BaaS and the Fragmentation of the Blockchain

BaaS and the Fragmentation of the Blockchain(BaaS) is one of the most interesting developments in the blockchain technology ecosystem. With incumbents such as IBM and Microsoft releasing the first versions of their BaaS stacks and Amazon announcing its intentions to enter the space, we can safely assume that BaaS is going to become a key element in the next phase of the platform as a service (PaaS) wars.

The emergence of Baas has been one of the strongest validations for the blockchain technology market since its inception. However, BaaS has also introduced a new set of challenges that will need to be addressed by the blockchain community. Among those, I believe fragmentation is one of the BaaS side effects that could result really disruptive to the evolution of the blockchain.

In the past, I’ve written extensively about the fragmentation challenges in the blockchain ecosystem. I think BaaS is one of the factors that is helping to increase the complexity of fragmentation in the blockchain space. To better understand this phenomenon, we should try to answer the following questions:

— How is BaaS contributing to the fragmentation of the blockchain?
— Why is the fragmentation of the blockchain relevant?
— How can the blockchain community address the immediate fragmentation challenges?

3 Reasons Why BaaS is Contributing to the Fragmentation of the Blockchain

The fragmentation challenges in the blockchain precede the emergence of BaaS stacks. However, BaaS platforms have certainly contributed to increase the complexity of this phenomenon. Below there are of the main characteristics of BaaS that could contribute to the fragmentation of the blockchain:

— Private Blockchain Implementations: As part of their BaaS stacks, both Microsoft and IBM have released proprietary implementations of private blockchains in the form of Project Bletchey and Hyperledger respectively. If this continue, we might soon have dozens of relevant private blockchain implementations which introduces challenges in terms of interoperability and portability.

— Proprietary Extensions: The BaaS stacks provided by the PaaS incumbents go beyond the implementation of private blockchain models and introduce new extensions to enable capabilities such as middleware or enterprise security which are not included in the public blockchain stack. Even though the incumbents have done a remarkable job open sourcing those technologies and building the community around it, the proprietary extensions introduce a marked difference between the different BaaS stacks with the consequent interoperability challenges.

— Optimized for Cloud Infrastructures: The BaaS stacks implemented by companies like IBM and Microsoft are really optimized to run in the Bluemix and Azure PaaS respectively. This is obviously expected as the main benefit of BaaS modes are to simplify and abstract the underlying infrastructure required to run and operate blockchain solutions. However, the level of dependency on a specific PaaS makes it impractical t use that BaaS stack in other infrastructure such as on-premise data centers.

3 Reasons Why We Should Care About Blockchain Fragmentation

Despite the fragmentation challenges introduced by the BaaS stacks, we should question whether those [challenges] are relevant at this point of the blockchain market. Here are a few ideas to consider:

— Portability Matters in the Blockchain: Fragmentation is a very common challenge of open source projects adopted by enterprise software incumbents. However, the case of the blockchain is different. the promise of the blockchain is to operate completely decentralized and trustless networks. In that model, portability and interoperability between different blockchain networks is essential and that could be challenging in a very fragmented market.

— The Risk of Incumbents Owning the Blockchain: The introduction of BaaS brings up the risk that one of the incumbent’s implementations becomes the dominant platform in the market and captures the majority of the market share. Even though that could be seen as one of the positive sides of competition, a blockchain market dominated by a large incumbent might kill the promise of the blockchain.

— Private Blockchains Evolving Faster than Public Blockchains: BaaS foments the adoption of private blockchains. With IBM, Microsoft and Amazon entering the market, there is a risk that private blockchain stacks in BaaS platform will evolve faster than the public blockchain. To illustrate this challenge in another context, imagine what would have happened if the adoption of private networks would have evolved faster than the internet.

3 Possible Solutions to Prevent BaaS Blockchain Fragmentation

I don’t believe there are any silver bullets to address the blockchain fragmentation created by BaaS stacks. However, there are a few ideas that might be worth considering:

— Standardizing on Ethereum: Even though there are several blockchain application development platforms, Ethereum has clearly become the market leader. More importantly, many experts are looking at Ethereum to address some of the well-known challenges in the public blockchain.Without proclaiming game over in the blockchain development platform race, I think there are some tangible benefits if the BaaS space would standardize on the Ethereum platform. This is the equivalent of what happened in the Hadoop community when the enterprise distributions adopted a basic tech stack.

— Cloudfoundry + Ethereum: The combination of Cloudfoundry and Ethereum can provide an open source BaaS stack that can be used as the baseline for other BaaS implementations. This could be the equivalent of the Docker model for the blockchain ecosystem.

— BaaS Interoperability Tests and Standards: I am not a big fan of using standards to enforce interoperability but something like that might be needed to address the fragmentation challenges in the blockchain. The idea of a third party organization conducting regular interoperability tests and building a series of standards to be followed by the BaaS providers is an interesting idea at this stage of the market. Obviously, the BaaS providers would need to be active participants in this exercise.

Written by

CEO of IntoTheBlock, Chief Scientist at Invector Labs, Guest lecturer at Columbia University, Angel Investor, Author, Speaker.

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