Microsoft's Blockchain Strategy: The Cloud and Identity Systems

By Giulio Prisco

Blockchains, cryptographically secured distributed ledgers inspired by the technology that powers the digital currency Bitcoin, are now finding growing adoption in the financial world from most major banks and financial service providers.

But Silicon Valley tech giants are investing and experimenting with blockchain technology as well, often targeting innovative applications beyond payments and financial services. The likes of Microsoft, IBM, and Intel now have ongoing blockchain projects, while similar projects don’t often surface in the business and stock investment worlds.

Microsoft’s (MSFT) interest in blockchain technology is particularly worthy of consideration. The company, which is shifting to a cloud-centered business model, offers blockchain development environments for corporate clients, integrated into its global vision of “essential but invisible,” scalable cloud computing for enterprise.

Microsoft hopes to persuade its enterprise customers to migrate to the company’s cloud platform, centered on Azure. With this objective in mind, Microsoft has been boosting in-house development capabilities and acquiring specialized cloud-computing companies, such as the Israeli cloud security company Adallom and Metanautix, a company specialized in data management for business analytics.

In December 2015, Microsoft and ConsenSys, a blockchain startup focused on Ethereum technology, launched an Ethereum-based Blockchain as a Service (BaaS) development platform on the Azure cloud.

“As an open, flexible, and scalable platform, Azure supports a rapidly growing number of distributed ledger technologies that address specific business and technical requirements for security, performance and operational processes,” reads Microsoft’s (Baas) website. “Blockchain as a Service (BaaS) provides a rapid, low-cost, low-risk, and fail-fast platform for organizations to collaborate together by experimenting with new business processes — backed by a cloud platform with the largest compliance portfolio in the industry.”

Aside from building and maintaining general purpose BaaS development environments for clients, the Microsoft seems to have chosen online blockchain-based identity management (the part of internet infrastructure that deals with authentication and digital signatures) as its own blockchain turf. In June, Microsoft announced a partnership with Blockstack Labs, ConsenSys and independent developers to build an open-source, blockchain-based identity system, interoperable across blockchains, cloud providers and organizations. The initiative aims to move beyond the informal identity systems operated by the major social media companies, and develop globally recognized identity systems for the real world.

Recently, Microsoft and blockchain technology company Tierion announced a partnership to develop a service that generates, manages and validates attestations — identity-signed and timestamped data on a public blockchain, able to prove, for example, that a student has completed the work required by an educational organization. It is to be expected that, as colleges and professional schools embrace online education, the need for solid attestation systems will grow.

“The collaboration between Microsoft and Tierion is another important step in bringing the best blockchain-based tools and services to developers,” Microsoft’s Azure blog reads. “As we move forward with our decentralized identity initiative, look for more content, collaborations, and announcements in the coming months.”

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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