Executive View

Microsoft Azure Blockchain Services

Azure’s Blockchain-as-a-Service (BaaS) operates both as Infrastructure-as-a-Service and a Platform-as-a-Service. With its large number of strategic partnerships and template library of preconfigured Virtual Machines, developer templates and artefacts, Microsoft Azure’s BaaS offering can significantly lower technical complexity barriers to the adoption of blockchain-powered applications.

Ivan Niccolai

1 Introduction

The decentralized blockchain could disrupt everything known about worldwide digital business and dealing with connected customers.

If there is one buzzword that swirls round all industries today, it’s blockchain. Rumour has it this easy to use distributed ledger technology is going to be the next huge thing after the internet, the cloud and big data. And actually even more influential. What started in the financial world with the digital currency bitcoin has the potential to go far beyond cryptocurrencies.

A blockchain is a decentralised data structure, originally used by bitcoin, that maintains a growing list of transaction records in a way that is extremely resistant to tampering. This technology is seen by many as the basis for creating distributed ledgers for a wide range of applications. Distributed ledgers offer a range of potential benefits to both private sector organizations as well as government and public services. They can be widely distributed and yet at the same time precisely controlled. They reduce costs by automating the processes involved in verifying and rapidly publishing authorized changes. They are structured in a way that makes it extremely difficult to change or tamper with existing authorized content. They can be the basis for new kinds of applications like smart contracts.

However, every new technology is claimed to offer unparalleled benefits, many of which do not materialise in practice. Equally, organizations that fail to exploit the new technologies may find to their cost that they have lost market. The constant challenge is to identify and quantify the real potential benefits and balance these against a realistic view of the potential risks.

Blockchain is the underlying technology behind bitcoin. Bitcoin is known as a “trustless” model, it uses a distributed public ledger and miners or participants have no requirement to have had a previous relationship with the ledger. Bitcoin is not controlled by banks, government or other financial institutions. Miners around the globe independently verify and confirm transactions and manage every transfer on the network. The ledger can be accessed online by anyone. No existing transaction (or block) can be changed or removed; it is a permanent record that cannot be corrupted. Attempts at corruption by one node result in the majority of other nodes noticing and reversing the transaction. The ledger essentially creates an audit trail that removes the possibility of fraud, theft or compromise of sensitive data. Once confirmed, each block on the blockchain is encrypted by a series of hashes. Each new block begins by using the hash of the previous block to generate a new hash. Thus a chain is created. Ownership of bitcoins is established through a private key; every bitcoin address has a matching private key which is saved in the wallet file of the person who owns the balance.

The blockchain is best examined today with Bitcoin as a distributed ledger, but many other blockchains have since been developed which enable its use as a Turing-complete, decentralised, distributed platform, with the distributed ledger being only one subset of available functionality powered by blockchain technology.

While the potential benefits of blockchains are immense, since this is a very new field, the technical complexities of this new technology present a barrier to greater adoption. Blockchain-as-a-Service (BaaS) offerings can significantly lower technical barriers by offering pre-configured blockchain service offerings allowing businesses to focus on rapidly deploying applications which exploit the benefits that this technological innovation provides.

Microsoft has recently refocused its business on delivering cloud services. Microsoft Azure started out as a Platform as a Service and has been extended to include Infrastructure capabilities through Microsoft Azure Infrastructure Services. The Azure services are hosted in Microsoft’s cloud infrastructure that comprises more than 100 globally distributed data centres. These are connected through a multi-terabit global network, with an extensive dark fibre footprint.

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