Microsoft has announced its first Azure-based, managed blockchain platform using JPM's Quorum enterprise-class distributed ledger technology.
Since 2015, Microsoft's Azure cloud service has allowed users to install a number of blockchain platforms, including Enterprise Ethereum, Hyperledger Fabric, R3 Corda, and Quorum. That service only offered provisioning and setup.
Now, however, Microsoft will handle not only the installation of the Quorum permissioned platform but software patches and updates, a full suite of application development tools as well as a template to govern the ledger, such as who can join a Quorum blockchain.
"None of that existed before. Customers had to figure all that out on their own," said JT Rose, senior marketing manager for blockchain at Microsoft.
In November, Microsoft launched Azure Blockchain Workbench, a cloud-based development kit that enabled Azure services for encryption key management, off-chain identity and data management, and messaging APIs into a reference architecture that could be used to quickly build blockchain-based applications.
"What customers increasingly wanted was a managed infrastructure from us as well as a set of tools with Visual Studio Code and Logic Apps and Flow to write smart contracts to live on that network, manage the code of those smart contracts and interact with them - send data to and from smart contracts," Rose said. "In our conversations with JMMorgan, they were seeing the same things.
"So, I think what we've evolved into is going from an infrastructure view of this in the early days...to a much more applications approach and set of offerings," Rose added.
By making JPMorgan's Quorum blockchain platform available as a managed service on its Azure cloud service, Microsoft said both its and the bank's customers will be able to more easily build and scale blockchain networks in the cloud – without the need for capital expenditures on internal infrastructure.
Avivah Litan, a Gartner vice president of research, said that while there is movement into managed services in the blockchain market they're not fully managed services – as in an on-premesis model. And most of them are not interoperable with other clouds.
"So Azure blockchain is only talking to other Azure blockchain nodes. It can't talk to AWS or Google," Litan said. "Frankly, the only one that does interoperate to some extent, not on all levels, is IBM's blockchain cloud. You can run a node on an IBM cloud, or AWS cloud or on-premise."
The market's still years away from true interoperability across clouds or for smart contracts to run everywhere, "which is really what you need for blockchain.
"That's one of the pieces that still needs to be developed," Litan added. "I think the big point here is companies do have trouble deploying blockchain, so cloud-based managed services certainly help them move faster."
JPMorgan developed Quorum last year based on the Ethereum open-source, public blockchain, which has smart contract functionality.
JPMorgan's version, however, is a permissioned or private blockchain, meaning a company using it can control who can join the ledger. Conversely, public blockchains, such as bitcoin, have no access restrictions.
"By utilising Quorum, enterprise businesses across all industries will be able to shift their focus from infrastructure management to application development, ultimately driving transformative business value," Microsoft said in a joint statement with JP Morgan.
"Customers will benefit from rapid network growth, lower costs, simplified deployment and built-in governance enabled through Azure Blockchain Service."
In addition to providing a platform for customers to build blockchain networks and applications, Quorum will continue to power JPMorgan and Microsoft blockchain programs and first-party apps, such as the Interbank Information Network, JPM Coin (a stablecoin or fiat-backed digital currency) and Microsoft's Xbox royalty payment process.
JPMorgan likely chose Microsoft's Azure platform out of necessity, Litan said, as it is the only managed cloud service already covering Ethereum, on which Quorum is based. Whlle it has announced its intent to support Ethereum, AWS currently only supports Hyperledger, as does IBM in terms of its managed service.
Google does not have a managed blockchain service.
"There really wasn't anyone left other than Microsoft," Litan said.
JPMorgan in February announced JPM Coin, making it the first major bank to offer a cryptocurrency backed by fiat money; the coin could be used on its Quorum blockchain platform for cross-border transactions. One JPM Coin has the same value as one U.S. dollar. Trials for the new cryptocoin are expected to begin in the next few months.
"When one client sends money to another over the blockchain, JPM Coins are transferred and instantaneously redeemed for the equivalent amount of U.S. dollars, reducing the typical settlement time," JPMorgan said in an online FAQ.
The technology also reduces fees by cutting out a central bank middleman typically responsible for clearance and settlement.
Blockchain continues to grow and evolve and is expected to generate upwards of $160 billion by 2023.
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