What is blockchain as a service, and how can you use it for your business?
Blockchain as a Service (BaaS) enables customers to use cloud-based services to develop, use, and host blockchain apps and smart contracts. In this article, we'll cover the main aspects of BaaS and how it can be used in various businesses to increase security, transparency, accountability, and efficiency.
Blockchain as a Service (BaaS) is a service offering that enables customers to use cloud-based services to develop, use, and host blockchain apps and smart contracts. Blockchain offers a new method to transfer data and information securely and immutably, creating trust between the parties involved. As a result of data distribution, companies can complete business transactions in a fully transparent and secure way.
The global BaaS market is expanding, and by 2027, it is projected to go over $24 billion, growing at a compound annual growth rate (CAGR) of 39.5%. World-known companies such as Amazon, Microsoft, Oracle Corporation, Accenture Plc, IBM Corporation, and Alibaba Group are among the leaders in blockchain as a service industry.
So, how does BaaS work, and could it make a difference for your business? We'll try to answer this question and provide some real-world use cases in this article.
Getting a glimpse of BaaS
Blockchain as a service is a fundamentally new level of cloud technology applications. With BaaS, service consumers and developers gain access to a third-party cloud-based infrastructure they may use to develop and manage their blockchain applications.
Illustration of how BaaS works
BaaS resembles web hosting and supports apps and platforms fueled by blockchain technology. For example, you can build a website that will get millions of visitors, host that website on your server and manage all the maintenance work yourself or hire someone. Another way is to host your website on any web hosting provider and let them handle all maintenance and infrastructure issues.
The new technology-based approach allows businesses to generate additional value in banking, media and entertainment, telecom, transportation and logistics, retail, e-commerce, healthcare, manufacturing, and other niches. In addition, BaaS helps to drastically improve supply chain management, payment completion, risk and compliance management, and smart contracts.
Many businesses would like to adopt blockchain technology, but the technical complexities in creating, operating, and maintaining blockchain infrastructure act as obstacles to mass adoption. BaaS can solve these issues by offering external services that organizations can use to set up a blockchain infrastructure and get help with complex back-end operations.
Blockchain as a service providers offer assistance in bandwidth management, resource allocation, hosting, and data security. Thus, they allow client organizations to focus more on the functionality of a blockchain-based solution. That is the reason BaaS is poised to boost the adoption of blockchain across industries.
How to use BaaS: industry use cases
Even though blockchain technology is not a new concept, it is still in its infancy, so most BaaS providers offer the core services that are likely to be replaced with more complex and specialized ones as the technology development and adoption expands.
Now that you understand blockchain as a service, it's time to delve into the specific options BaaS provides to different industries.
Blockchain allows medical professionals, hospitals, and laboratories to handle health records, request efficiently, and track patient information. The technology is vital in getting rid of drug counterfeits and helps healthcare providers manage HIPAA compliance issues.
EY and other insurance service providers may use BaaS to reduce paperwork and expedite insurance claim processing. The technology enables trusted and verifiable information exchange and automates payments to insurers.
Banking and finance
Market leaders like MasterCard, Amazon Web Services, Everledger, and Mercy Corps need BaaS to reinforce the supply chain management processes for small businesses. The technology also facilitates cross-border payments and reduces fees.
Retail and shipment
Blockchain can help reduce fraudulent activities or theft cases and make goods tracking easy. In addition, many providers in the field of retail and delivery are launching a blockchain-based global shipping business.
London Stock Exchange Group uses blockchain technology and BaaS support from IBM, a provider of solutions with the highest security protocols in the market. Traders can improve the straightforwardness and trust for their financial operations.
Use examples for most of the industries
Simple mechanism for people to write on the database
Since the primary use of blockchain is decentralized data storage, it can allow companies and regular users to have more control over data and ensure its credibility. However, because of the complications of setting up the machine to write on the global ledger, not everyone can write on the worldwide database. BaaS that provides a point-and-click solution of permission network that only allows certain people to write on the blockchain ledger with low hardware requirements of running a node would be very appreciated.
Traceable Supply Chain Solution
All supply chains are fundamentally similar. The problem with existing supply chains is the lack of transparency that prevents the participants from verifying the status of the good beyond one participant up or down the chain. It prevents participants from providing realistic timelines and enables bad participants to profit. A solution with the blockchain as the ledger and IoT devices as data providers automates the entire chain management with 100% transparency.
The three prominent companies that allow single sign-on (SSO) are Google, Facebook, and Twitter. These companies hold large databases of our information that is prone to get hacked or misused without the users' knowledge.
A decentralized identity will enable users to have complete control over their data and login credentials. Every user will be able to create a decentralized profile that is stored in decentralized databases, with its hash is stored on the blockchain. In this case, any third party has to match the hash of the user input credentials and match against the hash to verify the users during sign-ups. As a result, the profile will get verified, and there will be no need to store the user data.
These are just some of the possible applications of BaaS, with more applications possible, especially in cross-industry companies.
Combining AI and BaaS
The world economy may receive $15.7 trillion due to artificial intelligence by 2030. Like in many other areas, AI plays a transformative role in blockchain-driven service provision. Factors such as the increasing adoption of cryptocurrencies and 5G may also contribute to the BaaS market growth.
AI offers unique features for BaaS:
- Improved transparency level
- Traceability of transactions
- Fewer mediators
- High operation security due to distributed ledger technology
If merged, blockchain and AI will help handle loads of encrypted data more efficiently, securely store sensitive and valuable personal data, and decision-making processes will become less complicated. Also, AI networks could make data buying more fair and transparent, thus assisting in data monetization.
BaaS is still in its infancy stage, so financial organizations and consumer service providers are just exploring the new capabilities that it provides. The technology development and the emergence of new use cases may result in additional investment flows and the growth of the blockchain market at a rapid pace.
Blockchain as a service is a promising service that is already helping companies to become future-ready with scalable solutions built on blockchain technology. It will help new business models emerge, particularly in the finance field, by enabling better transparency, accountability, security, and efficiency of many processes. In addition, BaaS, combined with advanced AI-based analytics, will revamp financial institutions, supply chain participants, insurance companies, and players of other industries.