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Microsoft CEO Satya Nadella. (GeekWire Photo / Kevin Lisota)

[Editor’s Note: Atul Ajoy is a 10th grader at Redmond High School, a tech enthusiast, startup founder, blogger and event organizer. He attended Microsoft Build in Seattle this week for the second year in a row, and filed this report for GeekWire, following up on his dispatch from last year’s conference.]

It was good to be back at Microsoft’s annual developer conference, Build, for the second time. The event started off with Microsoft CEO Satya Nadella claiming, “the world is becoming a computer” and that the impact would be like that of the Industrial Revolution. It was interesting to see how Microsoft’s vision and focus has evolved since last year. Similar to last year, Microsoft emphasized the move to technology powered by the intelligent edge and cloud powered by AI, the Internet of Things (IoT), and new to the list this year: blockchain.

This new focus on blockchain was highlighted by the public preview of Azure Blockchain Workbench, a new tool with a goal of reducing the time it takes businesses to build blockchain applications on top of existing blockchain infrastructure.

Before I get into their blockchain products, what is a blockchain? Well according to billionaire investor Warren Buffett, Bitcoin, a cryptocurrency built on the blockchain, is “probably rat poison squared.” His harsh view isn’t rare: Amazon Web Services CEO Andy Jassy, discussing blockchain, has said that AWS does not “build technology because we think it is cool,” and JPMorgan Chase CEO Jamie Dimon called Bitcoin “a fraud” claiming it is “worse than tulip bulbs,” referring to the tulip mania of the 17th century. (Dimon later said he regretted the statement.)

But for many, like myself, blockchain technology is not about the hype shown by the volatility of cryptocurrencies like Bitcoin; it presents an opportunity to improve the world we live in, using smart computer science and innovative economics. Blockchain is the underlying technology behind many cryptocurrencies and is a distributed ledger that is immutable, allowing for transactions between two or more trustless parties to occur securely. Once blocks in the chain are verified, it is almost impossible to alter them after the fact.

To allow only authentic, authorized transactions and to avoid the double spend problem (an attack where someone attempts to send the same tokens to more than one person effectively spending more than they have), blockchains use a consensus algorithm such as Proof of Work in Bitcoin and Proof of Stake in others to decide which block to use in the chain of blocks when there are multiple contradicting blocks. This technology allows for secure, authorized transactions to occur, enabling many financial and non-financial use cases by business around the world.

Azure Blockchain Workbench architecture. (Microsoft Image; Click for Larger Version)

Microsoft’s goal with Azure Blockchain Workbench is to enable developers who aren’t blockchain experts to be able to build solutions for those use cases.

“Workbench dramatically reduces development costs and accelerates time to value for developers, independent software vendors and integration partners alike,” said Matthew Kerner, a General Manager at Microsoft Azure. It does this by automating the deployment of the ledger and network using the Azure Resource Manager and connecting identity on the blockchain to Azure Active Directory for identity management and allowing for the creation of blockchain workflows using Logic Apps.

It also integrates many of the blockchain’s other features with existing Azure products. Initially, the Azure Blockchain Workbench will work with Ethereum but will also add support for Hyperledger Fabric and R3’s Corda distributed ledger platform.

This approach of connecting a cloud platform’s existing products to existing blockchain infrastructure is not new. Jassy’s past comments notwithstanding, Amazon Web Services launched AWS Blockchain Templates less than a month ago to help developers create and deploy blockchain networks powered by Ethereum or Hyperledger Fabric. It does this by deploying the blockchain in containers with the Amazon Elastic Container Service or through Docker containers in Amazon’s Elastic Compute Cloud (EC2) service.

This approach can work extremely well for some users. As was shown by an Apttus demo at a session during Build, the Azure Blockchain Workbench simplified many of the toughest aspects of building a blockchain application such as identity management. Apttus, a quote-to-cash startup built on top of the Salesforce platform, was working with financial services firms to build a smart contract-based solution for loan securitization. Azure Blockchain Workbench gave them a simple solution for identity with single sign-on (SSO) and an easy way to deploy the applications and Solidity code. And Apttus isn’t alone, Microsoft gave examples of how companies like Maersk were using the tool to build solutions for problems they face with insurance. It is clearly a way to help developers build blockchain solutions on existing infrastructure such as Ethereum quickly and cost effectively.

Clearly these companies are focusing on their core strengths by offering developers ways to build blockchain apps using their existing cloud platforms and services. But the core blockchain infrastructure is still evolving. Ethereum is in the process of switching from a Proof of Work consensus mechanism to a Proof of Work and Proof of Stake hybrid consensus mechanism. This past year, the Bitcoin blockchain went through a hard fork to create Bitcoin Cash, which has an increased block size with the goal of speeding up transactions. These are just two examples of the changing blockchain infrastructure and I believe that there will be new blockchains that can form the basis for enterprise blockchain applications.

There’s room for improvement in communication between private consortium blockchains and public blockchains, blockchain throughput in transactions per second, and the cost of deployment in these networks whether it be for smart contracts or transaction costs.

We’ve seen companies like IBM, Facebook, and Google doing blockchain research and development into how the technology will impact their businesses and how it can be adopted. It would be fantastic to see a similar approach and investment from Seattle’s cloud behemoths in Microsoft and Amazon.

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