09-11: Nagarajan Venkatachalam
Chair: Mario Giraldo
Blockchain as a Service (Baas): A Multi-domain Perspective
This study conceptualizes Blockchain as a Service based on the premise that Blockchain performs valuable actions (e.g. distributive ledger, immutability) (Constantinides et al. 2018; Eyal et al. 2016), which fulfils specific demands (e.g. transactional security, fostering trust) (Iansiti and Lakhani 2017; Tapscott and Tapscott 2017). BaaS is observed disrupting incumbent processes and creating value exchanges across domains. Given its disruptive nature, different domains namely information technology (e.g. Information Systems [IS]), industry sectors (e.g. Law), economic entities (e.g. markets) offer differing etymological perspectives that reflect its use, impact and value. Through content analysis this study enhances understanding of BaaS diffusion by presenting these three domain perspectives. The diffusion of BaaS is captured through usability and acceptability elements.
In IS, Blockchain represents the Open-System Interconnection (OSI) model comprising of seven layers. It begins with a distributed database (Data), that is replicated across a set of nodes connected by a peer to peer network (Network) (Pilkington 2016). It is customizable through a communication messaging protocol (Transport) which uses cryptography (Session) for protecting users and value exchanges (Presentation and Application)(Glaser 2017). It ends with a hardware layer, viz. Internet connected device. Thus, the IS perspective reflects the integrative utilitarian value of BaaS.
Smart Contracts (SCs) (Lauslahti et al. 2017; Peters and Panayi 2016) represent rules coding in the Blockchain ecosystem designed for customizing the use. The economic parlance of Blockchain to mitigate uncertainty in trading and creating trust between market entities (e.g. buyers, sellers) (Riasanow et al. 2018)is achievable through SCs through (a) recording all valid transactions through a distributed ledger including consensus mechanisms and transactional histories making such records difficult to replicate or change (b) mitigating product uncertainty by enabling information availability and transparency between traders and consumers, and (c) executing SCs for making business dealings and networks less susceptible to fraud and misuse(Catalini and Gans 2017). Thus, market economies reflect the pragmatic value of BaaS.
The term “contract” caused significant confusion in terms of how SCs can potentially disrupt the legal profession (Lauslahti et al. 2017). All legal roles and agreements cannot be expressed digitally (i.e. codify). For example, courtrooms require subjective, human elements, which cannot be transacted via “if-then code strings”. Hence, claims of Blockchain creating redundancy of practicing lawyers and correcting asymmetric enforcement of rights is contestable (Beck et al. 2018). This study notes that legal contracts facilitate information flows between stakeholders, while SC’s automate such transfers, thereby protecting and sharing information stored therein. Thus, the law domain reflects the potential derivative value of BaaS.
The foundational (transaction guarantees) and disruptive aspects of Blockchain (e.g. powerful network effects) present opportunities and challenges to leverage BaaS. Hence, understanding the capabilities and potential value of BaaS, is invaluable for acceptance and use.