Intro to Blockchain as a Service (BaaS)

Blockchain? I’m not sure what it is, but I know that bitcoin used to be worthless and now is worth a lot. HODL! (hold on for dear life) Bitcoin can be forked, so blockchain is a scam. Bitcoin uses blockchain technology, that means it is backed by math and code!  These are just some of the things CITATION T_H20 \l 1033  (T_HQ, 2020) you can expect to hear if you go down the rabbit hole of blockchain. But what is it really? And what is BaaS?

The textbook answer is that Blockchain is a growing list of blocks that are linked using cryptography. It’s like if during World War II the allies gave the Germans all their secrets and told them the more they got a secret the harder the next one would be. Only in reality it was the opposite when the allies intercepted Enigma. [1]  The first official conceptual use of Blockchain technology was used in the 1990s when a cryptographer launched Timsec. This use as a ledger system provided a cryptographic hash that acted as both a digital receipt as well as provided authentication and non-repudiation is what lead to this type of technology to be used in the first cryptocurrency which was Bitcoin. [2]

While it is true that cryptocurrency is one of the uses of Blockchain, it is also true that because of the large scale implementation of cryptocurrencies and the transactions that occur and are processed by miners, this has led to an interesting economy of blockchains that can be provided as a service. One of the most interesting and prevalent way to use blockchain is to combine it with AI:

“Due to the coronavirus outbreak, global supply chains are somewhat stagnant in many sectors. In response to this, IBM has assembled the advances and their learnings from AI and blockchain to develop “more responsive, adaptive, resilient” supply chain management.” [3]  CITATION T_H20 \l 1033 (T_HQ, 2020)

According to T_HQ, IBM is reporting that even when the Pandemic clears, we will be entering a new age of business as the combination of blockchain and other automated business technologies have paved the way for a new era of global trade with:

  • Cognitive automated supply chains
  • Artificial Intelligence enhancing supply chain management using blockchain software
  • Predictive models of disruption levels in supply chains

Because of this Gartner has predicted that by 2023 blockchain will be used to support global movement and tracking of goods and services averaging $2 trillion annually. Additional analysis from Gartner shows that so far through 2020 80% of enterprise blockchain-based applications will fail to save money. By 2022 more than a billion people will have personal data stored on a blockchain whether they are aware of it or not, and that by 2022 blockchain-based businesses that are able to adapt will be worth an estimated $10 billion. [4]

As businesses struggle to adapt to the new uses of technology, Gartner has identified four blockchain initiatives that are projected to generate $176 billion by 2025 and more than $3.1 trillion by 2030:

  1. Blockchain Disruptor.  This initiative is primarily used for decentralized critical business functions such as smart contracts that are used in ICOs. Examples are Synereo, a decentralized social platform, OpenBazzar, a decentralized B2C marketplace, and Gnosis, a decentralized prediction platform.
  2. Digital Asset Markets.  These initiatives are new markets that facilitate the creation and trading of new digital assets. Examples are NYIAX, an exchange for advertising contracts, RMG, a market to trade and hold gold, and Energy Blockchain Labs, a platform to trade and manage carbon assets.
  3. Efficiency plays.  These initiatives are attempts to improve efficiencies that exist as part of the business process. Examples are DTCC, a derivative processing system, B3i, a reinsurance process system, and Maersk, a global trade and supply chain.
  4. Record keeping.  These initiatives’ primary purpose is to ensure records cannot be corrupted and can be audited on demand. Examples are Dun & Bradstreet a Business Identification (D-U-N-S Number), Government of the Republic of Georgia for use of Registration of land titles and The Government of Estonia for the Health records of its residents.

The first two are meant to be drivers of innovation for new companies to create new wealth for the economy, while the last two are meant to improve existing business models and provide saving with efficiency. CITATION Gar18 \l 1033  (Gartner, 2018)

EH-Net - Community Articles - Blockchain as a Service (BaaS) - 4 Types of Blackchain

To assist with the challenge of discovering new viable and secure ways to implement blockchain, CompTIA has organized the Blockchain Advisory Council (BCAC) with the intent of bringing together thought leaders and innovators to identify new ways to leverage blockchain technology in business cases. [5]

Based on studies by the BCAC aside from the broad adoption of involved parties in a set of transaction, one of the largest challenges faced by large scale enterprise blockchain adoption is the lack of scalability. While it is nice to pay for a product in crypto, the speed of individual and mining pools cannot compare to the infrastructure of other payment systems. As it stands today Bitcoin averages 7 transaction a second while Visa averages 2000. As transaction speed is related to block size in the chain this implies that scalability issues would translate into transaction issues with the potential to negate the possibility of savings as speed of transaction is a top driver for blockchain adoption. [6]

Additional drivers for blockchain are:

  • Improved security
  • Better data integration
  • Simplification of workflow
  • Lower cost
  • Elimination of third parties
  • Transparency of transactions
  • Alternative to traditional finance

It must be understood that successful adaption of these technologies implies that the businesses understand the current metrics for these areas and in some cases may require full knowledge of existing systems of blockchain. Additionally it must be cautioned that while it is possible to use blockchain and AI to simplify workflows across supply chains, the simplification is dependent on companies’ implementation of the required technologies correctly and seamlessly in order to ensure a high level of consumer confidence in the economic activity produced by blockchain. CITATION Com17 \l 1033 (CompTIA, 2017)

By: Simone Tartaglia
BS Cyber Security, CySA+, CEH, Security+

References for BaaS

BIBLIOGRAPHY CompTIA. (2017, 11). UNDERSTANDING EMERGING TECHNOLOGY BLOCKCHAIN. Retrieved from RESEARCH BRIEF | NOVEMBER 2017 MARKET OVERVIEW: https://www.comptia.org/content/research/understanding-emerging-technology-blockchain

Gartner. (2018, 3 19). Pay Attention to These 4 Types of Blockchain. Retrieved from Gartner: https://emtemp.gcom.cloud/ngw/globalassets/en/doc/documents/3868969-pay-attention-to-these-4-types-of-blockchain-business-initiatives.pdf

T_HQ. (2020, 6 1). IBM enlists AI and blockchain to supply chain management. Retrieved from T_HQ Technology and Business: https://techhq.com/2020/06/ibm-enlists-ai-and-blockchain-to-supply-chain-management/

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Footnotes

[1] https://www.britannica.com/topic/Enigma-German-code-device
[2] https://bitcoinnews.com/news/the-first-blockchain-was-actually-built-in-the-1990s/
[3] https://techhq.com/2020/06/ibm-enlists-ai-and-blockchain-to-supply-chain-management/
[4] https://www.gartner.com/en/information-technology/insights/blockchain
[5] https://www.comptia.org/membership/communities-and-councils/blockchain-advisory-council
[6] https://www.comptia.org/content/guides/blockchain-concept-to-implementation

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