Amazon Web Services is making its managed blockchain service publicly available Opens a new window in the United States, following in the footprints of its competitors, Microsoft Azure, Google Cloud and IBM.
The move by the tech giants underscores the rapid rise of blockchain’s distributed ledger technology, which has been adopted by enterprises ranging from food producers to financial services companies as a way to manage complex chains of supplies and partners.
Blockchain technology was first introduced as the technology behind cryptocurrency transactions and has since expanded to underpin a distributed ledger, a computerized database shared by various businesses and institutions.
Any changes or updates are copied instantly to all participants and cannot be changed – the ledger is immutable – and is governed by rules established in computer code. This eliminates the need for a central authority to monitor it and is a powerful deterrent to fraud.
Setting up a company’s blockchain can be difficult and time-consuming, the reason businesses often hire expensive consultants to advise them on implementation. But blockchain-as-a-service, in which a cloud provider such as AWS or Azure manages the setup, speeds up and simplifies the process as well as cuts costs.
Amazon inaugurated its blockchain service – called Amazon Managed Blockchain or AWB – at the end of 2018 and has kept it in preview state for the past four months. This week, Amazon launched it, initially for use in the eastern United States before expanding its access nationwide, and offers the Hyperledger Fabric framework as a platform to run the network.
Amazon will add the Ethererum framework later this year.
Amazon’s service will allow customers to choose a framework, add members to the network, then configure the member nodes – participating computers – to process transaction requests. AMB handles the background processes, so a blockchain network can be created that spans several AWS cloud accounts and configures the settings for software, security and networks.
Amazon initially expressed skepticismOpens a new window about blockchain technology. But Microsoft and IBM jumped into the business early, Microsoft Azure in 2015 and IBM in 2015, followed by Google Cloud earlier this year.
Azure has reportedly set up networks for hundreds of customers.
At this week’s launch, Rahul Pathak, general manager of Amazon Managed Blockchain, explained why the company entered the blockchain arena: “Customers want to use blockchain frameworks like Hyperledger and Ethereum to create blockchain networks so they can conduct business quickly with an immutable record of transactions but without the need for a centralized authority,†he said. “However, they find the frameworks difficult to install, configure and manage.â€
Amazon Managed Blockchain sets up the network, configures the nodes, manages certificates and security and scales the network. “Customers can now get a functioning network set up quickly and easily so they can focus on application development instead of keeping a blockchain network up and running,†he said.
Amazon provides the computing and storage power through its cloud network to allow customers to choose the mix of resources for their blockchain networks.
Ironically, the aim of a distributed ledger is to avoid a centralized authority. But the cloud provider will act as a guiding manager of the blockchain. While unable to influence decision-making, the cloud provider in effect controls the price and terms of supply for the distributed ledger.
Blockchain appears to be making inroads into a number of industries. Nestle, the food and beverage giant which has more than 2,000 brands distributed across 189 countries, has chosen Amazon’s blockchain to improve supply chain transparency, allowing precise tracking of materials used in its products.
“Amazon Managed Blockchain will enable our customers to track their products on the blockchain from the farm all the way through to consumption,†says Armin Nehzat, a Nestle digital technology manager.
One of the innovations created by blockchain technology is a self-executing contract written into the ledger’s lines of code. As a result, the contracts cannot be changed, guaranteeing that their terms will be carried out.
Because the contracts are distributed among the blockchain’s members, who all must validate any updates, no one player can fraudulently execute or change them.
Advocates for blockchain technology say the system promises to transform the way companies do business, removing the need to police contracts, since they will be carried out automatically. But first businesses have to overcome their reluctance to become involved in the complex, costly process of setting up a blockchain.
The launch of blockchain-as-a-service companies simplifies that process and, its Silicon Valley supporters say, is a giant step on the way to changing the economy.