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.)

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