Why Microsoft Wants ‘Every Blockchain’ on its Azure Platform

While Microsoft tested the waters with bitcoin at the tail end of 2014, the tech giant appears poised to be a far bigger player in the burgeoning market for solutions that harness its underlying blockchain technology.

Since opening its Azure cloud computing platform to the ecosystem this October, Microsoft has added a steady stream of partners to its blockchain-as-a-service (BaaS) solution – a product styled as a kind of ‘sandbox’ where partners can interact with different technologies, from smart contracts to blockchain-based tax reporting services, in a low-risk environment.

Far from starting with the biggest, venture capital-backed players, however, Microsoft has so far turned heads with its frequent, and often unpredictable, partnership announcements for the service.

For example, in October, Microsoft chose to debut its BaaS service not with later partners like $32m bitcoin startup BitPay or recordkeeping service Factom (infamous for its now stalled but well-publicized “partnership” with Honduras), but with a then-relatively unknown distributed applications company called ConsenSys.

Since then, Microsoft has backed efforts on all manner of blockchain services, from long-standing altcoin projects with novel blockchains (Emercoin) to ‘build-your-own’ blockchain solution providers (MultiChain).

However, according to Microsoft’s director of technology strategy, Marley Gray, there won’t be any shortage of new blockchain players added to its Azure platform, given that it is designed for development and testing.

Gray told CoinDesk:

“We want, and frankly our customers want, access to every blockchain. It could be two guys in a garage that forked bitcoin and had this genius idea and people want to try that out. We don’t want to have any barriers. We’re open to all. We help even the smallest of players onboard.”

Gray indicated the plan is for the Azure BaaS platform to scale up into a “certified blockchain marketplace” by this spring and that, at this stage, the technology providers undergo a more serious security vetting.

Until then, however, he sees the platform as one that should foster an environment of education and collaboration, with products that seek to appeal to users seeking to learn through trial and error.

Gray further sought to suggest that Microsoft was wary of acting as a ‘gatekeeper’ for the service, given that the technology is still in its early stages.

“We’re not going to pick a winner,” he added. “Even if we tried to, the market wouldn’t want the one we picked.”

Avoiding competition

In interview, Gray was keen to frame Microsoft’s new offering given the recent influx of big-name technologists, banks and professional services firms to the ecosystem – all of whom seem intent on helping institutions make their new interest in all things blockchain actionable.

For example, Internet payment firm Earthport has spun up a similarly positioned service that focuses on connecting banks and payment providers to the Ripple protocol. Gray, on the other hand, described Microsoft’s goal as helping facilitate interaction between clients and protocol-level blockchain providers

“We’re looking at places where we’re not competing with our customers and partners, but we’re trying to be that platform company we’ve traditionally been,” Gray explained.

In this light, he categorized the work ongoing at companies such as Accenture, Deloitte, Ernst & Young and KPMG as more focused on their traditional domain – applying blockchain technology to business use cases, an area in which he doesn’t believe Microsoft can, or should, compete.

“Vertical expertise will come from our traditional vertical partners,” Gray said. “You’re not going to see us writing an equities trading platform.”

Instead, Gray lauded Microsoft’s product for its success allowing partners to provide potential clients with access to their technology in a way that “provides rapid feedback” and allows them to more quickly respond to customer demand.

In a blog post, Gray summarized this strategy as one that allows users to “fail fast and cheap”.

Taking a neutral stance

As for how Microsoft sees its efforts in contrast to consortiums formed by major banks, Gray sought to position the tech giant as providing a neutral, “Switzerland-type” environment for development.

Alongside development sandboxes, consortiums have emerged as an increasingly favored path for banks and financial institutions seeking to better understand the technology. The most famous to date, R3CEV, has so far signed up 42 banks to its effort, and is seeking to expand its mandate beyond this demographic.

But, these networks aren’t optimized to handle participants’ every need, Gray contends.

Consortia projects, he believes, can leverage the Azure platform to offset the need for traditional types of trust agreements in permissioned blockchain networks.

While bitcoin’s blockchain has an almost Darwinian ‘every entity for itself’ environment commonly termed “trustless”, consortiums so far seem interested in replicating existing trust-based relationships in a distributed ledger environment.

One concrete example where Microsoft’s services can serve as an arbiter, Gray said, is in cryptographic key storage.

“When a consortium owns the keys to the kingdom, they can be kept on Azure and not by an individual bank,” he said. “They may want the consortium to be able to do the management, but they may also want to own their own resources.”

He also sought to position cloud offerings as a more mature testing environment for such efforts – a claim evidenced by the fact that R3 used Azure as part of its first completed blockchain test with 11 major banks.

Hastening innovation

As for the current version of Azure’s BaaS service, Gray stressed that it is “fully open” to the public now, and that clients can deploy blockchains either directly in Azure or in a local data center via its platform.

For cloud users, blockchains can be deployed by clients who “fill out a web interface and click go”. From there, Marley said, they can be managed like any virtual machine in a cloud environment, with users quickly adding blockchain networks.

Such mechanisms, however, are currently developed by application providers and not Microsoft. So, for example, developers looking to run Ethereum on a virtual machine will need to deploy via a template created by tech platform provider BlockApps.

Gray described this ability for innovators and incumbents to interact in energetic terms, suggesting that Microsoft sees Azure as a way to ramp up the pace of innovation in the blockchain sector.

“You can have a private cloud, but nodes can be sitting under people’s desks. If they’re permissioned to join the blockchain, they can join,” Gray said.

In this way, he suggested the BaaS is a way for the company to replicate its own experimentation process, and its successes.

“We initially launched the BaaS platform to include numerous blockchain platforms … to allow customers and partners and developers to try these things out to figure out the strategies,” he said, concluding:

“Now we can automate the setup and get it down to 20 minutes in a blockchain environment.”

Image via drserg / Shutterstock.com