Chapter 7. Summary: Using BaaS
Blockchain technology, an interconnected chain of tamper-resistant digital blocks containing transactional information and distributed to peers on a network, is revolutionizing the way that business is done. As we have covered in this report, the applications for blockchain are only limited by the imagination.
Create Living Partnerships
Implementing blockchain technology is a structured way to bring strategic alliances and partnerships to life, by developing smart contracts that automatically execute the predetermined business logic as transactions take place. Yet, you should exercise caution and be sure that it makes sense to use blockchain to solve the business problem at hand. Make sure that adding blockchain technology to an application actually enhances the workflow you are trying to improve or adds some valuable feature that benefits all participants—preferably one that clearly and quickly demonstrates return on investment.
BaaS and SaaS with blockchain offer fantastic opportunities for new alliances. Forward-thinking organizations from every industry all over the world, in both the public and private sectors, are taking a serious look at blockchain. New partnerships are forming from industry-focused consortiums, which are formalized through mutual statements of intent. Blockchain can bring to your organization increased efficiency, better customer service, and competitive advantage.
Consortiums
When you are performing transactions within your own organization, there is already some level of trust, and blockchain isn’t typically needed. But once you add multiple organizations to the workflow, blockchain can be used as a trust layer that allows transactions to take place in accordance with contractual rules, regulations, and other business logic. This creates a circle of trust that can automatically vet new partners so you can begin using their services via smart contract.
If you find an existing consortium to join, plan to pay fees associated with affiliation. These can vary but usually involve paying an annual fee that scales with the size of your organization.
Many consortiums are popping up these days with a focus toward implementing blockchain in a specific industry. Other emerging technologies, like self-driving vehicles, have their own consortiums that sometimes include a blockchain component.
Example: Global Shipping Business Network (GSBN)/CargoSmart
In Chapter 6, we talked about the GSBN and CargoSmart global shipping documentation project and mentioned that there was a consortium driving the effort. Examining consortiums like these can help organizations to understand the level of involvement in creating the kind of active partnership that is needed to support blockchain networks.
According to its November 26, 2018, press release, here are some of the steps taken in establishing the GSBN consortium:
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The founding organizations signed a Memorandum of Understanding to form the consortium.
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An overall mission was created.
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Benefits of the blockchain network were stated.
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A specific pilot project was identified.
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An announcement was made to the press.
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A Declaration of Intent was signed by the founding organizations at an industry event.
A formalized consortium like GSBN can help generate commitments of budget and time from participating organizations, and move the project along at a pace that allows all participants to gain confidence in the blockchain network. When compared to less formal efforts, this approach provides a more certain path to revenue—which can be critical to the survival of participating startup organizations.
Forming a consortium also acknowledges the legal commitment required to maintain updated contractual information so the blockchain network and surrounding workflow can function in a governance capacity for these business-to-business interactions.
The effort to form GSBN was initiated by CargoSmart—the technical partner—but it could have been any of the organizations that first proposed the idea.
Ensure Collaboration Between Business and Technical Teams
Planning BaaS projects will involve both the business and technical teams that are part of the network. Business logic is the core driver of a blockchain network, yet blockchain technology is complex. A business team needs to plan to drive the logic and the rules on how information is distributed, and to whom. This will be an ongoing responsibility for the business units involved.
While the programming languages used to create and implement the functionality of a blockchain network are common and don’t take much time for developers to learn, the decentralized architecture of blockchain itself is something that could take time to grasp. The structure, tutorials, and support typically provided by a BaaS can drastically shorten the learning curve.
Budget for Follow-Through
Plan an adequate budget for taking your blockchain proof-of-concept or prototype to a live production environment. Talk with your BaaS provider to find out the steps for going from development to production, and the costs for expanding the network to new members and scaling for additional traffic.
Once your blockchain network is live, the work is just beginning. It is critical to budget for ongoing staff to maintain the business logic and oversee the technical details. It’s important to have an adequate legal budget to make sure the smart contracts keep you in compliance with your agreements and applicable laws. To keep things functioning properly, you’ll want to proactively revise smart contract terms as agreements change.
Selecting the Best Option
There are many blockchain platforms that can be used “for free.” However, it’s important to consider all of the other resources that would be needed to run a free blockchain platform. Depending on the use case, it may make more sense to select a BaaS or a prebuilt SaaS with blockchain, at least for your initial projects.
BaaS is a great way to dive into the world of blockchain—sometimes as easily as a point-and-click selection in your cloud provider’s dashboard. BaaS allows you to learn using sample code by prototyping and distributing quickly, and rolling the pilot project into production. BaaS alleviates the administrative and technical burden associated with blockchain platforms, and drastically reduces the total cost of ownership associated with running and distributing the nodes and credentials.
BaaS in the Future
We have learned from the past that information shared across networks can be breached. Our heavily data-driven society is becoming even more so with new data-dependent applications like artificial intelligence, automated vehicles, and robotics. We need to be able to trust the data we use, as well as the algorithms driving the processes, and even the identity of individual developers (which may not all be human, as machines learn to write code).
Blockchain delivers the long-missing verification component of network information sharing. It provides validation and processing rules for the information we now freely share across the web as well as through private networks. Just like we saw widespread adoption of web applications, we will also see viral adoption of blockchain.
Ad hoc, private networks for specific business purposes will likely be the way of the future. Organizations will join these networks, and they will spread, because the networks cement partnerships into a strategic, cross-organizational workflow that can be validated.
Business applications are already transitioning from those run on servers in the cloud to those that are part a suite of cloud-based services that can be mixed and matched—even mixed among providers, such as running IBM Watson services on Google Cloud. BaaS will become an important service that can be added to any technology stack to provide integration with the other components.
I asked Reshma Moorthy—president of Frontier Technologies, a company that has been designing award-winning IT solutions for 30 years—how she sees her enterprise customers using blockchain and BaaS in the future.
Reshma replied, “BaaS will play a very important role. Software-as-a-Service and Infrastructure-as-a-Service are just emerging as ways to save money on resources that would otherwise be too expensive. BaaS can be used in the same way, and provides an opportunity for organizations to try blockchain while they are still determining how well it will be accepted across their industry.”
BaaS in Government
Government rules and regulations are the perfect match for BaaS and smart contracts. BaaS is convenient for auditors and regulators, and saves a lot of money on travel and other expenses related to audits. BaaS run by government agencies can assist regulated organizations with compliance. Smart contracts for business processes can proactively help organizations to apply the right laws at the right time so their transactions are always in compliance. This proactive government involvement via smart contracts can help organizations avoid costly fines and expensive audits. Smart contracts also do not know any prejudice or favoritism, and are always applied fairly and in accordance with the agreements that govern transactions.
I spoke about the topic of BaaS in government with Rob Hanson, senior researcher at Data61, Australia’s leading digital research network. Data61 is part of Australia’s Commonwealth Scientific and Industrial Research Organisation. Rob has heavy involvement with blockchain research in his current role, and previously worked in fraud prevention.
I asked Rob how he sees government being involved in BaaS in the future. Rob said, “Governments will operate smart contracts to enforce all types of things. Document manipulation and other corrupt processes can be exposed through the use of blockchain verification. Integrity is the key factor—we need to know that we wrote the data, and no one’s changed it.”
Rob mentioned that blockchain will be useful in every aspect of government, including permits, licenses, and registrations, in industries such as agriculture, fishing, and construction, and in IoT controls, such as locking down configuration for devices.
BaaS and Hardware-Level Security
Keith Guidry is chief technology officer of Sawblade Ventures, which provides architects and designers with an automated design tool solution to create flexible and distributed functional facilities into chip architectures. Lynn Riley, chief information officer and cofounder of my company, Kilroy Blockchain, is a former semiconductor engineer who worked at Motorola. Keith and Lynn frequently discuss how blockchain can be compromised by chip-level security breaches.
I asked them about this wrinkle in the integrity of blockchain technology. Lynn explained, “All of the chips—NXP, AMD, Intel—have the same basic functional units inside. All chips across industries are open to the same vulnerabilities.” Because of this, exploits can be scripted and executed by a bad actor, regardless of skill level.
According to Keith, “The vulnerabilities can be addressed once the chip and correlating software can intercept penetration attempts into the memory cache and control nets on the chip itself.” Keith continued, “Blockchain is the only viable (intrinsically authoritative) method of tracking operations inside the chip for informing system overwatch in the outside world. That’s why blockchain needs to be anchored inside the chip itself.” In other words, chips of the future will need to become self-auditing.
Keith and Lynn pointed out that significant additions to chip functionality would impact its physical size, and that the new functionality might come in the form of companion chips.
Such vulnerabilities are not typical of a BaaS, but are more common with self-implemented blockchain platforms. This is a big advantage in selecting a trusted BaaS for your blockchain network. To learn more, ask your BaaS provider about its strategy for hardware-level blockchain security.
Next Steps
Now is the time to look into blockchain. Blockchain and BaaS are growing in popularity, and this trend is showing no sign of slowing down. If leaders are remiss in checking into how these technologies are impacting their businesses, they could one day find themselves behind the times and no longer competitive.
Here are some tips on how to move forward with blockchain:
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Put together your own business use case and validate it by identifying participants, assets, and transactions.
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Find and join an industry vertical consortium or, if your industry doesn’t already have one that fits your needs, start a consortium with your strategic alliances/partnerships.
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Along with your partners, evaluate the best options for your blockchain network, whether blockchain platform, BaaS, or SaaS with blockchain. The options include:
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Build your own blockchain platform: if you want to accomplish an industry-specific or technically innovative task and have a very large budget.
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Use an existing blockchain platform (like Hyperledger Fabric or Ethereum): if you want to set up and maintain your own systems.
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Find a BaaS that suits your needs: if you want to build your own blockchain network using an existing blockchain platform. The BaaS will provide a blockchain platform, such as Hyperledger Fabric or Ethereum). Consult with the BaaS providers and their business partners, who can be hired as developers. Consider adding your own SaaS as a frontend for your participants.
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Look for a prebuilt SaaS with blockchain: If you want to get up and running as quickly as possible and don’t mind sharing a blockchain network with potential competitors. If there is one available that fits your needs and those of your partners, consider joining it.
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Choose a proof-of-concept pilot project that can show results to all partners quickly (e.g., in four to six months). Have a plan for going into production once the pilot phase is complete.
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Train your developers in the BaaS architecture and related code, or hire additional staff.
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Talk with your legal team to make sure your own smart contracts are correctly interpreted for incorporation into the blockchain network.
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Lead meetings with your network of partners to build everyone’s understanding of blockchain.
Even after you have made your decisions, stay aware of what is going on in the world of BaaS. Many blockchain platforms not currently offered on BaaS will become available from other providers. When you design your architecture, consider that you may want to switch out certain components of your system as these emerging technologies evolve.
Finally, when choosing a BaaS, realize that you may not want to stay with it forever. There are new offerings coming out regularly. Think of these early projects as transitional, and always keep an eye on what’s next. Watch for revolutionary advances as BaaS matures, advances that continue to make blockchain networks easier to create and manage.