Since its adoption, blockchain technology has risen exponentially beyond the financial industries. As a result, organizations and businesses have no choice but to expand their horizon with revolutionary technology and leverage the blockchain's potential.
As a result of the commercial interest in implementing blockchain technology and extending its benefits to a broader business community, the technology is being offered through an "as-a-service" business model known as Blockchain-as-a-service.
What is Blockchain-as-a-Service (BaaS)?
Blockchain-as-a-service (BaaS) is the establishment and operation of cloud-based networks by a third party for firms that develop blockchain applications. BaaS is a blockchain service that enables business developers to use cloud-based solutions to create, host, and adopt their own blockchain applications, smart contracts, and other relevant blockchain functions. With BaaS, these developers are relieved of the responsibility of building and maintaining sophisticated hardware infrastructure. Instead, the cloud-based network or service provider manages all necessary tasks and activities to keep the infrastructure operational. This gives developers more time to develop new features for their applications. Offering third-party services is a relatively recent development in blockchain technology. Blockchain applications have expanded to include safe transactions of various kinds, going far beyond its most well-known use in cryptocurrency transactions.
The BaaS business model is a crucial advancement in the blockchain ecosystem. The business model will drive the adoption of blockchain technology across enterprises as the technology's popularity grows. Furthermore, BaaS can be a perfect solution for businesses looking to enter the blockchain domain and run blockchain-based apps without worrying about managing operating systems, storage, infrastructure, or software updates.
How Does BaaS Work?
BaaS enables organizations to quickly and easily launch applications, similar to the software-as-a-service model. When a company or developer signs up with a BaaS provider, the BaaS provider sets up and oversees the blockchain technology and infrastructure for the company. As a result, they typically get into an agreement in which the BaaS provider functions as an external supplier. The business is charged a service fee because the BaaS provider oversees the business's backend operations.
The BaaS service provider supports the preservation and management of crucial blockchain objects and services by deploying the necessary resources and leveraging the requisite technology and infrastructure to set up and maintain Blockchain-connected nodes on the business's behalf. Furthermore, BaaS allows businesses to focus on other critical operations while managing bandwidth, assessing storage requirements, assigning capacity, and recognizing security concerns and threats.
In contrast, the function of a BaaS for business is comparable to that of a traditional web hosting provider. It allows customers to take advantage of cloud-based services for creating and hosting Blockchain apps and smart contracts within the provider's ecosystem while leveraging blockchain technology and infrastructure for the company.
Why is BaaS Important?
Since blockchain technology revolutionized the financial industry with cryptocurrency, many industries and businesses are adopting the technology. However, the adoption is going at a slow pace due to the technical difficulties and operational overhead required in developing, setting, and operating a blockchain and maintaining its infrastructure, acting as a barrier. Therefore, BaaS is currently considered a viable solution to this problem.
Furthermore, organizations may easily and seamlessly transition to blockchain technology with the help of the right BaaS service provider. Businesses can use the whole cloud infrastructure for development and deployment, as well as qualified Blockchain developers, process and governance experts, and other services from the service provider without having to worry about startup or overhead expenses.
Benefits of BaaS:
The BaaS business model is gaining popularity in the blockchain community as a quick and affordable alternative. It offers businesses the following benefits by eliminating the requirement for personal software and system development, maintenance, and upgrades.
Ease of use
Time-saving
Cost-effectiveness
Improved scalability
Availability and accessibility
Considerations for Selecting a BaaS Platform
Smart Contract Functionality
It is crucial to remember that the BaaS provider enables you with the option to integrate smart contracts with the deployment. Furthermore, unlike conventional contracts, smart contracts not only include the rules but also enforce penalties if any party violates the rules.
Ease of Use
The BaaS platform must be easy to use and simple to implement. But, of course, you don't want a system that will be challenging to use or understand since this could lower adoption rates and have a negative effect on business outcomes.
Know the Consensus Mechanism Adopted
Choose blockchain service providers who are implementing a computation-free consensus mechanism. Knowing the consensus models used can grow the network and make it easier for businesses to swiftly adopt the technology.
Security Assurance
Check the proposed implementation plan for any possible security assurance vulnerabilities. This is extremely important because the smallest bug detected could have negative effects.
The Takeaway
BaaS provides a paid external service provider to set up all required blockchain infrastructure and technology. Once an agreement has been reached and it has been developed, the provider becomes custodial of the business's intricate backend activities. BaaS expands the potential of businesses by making blockchain technology available to a larger audience across different industries and supporting all the quickly developing use cases of the technology. However, the drawback of the BaaS approach is how much centralization is required because all transactions must go through the blockchain services of the host platform.
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