular?
As a technology that can provide specific security features to organizations based on those needs, Blockchain's popularity is growing steadily. The transparency that it offers to both you and your business partners is what makes this technology so popular.
Building Trust
Blockchains create a level of trust because they are constructed in a specific way. No data can be deleted, and every member of the chain can view all blocks. This transparency in business is crucial. It is essential to set up the encryption keys. It would be best if you had the keys for the blocks you own and those of your business so you can update the records.
Establishing Contracts
Being a member of the Blockchain can eliminate the need for intermediaries in many contract types. This technology allows for the definition of legally-enforceable terms, verification of identification and creation of an unalterable record. The three critical elements of any contract with a financial institution or other business are essential. Even though these contracts haven't been tested in court yet, the current trend indicates that Blockchain will be treated by law the same as any other contract.
Value Transfer
Blockchain technology was first used to transfer the value of different cryptocurrencies. Blockchain technology allows this to be done. The products that you can use to exchange value have grown in number.
Smart Contracts
Smart contracts can mean several different things. First, people could use the Blockchain to sign contracts with their encryption key. Smart contracts use technology to verify digital identities and maintain records. Smart contracts can be created using blockchain technology to execute certain circumstances automatically. It is possible to store code within a block record, as it's just data. The contract can align itself to purchase a specific stock once the price has been determined.
Audit
Records on the Blockchain include timestamps that cannot be removed. Even blocks can have extra metadata options for auditing. You can always show the past of any files or transactions.
Private vs Public Blockchains
Public Blockchain
A public blockchain is a decentralized, open platform that anyone can use to read and send transactions. In the ledger are all valid transactions. Cryptoeconomics is used to secure public blockchains. This is a combination between economic incentives and cryptographic validation. The amount of resources that are brought into the system will determine the degree of influence on the consensus process.
- Ethereum - Provides a decentralized platform and coding language for smart contracts. It also allows developers to create distributed applications.
- Blockstream - Blockstream is a blockchain provider that focuses on the extension of capabilities in cryptography and distributed systems. They want to create a blockchain ecosystem to solve problems related to financial systems, such as fraud, counterfeiting and accountability.
Private Blockchain
The write permissions in a blockchain are centralized within one organization. This system is tightly controlled in terms of access, licenses and modification rights. This concept could attract a lot of interest from FIs as well as large blockchain development companies. The cost of transactions will be reduced, and the efficiency of validation will be increased with a proprietary system built using a private blockchain.
Some Predictions for Blockchain
Blockchain's future is bright. These are some of the most promising uses for this technology:
- Governments based on DLT - Distributed Ledger Technology (DLT) isn't a trend. Dubai is aiming to have all its government systems replaced by DLT-based ones. The transition to DLT from paper-based systems is the next logical step for government agencies.
- Collaboration of Blockchains - While different blockchain networks may operate within a single development company, each geared towards other business goals, the real benefits to customers can only be achieved when all networks are brought together in an open standard.
- Industry Transparency - Blockchain guarantees that everyone can see all transactions and that changes are only possible when every node in the network has verified them. Blockchain will therefore help to introduce some transparency into industries' operations.
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Conclusion
Currently, a novel method for streamlining the digital transformation process is to use blockchain-as-a-service. This can give your business a competitive edge without investing in infrastructure, research or planning.
Blockchain Development will surpass our perceptions of its challenges and be combined with the Internet of Things to build trust, reduce tampering risks, lower costs through the removal of intermediaries and accelerate settlements from taking days to being almost instantaneous.
