Oil and water: Microsoft's blockchain-as-a-service

Tuesday 29 December 2015

We knew the big guys would come around to blockchain tech, but they’re doing it their own uncomfortable way.

Microsoft has announced that it will be offering blockchain services including Ethereum and possibly Ripple as part of Azure, its cloud computing platform and services.

So what does it mean that a traditional, top-down, centralised corporate giant of the computing world is adopting technology that is decentralised by nature? Isn’t that an oil-and-water, chalk-and-cheese situation?

Oil and water

Big corporate blockchains are not the most intuitive idea

Well, yes and no.

For starters, the whole point of a decentralised system is that you can’t control who uses it. Microsoft are a for-profit company, they’ve seen a demand, and they’re looking to profit from it. Can’t say fairer than that.

It’s also a reality that blockchain tech will be driven by businesses - and big businesses mean big adoption. So it’s not only reasonable but inevitable that the likes of Microsoft should integrate blockchain tech into their own offerings. It also makes perfect sense that it would be something like Ethereum or Ripple. Although these are crypto platforms, decentralised in terms of infrastructure (thousands of computers all over the world), they are both centralised in terms of organisation. They are companies themselves, and so there are individuals and departments with whom Microsoft can communicate. Just imagine a traditional corporation trying to deal with a truly decentralised, leaderless protocol, like bitcoin itself - one in which there is no real development, and decisions are made the most torturous way possible.

Yeah, it wouldn’t work well.

Then there’s the fact that a good number of people who use Ethereum via Azure will realise they can do it just as effectively and a lot more cheaply if they work directly with the protocol, running it on their own machines. There’s even the chance that Microsoft’s EBaaS (Ethereum Blockchain as a Service) as a gateway drug to other protocols.

The downside, if there is one, is the increasing centralisation - organisationally and possibly infrastructurally - of Ethereum and other protocols that are involved. The closer relationship there is between a protocol and a single, powerful company, the more scope there is for unilateral interference. (In fact, Microsoft are working with ConsenSys, an Ethereum-based startup created by one of the platform’s co-founders).

One major question that arises is the proportion of the Ethereum network that will end up running on Microsoft’s servers. Customers will be able to interact with it, but the whole point of PaaS/SaaS (Platform/Software as a Service) is that you don’t run it on your own machine. What will that do for the security of the network?

And here we run into the major issue, the chalk to the cheese in what will become an increasingly common scenario. Big companies see the attraction of blockchain technology. But:

  • Big corporations cannot work with fully decentralised protocols, because they have no control of them.
  • Big corporations cannot fully centralise crypto protocols, because that robs them of their real value in the first place.

I’ve always maintained that bitcoin is not for the big guys. Blockchain is a grassroots protocol. When big corporations butt up against that, it’s a difficult - very difficult - line to negotiate.

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