Viewfin Metaverse CTO Chen Hao Talks about BaaS and the Internet of Value
This article aims to discuss the integration of public blockchains with existing internet applications; “blockchain as a service” here only refers to the public blockchain;“I” refers to CTO Chen Hao.
1. From the Internet of Information to the Internet of Value
The internet of information refers to the vast, complex Internet as we know it today. Currently, this internet of information serves purely as a means of information exchange and does not have financial attributes — hence a trusted third party is often required to provide credible financial services. Information systems with multilayered architectures allow business logic and data access rules to be developed and maintained as separate, independent modules.
The internet of value refers to the construction of an internet network with financial attributes. This network does away with the need for trusted third parties (although they can exist), and currently blockchain technology seems to have the ability to make the internet of value a reality: blockchains have an exclusive nature and often intrinsically contain a financial system. When separated from this financial system, blockchains become a classic distributed system.
On the internet of information, the typical product separating business and technology is cloud computing.
Today, cloud computing has gradually expanded beyond its typical applications and is attempting to penetrate multiple verticals and industries to provide better technical solutions. A common example would be financial services solutions hosted on the cloud;
However no matter what kind of financial cloud solutions, they all have a repeatable and instantiated nature: factory A and B could both buy F application; however their actual operations will run on completely separate instances. There is no direct relationship between the two factories, apart from perhaps a small connection in their third-party intermediaries (O) such as banks or securities.
In this case, it can not be called the Internet of value.
To achieve the Internet of value, A and B could run different subnets on the same instance of application F and hence be directly connected; in other words, some of the services provided by third party intermediaries O such as payment functions (which blockchains come with) are no longer necessary.
2.BaaS and BTaaS
BaaS — — Blockchain as a Service
BTaaS — — Blockchain Technology as a Service
This classification draws on the concept of PaaS / SaaS in cloud computing sector.
In picture 1, I put BTaaS and PaaS at one level, and Baas and Saas at another.
The reason for this classification is that they have one of the biggest common points, that is, they target the same users.
I have begun to pay attention to the concept of BaaS since last year, and also wrote two articles to clarify the concept under the pattern of public chains and alliance chains: “Degraded Alliance Chain and BaaS” and “Analysis on the Limitations of Alliance Chain and Public Chain”.
The two articles mainly put forward two points of view:
First of all, the essence of the alliance chain is not about technology, but about business modeling. These business models are usually accompanied by equilibrium issues faced in the design of non-cooperative games. Whether or not a stabilization strategy that satisfies all parties in the system evolves becomes a key factor of the alliance chain; trying to completely rely on Byzantine fault-tolerant systems will absolutely not work.
Secondly as a special system, blockchain cannot be separated from its intrinsic financial attributes because they give rise to blockchain systems’ vitality. When its financial attributes are stripped, it will degenerate into a simple Byzantine fault-tolerant system. As a result, the ecosystem it supports will be greatly weakened.
Suppose the reader agrees with the two points mentioned above, then we come to a conclusion:
BaaS refers to the services provided by public blockchains, while BTaaS refers to the use of services provided by alliance chains.
We also draw the following conclusions:
- The ecosystem that BaaS can support is far greater than BTaaS.
- BaaS is closer to the specific structure particular to the Internet of value, while BTaaS is closer to corporate software solutions.
I’ll proceed to define BaaS and BTaaS:
Blockchain as a Service (BaaS) refers to using data generated by public blockchains to provide a series of operational services including blockchain-based querying, transactions and data analysis. These operational services may be decentralized or centralized. Currently, in the blockchain sector, blockchain browsers, digital currency trading platforms and other applications derived from public chains such as certificate-Factom and digital identity-uPort all fall under the umbrella of blockchain services.
Blockchain Technology as a Service (BTaaS) refers to using blockchain technology to build private distributed systems. These systems can be thought of as improved versions derived from classic distributed systems (Raft/Paxos/PBFT). Integration with existing cloud computing technology can provide developers and manufacturers with platform-level blockchain technology services.
Picture 2 shows the difference between BaaS and BTaaS and their application.
Readers may be confused about why I distinguish the two concepts so clearly? Because it determines the direction of the architecture of new businesses of blockchain.
3.Application and innovation under the Internet of value (Blockchain)
People believe that the future is headed towards completely decentralized DAPPs. In fact, this is unrealistic.
Presently, all economic systems rely on vast banking and securities systems, futile attempts to cut off everything and create a new economic system are even more unrealistic.
With blockchain as the underlying financial infrastructure, BaaS is capable of providing immutable, open and transparent financial services.
Blockchain is an infrastructure, representing the user channel; blockchain applications are related to back-end operations and represent service providers. They play the main role in the Internet of value.
Financial applications are divided into two types — high frequency and low frequency.
High-frequency applications are often payment and loan-related.
Low-frequency applications match transactions, futures and financial derivatives.
We prioritize high-frequency functions as a blockchain infrastructure, while low-frequency functions may be provided in the form of BaaS initially before progressively transiting to blockchain.
During this process Baas will play a key role.
Under BaaS, the business model of the blockchain resembles B2B2C because BaaS provides the 2B function while the blockchain itself provides the 2C. Because the public chain itself gathered a large number of users.
Institutions (B end) providing services must introduce charges. Centralization is also inevitable, so we do not have to vainly attempt complete centralization. During the process, blockchains are more like to play an intermediary role of having powerful evidence chains. All B-ends will be supervised by users.
In fact, the BaaS model has been gradually emerging in the blockchain sector: a large number of digital currency trading platforms (P network, B network) and blockchain explorer (blockchain.info) as well as Token master are centralized, but they all show great vitality.
I am one of the founders of the Metaverse Open Source Project. Picture 3 shows the BaaS displayed by a public chain. Metaverse achieves BaaS in accordance with its three pillars — Digital Assets, Digital Identity and Oracle intermediaries.
BaaS can be the ZenDao project on Metaverse (http://zendao.org/) or the ZenGold project (http://zengold.org/), and can also be any blockchain-based financial infrastructure project focused on Metaverse. So I built a BaaS development team inside the company.
So any applications focusing on public chains and providing services through BaaS are applications and innovation under the Internet of value.
4.The development of public chain
Systematic risks of blockchain
This issue has attracted particularly large amounts of attention, but is not yet widely acknowledged.
Many people criticize PoW mining as being not environmentally friendly and a waste of energy. This is similar to the problem of electric vehicle where the issue lies in energy structure, not PoW.
For example, the materials consumed when constructing a bank vault come from heavy industry manufacturing. Heavy industries similarly consume large amounts of energy.
Any public chain faces systemic risk — namely, the Byzantine fault tolerance threshold has the risk of being broken.
In fact, this is a common mistake made by beginners as it shows that they only sees the technical consensus, but fail to see the community consensus. In the real world, community consensus usually plays a stronger role than technical consensus. This systemic risk often comes down to community consensus which oversees all behaviors to some extent.
Identity issues
There has been a hot topic in the past two days — “What kind of users do not like WeChat? ”
At present, we are still at a stage where we merely inquire about addresses and transactions. In the future, blockchains will be accompanied by identities, and it will be an identity mechanism where users fully control their own assets. For example, Metaverse’s digital identity is sufficient to solve most internet identification problems.
Data privacy
Data privacy can actually be attributed to the identity issue, but sometimes it is purely about data privacy, not identity. I predict that the issue will become a popular research direction.
In this case, there actually exists a zero-knowledge proof problem. There has two currencies (Zcash \ ZCoin) in the blockchain sector that provide excellent payment privacy cases, but I think the best application of zero-knowledge proofs is not payment, but digital identity.
Importing external data onto the chain
Solving the issue of data privacy is a prerequisite for data to be imported onto the chain, followed by resolving identification and application issues.
This problem will naturally solve itself if these other issues are first addressed. It is an end in and of itself and will not be the main technical problem faced by blockchains.
Product form
The core competitiveness of blockchain products will focus on new applications that is optimized through core wallets
Currently BaaS will be the most competitive form of providing blockchain products, and can be seamlessly linked to Internet applications.
