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While the price of major cryptocurrencies like Bitcoin (BTC) and Ethereum (ETH) remain choppy this year, businesses and investors across the globe have been busy exploring ways they can best use blockchain technology.
They're trying to harness the tech to improve or streamline operations in a wide range of industries – from financial services, media, and telecom to transportation, healthcare, and consumer or industrial products.
The idea here is that the blockchain can provide a digital store of value, eliminate the middleman currently required in many digital transactions, quicken settlement between parties, and authenticate transactions in an immutable way.
And that's just the beginning.
So this is going to be a big industry, with a big market.
WinterGreen Research estimates the worldwide market for blockchain products was $706 million last year and could reach more than $60 billion by 2024. That's 8,400% growth in less than a decade – and that'll lead to the kinds of gains no one can ignore.
But today, I want to focus on a smaller sector within the blockchain world. It's got explosive profit potential all on its own.
Then I'm going to show you three ways to make money on this blockchain revolution.
Check it out…
Introducing Blockchain as a Service
Technology hardly ever works in isolation. It often takes a variety of technologies working in tandem to achieve next-level services that become the basis for whole new industries.
That's the "Convergence Economy" in a nutshell.
And that is just what's at play with the field of blockchain as a service (BaaS), which seeks to help businesses build out their enterprise blockchain solutions and incorporate the cloud services they rely on.
It's not much of a surprise when you consider the potential market here – MarketsandMarkets sees BaaS growing from a $623 million industry today to a $15.5 billion one by 2023.
You can now add to that list the Chinese telecom giant Huawei Technology Co. Ltd., which recently announced its blockchain strategy at a Hyperledger Meetup in Beijing.
Huawei's BaaS offering, known as BCS, will become the core structure on which the firm can incorporate its cloud solutions. The idea is to integrate with other cloud services, as well as enterprise blockchains, through existing IT infrastructure.
Companies setting up their enterprise-level blockchains typically focus on nine key application scenarios when choosing BaaS – data assets, Internet of Everything (IoE), operations, identity verification, data certification, data transactions, new energy, philanthropic donations, and inclusive finance, according to Zhang Ziyi, a blockchain architect with Huawei's cloud unit.
It's an exciting new industry we'll be keeping an eye on.
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And as we do, I want to call your attention to a few ways you can play this new trend – and the broader blockchain space.
Blockchain as a Service Play No. 1: Microsoft
Microsoft Corp. (Nasdaq: MSFT) was the first firm to bring blockchain to the cloud, and it's made blockchain technology a key part of its Azure cloud computing platform. The system even comes with easy-to-deploy templates that allow users to plug into the most popular crypto ledgers.
Microsoft also says Azure's built-in blockchain is designed to help developers write enterprise-wide applications that can integrate into existing cloud services.
Designed to provide maximum flexibility, the Azure blockchain platform provides a highly secure ledger of all transactions for a literal permanent record. This "immutable" record means mistakes cannot be corrected with updates or through data deletions – they must be fixed later through a compensating transaction that also remains in the ledger.
Recently, Microsoft has begun connecting its blockchain services to other popular infrastructures and platforms, from its own Office 365 Outlook to those from Salesforce.com Inc. (NYSE: CRM) to SAP SE (NYSE: SAP) and Twitter Inc. (Nasdaq: TWTR).
The idea for Microsoft here is to help its customers by allowing them to port their data from these services onto the cloud and then a blockchain. In this way, data from multiple companies can be collected in a standardized format at scale, allowing for a nearly limitless ability to mine such data for all kinds of insights.
"What blockchain is doing is creating a multi-party business process that is moving out of email, phone calls, spreadsheets and into a single system with a single view on the data that all of the participants can rely upon and trust," Azure General Manager Matt Kerner told CoinDesk. "Even the fiercest of competitors can onboard and mutually derive benefit from that system and find new revenue streams."
To date, Microsoft hasn't said just how much it's earning from the blockchain portion of Azure. But that cloud product is a big winner.
In its most recent fiscal quarter, Microsoft said Azure revenue grew 76%. While below the growth rate Azure has scored in recent quarters, it's still impressive – and makes Azure the fastest-growing part of the Microsoft empire.
Now, Microsoft still hasn't disclosed how much revenue Azure brings in, but Evercore analysts estimate it saw more than $7.74 billion in sales in fiscal 2018, or about 7% of Microsoft's total annual revenue.
That's bound to rise as more firms seek out Azure.
Blockchain as a Service Play No. 2: IPOs to Watch
About the Author
Michael A. Robinson is a 35-year Silicon Valley veteran and one of the top technology financial analysts working today. He regularly delivers winning trade recommendations to the Members of his monthly tech investing newsletter, Nova-X Report, and small-cap tech service, Radical Technology Profits. In the past two years alone, his subscribers have seen over 100 double- and triple-digit gains from his recommendations.
As a consultant, senior adviser, and board member for Silicon Valley venture capital firms, Michael enjoys privileged access to pioneering CEOs and high-profile industry insiders. In fact, he was one of five people involved in early meetings for the $160 billion "cloud" computing phenomenon. And he was there as Lee Iacocca and Roger Smith, the CEOs of Chrysler and GM, led the robotics revolution that saved the U.S. automotive industry.
In addition to being a regular guest and panelist on CNBC and Fox Business Network, Michael is also a Pulitzer Prize-nominated writer and reporter. His first book, "Overdrawn: The Bailout of American Savings" warned people about the coming financial collapse - years before "bailout" became a household word.
You can follow Michael's tech insight and product updates for free with his Strategic Tech Investor newsletter.