Authored by Mustafa Inamullah, Creative Content and Design Lead, MIMIR Blockchain Solutions
In case you don’t know what Blockchain as a Service is, BaaS is when an entity sets up all the “blockchain tech” for you. If you pay for BaaS, you pay a company to set up blockchain connected nodes on your behalf. A BaaS provider would deal with the confusing back end for you or your business.
This article will assume the reader has a beginner level to intermediate level understanding of blockchain technology. You have likely heard the words “blockchain”, “Bitcoin”, or even “Ethereum.”
The first question we need to address is adoption. How big will blockchain get? How many companies will plan to incorporate blockchain technology? Is blockchain the foundational technology for the next generation of the internet or is it simply a passing fad?
Once we have understood the scope for how large blockchain technology is set to be, and once we have understood how many industries blockchain will disrupt, the need for BaaS becomes clear.
We will take the position that BaaS will serve as an essential catalyst for bringing about the adoption of technology. Taking the burden of difficulty out of the equation will allow a wide range of businesses and industries to adopt blockchain into their existing platforms.
BaaS does have some limitations though. BaaS is a means to an end. BaaS necessarily involves adding some centralization to blockchain, which is never ideal. The purpose of blockchain is to have decentralized solutions to centralized problems.This could be the banks as much as it could be any trusted middleman.
Though BaaS does require one to rely on a centralized third party, it is a strong step towards bringing blockchain technology the world. To get to this point we must first examine the blockchain hype.
You’ve likely noticed all the buzz around Bitcoin and Blockchain recently. It’s not all just speculated hype, though a hefty serving of speculation does exist. People who haven’t done their research may just be jumping in to the “cryptoclub” because of the hype, but that doesn’t mean the entire industry is speculative.
Blockchain is beginning to weave its roots throughout the fabric of our society. According to Gartner: “As of February 2017, “blockchain” was the second most-searched-for term on Gartner.com, having increased in volume by 400% in the last 12 months.”
People are starting to notice it. A quick peruse through google trends will show you that all aspects of blockchain are showing exponential growth in interest over the past few months. But all of this interest isn’t simply curiosity.
Just take a look at the recent growth of ICO’s. The ICO market grew over 4 billion dollars in 2017. And it’s also not just the new startups that display business interest in blockchain.
According to IBM, “91 percent of surveyed banks are investing in blockchain solutions for
deposit-taking by 2018 to protect against start-up non-banks.” This paints a very clear picture of just how big of an impact blockchain has made on the financial sector.
There have even been estimates that the entirety of Google’s computing power would only be 5% of the total computing power of the bitcoin blockchain. That’s not 5% of all blockchain computing power. That’s just compared to Bitcoin’s blockchain.
It’s not just banking, there are dozens of industries that blockchain could disrupt. This could include Cybersecurity, Academia, Government, Music and Arts, and even Ride Sharing. This list has several other potential candidates, but we only need to make the point clear.
Blockchain is about to be a part of our everyday lives.
The big hitters are already throwing their hats into the blockchain rings with BaaS. Microsoft has been adding BaaS modules to their cloud-computing platform, Azure. Microsoft’s Azure is focused on the Ethereum blockchain.
IBM has also built their own BaaS service. It is a Hyperledger BaaS system based on the Bluemix Cloud Platform. They are focused more on private consortium blockchains.
There are other players as well. Ardor, is a BaaS platform that will allow people to use the NXT blockchain. They use “child chains” to bring BaaS into the front of the equation. Instead of leaving BaaS as an afterthought, they frontloaded the ability for companies to use their BaaS platform.
Now that we understand this rapid interest and growth of blockchain, we can start to understand just how important BaaS is.
Not many people realize how big of a deal HTTPS is. This isn’t technology that end users have to understand at all. For that reason it often gets taken for granted.
Without HTTPs, online business would be impossible. Otherwise all passwords and information would be public for everyone. Nothing on the internet would be safe.
But how many people really know that? Despite using HTTPS almost every day, your average user wouldn’t be able to tell you what HTTPS does for them. That’s what makes HTTPS so great.
Dev Mukherjee, vice president for strategy, e-business on demand, for IBM’s global services division, once said, “Technology becomes truly useful when it becomes invisible.”
HTTPS is completely useful as a way to enable secure online business, and there’s nearly no sign of it when used by end users. It’s omnipresent, yet invisible. This is how you know it’s a truly useful piece of technology.
When blockchain reaches this level, it will be useful. BaaS allows the blockchain part of the technology to be relatively invisible. And if not invisible, it’s at least translucent. It’s a step in the right direction. Allowing someone else to take care of the dirty backend of blockchain for you allows you or your business to benefit from blockchain technology without really having to deal with blockchain technology.
There are two options when interacting with the blockchain. You can either set up your node directly, and remove the invisibility cloak of blockchain, or you can have someone else do that for you. This is what BaaS is. It’s your second option.
The question is, how much demand is there for this option?
According to Etherescan, there are well over 23 million unique addresses on just the Ethereum blockchain right now. This gives you a decent idea of just how many people there are trying to interact with blockchain services.
According to Ethernodes, there are about 26,000 connected nodes to the ethereum blockchain. This means at most, there are 26,000 people who are directly connected to the blockchain.
You may be wondering,”how are the other 22,974,000 people interacting with the blockchain?” Well it’s because many of those nodes are being used in BaaS operations. They are interacting with the blockchain on behalf of end users.
That goes to show that the demand for blockchain connection outpaces supply by about 88,462%. That makes a pretty strong case that there is a strong need for BaaS. Millions of people are interacting with the blockchain and they are doing it through BaaS. Blockchain is only expected to grow dramatically for individuals and commercial interests.
This doesn’t even include future projections of an IoT based world. If the world wants to connect blockchain technology to IoT, they simply cannot rely on direct node connection. It’s not possible for every tiny IoT computer to carry the load of connecting to the blockchain. What they can do is make requests to a BaaS operation which then does all the heavy lifting on behalf of IoT devices. The more we see IoT incorporate blockchain and cryptocurrencies, the more of a need we will see for BaaS.
BaaS is an essential step. Without it, we won’t be able to bring blockchain mainstream. That being said, in a perfect world, we wouldn’t have centralized BaaS.
We understand how blockchain is needed to evolve the blockchain ecosystem, now let’s look at what a perfect blockchain ecosystem would look like.
So what does a perfect world look like for Blockchain?
Blockchain is certainly extremely impressive technology, but it does have some limitations and drawbacks. Let’s address the biggest and most pertinent issue first.
What are we going to do about this giant electricity problem?
Bitcoin itself uses enough electricity to compare itself to a small country. There is such a crazy arms race in the world of crypto mining that computers have spawned up left and right. The blockchain network is now easily one of the largest computer networks in the world.
This could be a catastrophic problem economically as well as environmentally. A great solution to this problem is Proof of Stake (PoS). The new Casper protocol will switch Ethereum’s current Proof of Work (PoW) standard to Proof of Stake. This means you won’t have tons of miners competing with computational power. Instead, you will have a smaller number of “stakers” who put down stake to ensure security. This prevents the need for security by computational security, and replaces it with security through invested stake. This will greatly reduce the electricity burden.
What about transactional capabilities? Will blockchains ever be able to handle the load of an entire globalized world sending billions of transactions a day? When will blockchains be able to handle say 100,000 requests per second?
The recent Crypto Kitties Fiasco displayed how strong blockchains like Ethereum aren’t fully capable of handling an explosive growth in adoption. In this example, a tremendous amount of people surged to the ethereum blockchain to buy and trade Crypto Kitties. This almost killed the network and operational costs shot up dramatically.
Thankfully, some of Ethereum’s brightest minds are working on the solution to this. Plasma uses a technique called sharding alongside Lightning Networks (Raiden) to greatly help Ethereum scale. This is being led by Ethereum’s most prominent leader, Vitalik, himself. By using the Raiden network as an extension to the Ethereum blockchain, it will help prevent bottlenecks.
But what about all these tokens? There are way too many of them to the point that cryptocurrencies are at the risk of suffering from the “too many cooks” dilemma.
Dr. Gavid Wood, one of the most brilliant minds in Ethereum, is working on the solution for this. His project, called Polkadot, uses Proof-of-Stake mechanics to allow for token interoperability. This will allow for blockchains to interact with each other seamlessly.
So now back to “BaaSics”, what does the ideal version of BaaS look like? Well it could be one of two things. It could possibly look like Ardor and Nxt, where BaaS is front-loaded into the fundamentals of the blockchain.
Alternatively, here are at MIMIR Blockchain Solutions we are creating the world’s first Decentralized Ethereum Service Provider (DESP). We are using Proof of Stake mechanics to allow for decentralized BaaS. Instead of having one entity set up all the blockchain infrastructure for you, MIMIR creates a system where the 26,000 nodes can work together to share blockchain access to the growing 23 million people who want access to blockchain. Instead of relying on a centralized party to share blockchain access, MIMIR relies on a distributed model where all connected nodes can get paid to do the heavy lifting for people.
In a world where we have Casper, Plasma, Polkadot, and MIMIR, blockchain has the ability to play an enormous role in our everyday lives. Without current BaaS systems, we may never get there, but once we do, it will be important to adopt a decentralized BaaS model.
The purpose of blockchain is to provide decentralized solutions after all. This decentralization isn’t perfect yet as it is still a new technology. Because of this, BaaS is the pair of crutches that blockchain desperately needs to get to where it needs to.
DISCLAIMER: The content provided on this site is opinion and commentary on topics related to the blockchain universe. IT IS NOT INTENDED TO BE NOR SHOULD IT BE RELIED ON BY YOU FOR ANY REASON AND IS PROVIDED “AS IS” WITH NO WARRANTIES OF ANY KIND. You are responsible for your own decisions and for properly analyzing and verifying any content.
Create your free account to unlock your custom reading experience.