Blockchain Technology
Blockchain as a Service (BaaS) Guide: Benefits, Uses & More
The rapid growth of blockchain technology and the expansion of its use cases beyond cryptocurrency to other sectors are not hidden from anyone. However, the complexity associated with blockchain technology resulted in two major challenges for businesses:
- Higher costs of infrastructure development for blockchain technology.
- Setting up and managing a blockchain system requires in-depth technical knowledge.
To address these problems, Blockchain as a Service (BaaS) has been introduced in the market, which simplifies the blockchain adoption process by providing a cloud-based solution.
In this article, we’ll explore how Blockchain as a Service (BaaS) works, its benefits, and potential use cases for your business.
What Is Blockchain as a Service (BaaS)?
Blockchain as a Service (BaaS) allows organizations and businesses to build, host, and manage blockchain applications through cloud solutions, letting businesses focus on blockchain implementation rather than core infrastructure development.
For the operational front, Blockchain as a Service (BaaS) is quite similar to other models such as SaaS, LaaS, or PaaS, which enables businesses to leverage third-party services through a “pay-per-use” model.
Think of it as outsourcing your blockchain backend from a BaaS provider who handles:
- Building the core blockchain infrastructure.
- Updating and managing protocols and performance.
- Securing blockchain network with encryptions and compliance measures.
Additionally, Bass offers various services, from core blockchain networks to deploying smart contracts and managing decentralized data storage.
How Does Blockchain as a Service Work?
When you opt for the BaaS service, your blockchain as a service provider builds and deploys all the essential backend services and blockchain infrastructure on the cloud while maintaining blockchain-connected nodes.
A BaaS platform or service provider offers customizable and ready-to-use blockchain networks hosted on cloud infrastructure. Here’s a step-by-step overview of how BaaS works:
- Setting Up Your Blockchain: Customers select blockchain platforms, such as Ethereum, Hyperledger Fabric, or R3 Corda, according to their business needs, and the service provider builds and configures the network and backend infrastructure accordingly.
- Deploy on the Cloud: The service provider deploys your blockchain network and backend infrastructure on the cloud, handling hosting, monitoring, security, and scaling your blockchain network.
- Integration with Your Systems: Provides the necessary tools, APIs, and SDKs to connect your existing applications or build new decentralized applications on the blockchain network.
- Customization: BaaS providers offer customization by allowing you to add smart contracts, tokenized assets, Decentralized Identity solutions, or other blockchain features.
The image below highlights the working of the Blockchain-as-a-Service (BaaS) model, which integrates cloud infrastructure with blockchain solutions, providing each user with separate resources and utilities.
Additionally, blockchain as a service provider takes full responsibility for maintaining overall blockchain infrastructure, including bandwidth management, optimization of resources, incident management, system health monitoring, and proactive security measures to prevent hacking attempts.
Ultimately, the BaaS model gives businesses and organizations complete freedom to build decentralized solutions without worrying about the high costs of developing the infrastructure, the technical expertise required to build it, and the maintenance of the blockchain.
BaaS vs Traditional Blockchain
Choosing between Blockchain as a Service (BaaS) and building a traditional blockchain network depends on the business needs, long-term vision, technical expertise, and budget because both provide a range of benefits and some limitations.
You can take a look at the below table to understand the difference between both to make an informed decision:
| Feature | Blockchain as a Service (BaaS) | Traditional Blockchain |
| Setup Time | Quick blockchain deployment, typically within weeks, as infrastructure is pre-built by a service provider. | Requires months to set up from scratch, including configuring consensus mechanisms and nodes and securing the network. |
| Infrastructure | The backend provider develops, hosts, and manages all BaaS infrastructure. | Businesses will need to develop, manage, and host the infrastructure themselves. |
| Cost | Pay-as-you-go pricing. Depends on the usage of resources, nodes, and transactions. | Building the infrastructure, including hardware, and software, requires large initial investments. |
| Scalability | Scalable solutions. Provide dynamically allocated resources based on network demand. | Scaling in-house blockchain requires significant effort, including updating protocols and expanding infrastructure, which may disrupt operations. |
| Technical Expertise | Minimal or no direct blockchain infrastructure development expertise is required as the provider manages backend complexities. | Requires advanced blockchain knowledge and dedicated developers for coding, deployment, and debugging. |
In addition, several factors, such as security, compliance, and customization, are crucial to consider when choosing between Blockchain as a Service (BaaS) and traditional blockchain. Each factor adds a layer of complexity, work, and cost, especially when building a traditional blockchain infrastructure.
If you plan to leverage blockchain technology at a large scale or target a wider audience, developing an in-house infrastructure may be a more cost-effective solution in the long term. However, if you are a small business looking to integrate blockchain into your operations, opting for blockchain as a service (BaaS) is a more resource-efficient and cost-effective option.
Benefits of Blockchain as a Service
Implementing blockchain into a business requires significant investments of money, time, and resources, which may not be efficient for most businesses. Given this, partnering with a Blockchain-as-a-Service (BaaS) provider enables businesses to implement blockchain without worrying about building an entire backend blockchain infrastructure.
Blockchain as a service makes the entire transition of a business from a centralized to a decentralized model a lot smoother and comes with numerous benefits as highlighted below:
- Cost Savings: Outsourcing blockchain services can save businesses time and money compared to building their blockchain infrastructure from scratch. Opting for a blockchain-as-a-service (BaaS) provider reduces initial investment since you pay only for the resources you use. It also cuts costs associated with hiring developers, building infrastructure, and maintaining operations and updates.
- Accessibility: BaaS providers lower the entry barrier for businesses into blockchain technology by developing and handling all the complex backend infrastructure. BaaS platforms also allow businesses to customize the infrastructure according to their business needs, enabling them to integrate different blockchain solutions along with support for cross-chain compatibility.
- Reliability & Scalability: BaaS providers handle all the complex backend operations such as hosting, data security, and resource allocation to keep the blockchain running smoothly. Businesses can increase or decrease their resource uses according to their needs, making BaaS ideal for scalability as well.
- Focus on Core Business: As a business, you can leave all the complex backend operations to service providers and focus on the implementation and core activities to increase your business growth and profitability with cost-effective solutions.
Real-World Use Cases for Blockchain as a Service
Blockchain is a technology revolutionizing every sector, from enabling small changes to driving complete transitions to blockchain-based systems. Moreover, Blockchain-as-a-Service (BaaS) helps businesses leverage the true potential of blockchain without the complexities of setting up their own infrastructure.
Below, we explore the industries most impacted by blockchain and how they are adopting real-world use cases of Blockchain-as-a-Service:
1. Supply Chain Transparency and Traceability
BaaS solutions allow businesses that primarily work in the supply chain management industry to trace and track products as they move through via building blockchain solutions. With the implementation of blockchain, the entire supply chain of networks can update documents on a single shared ledger, which gives complete transparency and secure storage.
BaaS solutions help businesses combat traditional issues like counterfeit goods, compliance violations, delays, and waste by creating tamper-proof, transparent supply chains.
2. Decentralized Finance (DeFi) and Payments
Businesses that offer financial services and payment transfers are now implementing blockchain to enable faster, cheaper, secure, and more transparent transactions. With BaaS, small financial institutions or businesses can now access blockchain solutions to enhance their entire financial operations.
Financial businesses can use BaaS solutions to enable cross-border transactions with faster transaction time and lower fees. They can also automate their loan disbursement process.
For example, Santander used Ripple’s BaaS solutions to offer real-time international payments, making it now a better option for global payments.
3. Healthcare Data Security and Sharing
The healthcare industry manages a vast amount of patient data, including reports, medication descriptions, samples, and more. However, it is a fragmented industry with insecure data systems, leading to potential security breaches.
With Blockchain-as-a-Service (BaaS) solutions, healthcare operators can now integrate blockchain technology into their backend infrastructure. This allows them to securely record patient data on the blockchain, giving patients complete ownership of their information. Additionally, data sharing between hospitals and clinics can be automated using smart contracts.
4. Digital Identity Management
Implementing blockchain technology in sectors like banking, e-commerce, and government services enables secure identity verification and efficient management of digital identities on a tamper-proof distributed database.
With BaaS, companies can easily integrate blockchain technology into their existing systems, allowing individuals to own their data and enabling automated identity verification through blockchain-powered KYC (Know Your Customer) processes.
5. Real Estate Transactions and Land Registry
Most businesses providing real estate services heavily rely on paperwork and time-consuming manual processes, which can be automated through the integration of blockchain technology.
Real estate firms and government registry departments can integrate blockchain technology into their existing systems using blockchain-as-a-service solutions. This enhances and automates their entire legal processes while ensuring transparent ownership records.
For example, myIDFI implemented blockchain and smart contracts to automate its entire mortgage loan process, enabling users to execute agreements with greater speed, transparency, and security.
Conclusion
Blockchain as a service (BaaS) is helping small businesses to adopt blockchain technology with minimum upfront infrastructure investment. Businesses can implement and integrate blockchain into their workflows to maximize efficiency, and capacity and streamline operations.
At Iotric, we help businesses adapt to blockchain advancements with tailored blockchain solutions. Our expertise spans blockchain integration projects, leveraging both in-house and third-party BaaS platforms to deliver secure, scalable, and efficient systems.
Hire our expert blockchain developers and take the first step toward transforming your operations. Contact us today to build or implement blockchain solutions.