DEFINITION of 'Blockchain-as-a-Service (BaaS)'

Blockchain as a Service (BaaS) is an offering that allows customers to leverage cloud-based solutions to build, host and use their own blockchain  apps, smart contracts and functions on the blockchain while the cloud-based service provider manages all the necessary tasks and activities to keep the infrastructure agile and operational. It is an interesting development in the blockchain ecosystem that is indirectly aiding the blockchain adoption across businesses. It is based on, and works similar to, the concept of Software As A Service (SaaS) model.

BREAKING DOWN 'Blockchain-as-a-Service (BaaS)'

Individuals and businesses are increasingly willing to adapt to blockchain technology. However, the technical complexities and operational overhead involved in creating, configuring, and operating the blockchain, and maintaining its infrastructure, often act as deterrents to its mass adoption. Along with leading tech giants, many startups are now offering a viable solution to this problem through the Blockchain-as-a-Service (BaaS) model. (See also, All About Amazon's New Blockchain Service.)

How Does BaaS Work?

BaaS is when an external service provider sets up all the necessary “blockchain technology and infrastructure” for a customer for a fee. By paying for BaaS, a client pays the BaaS provider to set up and maintain blockchain connected nodes on their behalf. A BaaS provider handles the complex back-end for the client and their business.

The BaaS operator takes care of keeping all the important blockchain-related artifacts and the infrastructure up and running. It also includes support activities like bandwidth management, suitable allocation of resources, hosting requirements, and provides security features like the prevention of hacking attempts. By using a BaaS model, the client can now focus on their core job – the functionality of their blockchain – instead of worrying about infrastructure and performance related issues.

Think about BaaS’ working similar to that of a web hosting provider. You build a fantastic website that is capable of getting millions of hits per day. You can host and run that website on your own computer/server from your own office and take care of all the maintenance and support work yourself or by hiring support staff. However, another hassle-free option is for you to host your website on an external web hosting provider like Amazon Web Services or HostGator, and let them take care of all infrastructure and maintenance issues. BaaS works similar to the second option and allows you to focus on your core website functionality.

Hyperledger Cello, a BaaS-like blockchain module toolkit and utility system under the Hyperledger project, provides a graphic demonstrating the working model of Blockchain-as-a-Service.

BaaS may be the necessary catalyst that can lead to a much wider and deeper penetration of blockchain technology across various industry sectors and businesses. Instead of creating and running their own blockchains, a business, large or small, can now simply “outsource” the technical complex work and focus on its core activities.

Large technology firms are already throwing their hats into the blockchain rings with their own BaaS offerings. Microsoft offers a BaaS module on its Azure platform, IBM has its own BaaS which is focused on private consortium blockchains, and Amazon and Oracle have their own blockchain cloud hosting services. (See also, Oracle to Launch Blockchain Products This Month.)

RELATED TERMS
  1. Permissioned Blockchains

    Permissioned Blockchains require participants to identify themselves ...
  2. Blockchain ETF

    Blockchain ETFs facilitate real-time trading on a basket of blockchain-based ...
  3. Hyperledger

    Hyperledger is the open-source umbrella project that offers tools ...
  4. Hyperledger Explorer

    Hyperledger Explorer is a dashboard utility that allows for the ...
  5. Ripple Swell

    Swell is Ripple's annual conference for leaders in the cryptocurrency ...
  6. Lightweight Node (Cryptocurrency)

    Lightweight nodes are computers that perform the basic functions ...
Related Articles
  1. Tech

    Is Amazon Getting Serious About Blockchain?

    Amazon has made blockchain tech overtures as early as 2017, but 2018 has seen it grow more aggressive in its forays into blockchain.
  2. Tech

    Why Google is Building its Own Blockchain

    Here's why Alphabet Inc.'s Google is actively pursuing a blockchain based offering.
  3. Tech

    Which FAANG Will Win the Blockchain Wars?

    The FAANGs are expected to dominate stock market. How are they doing on the blockchain front?
  4. Tech

    How Do Blockchain ETFs Work?

    Investopedia explores how blockchain ETFs work and the risks associated with such theme-based investments.
  5. Tech

    Forget Bitcoin: Blockchain is the Future

    Blockchain is the technology that undergirds the cryptocurrency world, but itspotential uses extend much farther.
  6. Tech

    Public vs Private Blockchains: Challenges and Gaps

    Despite the growing corporate embrace of public blockchains, there's a slow shift toward private blockchains.
  7. Tech

    Could Blockchain Really Have Better Security Than Banks?

    Some experts believe adopting security measures used by banks could help to strengthen the viability of blockchain technology.
  8. Investing

    World Bank To Launch Novel Blockchain Bond

    The World Bank announced it has chosen Commonwealth Bank of Australia to launch the world's first blockchain bond.
  9. Tech

    Blockchain: The Backbone of Finance's Entire Future

    What is blockchain, and why is it now being used for everything from tracking loans to authenticating diamond purchases?
  10. Tech

    Nasdaq: Long Blockchain Deceived Investors With Bogus Name Change

    Nasdaq plans to delist Long Blockchain, saying it deceived investors by fraudulently changing its name from Long Island Iced Tea.
RELATED FAQS
  1. Who are GoDaddy's (GDDY) main competitors?

    GoDaddy, the biggest domain registrar has enjoyed great success over the years but its market dominance is now under threat ... Read Answer >>
  2. What does low working capital say about a company's financial prospects?

    Find out what it means when a company has low working capital, including how this metric is interpreted based on business ... Read Answer >>
  3. What is the difference between external economies and external diseconomies?

    Learn to differentiate between external economies and external diseconomies, as well as between external economies and diseconomies ... Read Answer >>
  4. How can companies reduce internal and external business risk?

    Understand the difference between two types of operational risk – internal risk and external risk – and how companies can ... Read Answer >>
  5. How do externalities affect equilibrium and create market failure?

    Discover the ways that externalities lead to market failure. Externalities are costs or benefits that go to a third party, ... Read Answer >>
Trading Center