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FAQ: What Amazon's blockchain services mean for your business

Amazon unveiled Quantum Ledger Database and Managed Blockchain services at AWS re:Invent 2018. Here's how the new services can potentially impact your organization.

Amazon Web Services (AWS) has been famously resistant to blockchain adoption, despite the distributed ledger technology now being nearly a decade old. At AWS re:Invent 2018, the company announced two blockchain services, allowing users to create a private blockchain or blockchain implementation for potential business use cases.

The first of these, Amazon Quantum Ledger Database (QLDB), is a fully-managed ledger database with a central trusted authority. The second, Amazon Managed Blockchain, allows users to create and manage blockchain networks using the Ethereum or HyperLedger models.

Here's a comprehensive briefing on how blockchain differs from other computing and transaction management paradigms, how these offerings impact the blockchain industry, and potential blockchain use cases in your organization.

SEE: Research: The current state and predictions for the future of blockchain in the enterprise (Tech Pro Research)

What is blockchain, and how is it different from a database?

Blockchain is a computing model which enables the decentralized management of records in a permanent and verifiable way. By design, it is intended to be tamper-proof—each block contains a cryptographic hash of the previous block—making retroactive editing of transactions in the blockchain impossible without altering all of the blocks that followed it. For decentralized blockchains, this is a practical impossibility due to the distributed control of the network.

The technology was developed by the pseudonymous programmer Satoshi Nakamoto as the underpinning of the Bitcoin cryptocurrency. Since then, other cryptocurrencies have been built on top of the concept, while some groups have explored applying blockchain to other use cases. These include managing transaction records for traditional currencies, as well as more inventive uses like land registration, smart contracts, and federated social networking.

How are the two blockchain services on AWS different?

Amazon Quantum Ledger Database (QLDB) is marketed as a "fully managed ledger database that provides a transparent, immutable, and cryptographically verifiable transaction log ‎owned by a central trusted authority."

Strictly speaking, there is not a universally accepted definition of blockchain. The cryptographic hashing features which make the technology suited to digital currency applications like Bitcoin—when applied to use cases with a central trusted authority—make the technology little more than a computationally intensive database.

The value of QLDB is ease of deployment. Relative to the amount of work and compute nodes required to deploy Hyperledger Fabric or Ethereum, QLDB simplifies the deployment of a ledger database.

To contrast, Amazon Managed Blockchain is a full blockchain network which automatically scales the resources needed to operate networks using Hyperledger Fabric or Ethereum frameworks. According to Amazon, it "manages your certificates, lets you easily invite new members to join the network, and tracks operational metrics such as usage of compute, memory, and storage resources," and allows users to replicate the Managed Blockchain instance on QLDB to analyze trends and generate transactional metadata for statistical analysis.

Why do blockchain services on AWS matter?

Strictly speaking, it has always been possible to implement blockchain on AWS, via a standard EC2 compute instance. AWS CEO Andy Jassy indicated at re:Invent 2018 that the company has concentrated on understanding why customers want blockchain services instead of traditional databases, stating "Even though we have a lot of customers that run blockchain on top of us... we just hadn't seen that many blockchain examples that couldn't just be solved by a database."

Amazon's new offerings do substantially simplify the process of deploying this technology on AWS, as tools customized for this purpose make it easier to scale resources and manage resource billing.

Should I use blockchain or ledger database services on AWS?

There's a really simple flowchart for implementing blockchain.

QLDB occupies an uncomfortable middle ground, in terms of technology. The centralized nature of the service gives it all of the immutable properties that blockchain has, though these immutable properties mean it has limited practical business application to justify the computational overhead and expense that accompanies a blockchain deployment.

If, somehow, you have a business use case which requires an immutable database because the product design potentially allows users to modify data or attributes of other users, you have a design problem. Throwing blockchain at this would not be helpful or cost effective. Likewise, if you have a design which can result in unintended changes to data, you have a data recovery or version control issue. These are problems which can be fixed easily with less engineering talent than is required to adapt these use cases to QLDB, with a lower operating cost.

SEE: AWS RoboMaker: A cheat sheet (TechRepublic)

If, for some reason, you have a business case that actually requires distributed control and reporting—as a simple example, imagine a federated rewards system which allows customers to earn points across stores with different owners, with redemption cost offset calculated proportionally by the stores at which the points were earned—deploying blockchain would be useful. The number of these use cases is not abundantly high, but is nonzero.

With those disclaimers in mind, if you are absolutely convinced of a business need to use blockchain, the AWS implementation of ledger or blockchain applications is quite likely to be the easiest path to implementing that for your business, with that ease of use magnified if you are already using other AWS products in your organization.

Also see

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Image: iLexx, Getty Images/iStockphoto

About James Sanders

James Sanders is a technology writer for TechRepublic. He covers future technology, including quantum computing, AI, and 5G, in addition to security, cloud computing, open source, mobile and satellite communications, and the impact of globalization o...

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