Launching a blockchain startup could be difficult, but with the appropriate plan, such a company could scale past the difficulties.
Given the rapid development that blockchain technology is presently undergoing, many founders are looking to own their own blockchain startup. Without a question, blockchain technology will affect the world in exciting ways and we haven’t yet realized all of its possibilities. We however anticipate the emergence of innovative blockchain startups.
Numerous industries, including healthcare, supply chain, real estate, retail, and others, can use and benefit from blockchain technology. But there are several steps you should consider taking in order to build your own blockchain startup.
If you are new to the blockchain world, it would only be fair that you have an understanding of what blockchain is.
What is Blockchain?
Blockchain is a decentralized, distributed, and public digital ledger that is used to record transactions across many computers so that the records cannot be altered without the alteration of subsequent blocks and the consensus of the network.
In simpler words, a blockchain is a distributed database that maintains a continuously growing list of ordered records, called blocks. These blocks are linked using cryptography. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data.
It is predicted that the global blockchain market is expected to reach a market size of $69.04B by 2027.
Tips on how to own a blockchain startup
Anyone can own a blockchain startup but the process requires the commitment of time, money, advanced technical knowledge, and other resources. If you decide that building a new blockchain startup is your next step, then here are a few tips on how to own a blockchain startup:
- Test and validate assumptions
- Choose a blockchain model
- Choose a framework for your blockchain application
- Verify legal compliance
- Generate revenue
Test and validate assumptions
When it comes to starting a business, too many first-time founders spend too much time at the beginning planning while sitting at a computer and too little time putting their business plan’s assumptions to the test in the real world.
In truth, the business climate is changing so quickly that business ideas and concepts that made sense one year ago are now obsolete. You must therefore make sure that your leap of faith assumptions are correct.
When someone has a new product or service concept, the first step isn’t to figure out how to make it happen; rather, it’s to determine whether the client has a problem and, more critically, whether they’re willing to pay for a solution.
The Minimum Viable Product (MVP) methodology is used by the majority of tech founders and product developers to gauge their progress toward a workable market prototype. Early in the product development cycle, an MVP is a product with sufficient functionality to draw early adopters and verify a product idea. In sectors like software, the MVP can assist the product team in gathering customer input as soon as possible so that they can iterate and enhance the product.
The Riskiest Assumption Test (RAT), however, is an even better method of demonstrating the feasibility of your idea. Prior to the product’s debut, the major objective of RAT (Riskiest Assumption Test) is to immediately gather customer input and determine the idea’s viability.
Blockchain entrepreneurs are increasingly using the RAT to avoid wasting time and resources on the wrong solution or issue.
It adheres to the established “Lean Startup Model” and will assist you in making sure you only develop features and goods that consumers will find valuable enough to pay for. According to the Lean Startup model, you must create a number of tests to validate your solution’s crucial leap of faith assumptions.
Instead of spending time and money on a company idea that no one would buy, it is much better to realize early on that you need to rethink your approach.
Choose a blockchain model
A blockchain business model unifies numerous technological models and commercial modules across the three layers to establish a value-based ecosystem around blockchain technology.
A blockchain business model possesses all three of the key features of blockchain technology: it is decentralized, relies on peer-to-peer transactions, and operates within a secure network.
Any blockchain business’s underlying model is its most important component. Let’s look at a few of the most common blockchain business models that are appropriate for large organizations:
- P2P Blockchain Business Model
- Blockchain As A Service Business Model (BaaS)
- Token Economy – Utility Token Business Model
- Blockchain-Based Software Products
- Development Platforms
- Blockchain Professional Services
- Network Fee Charge
P2P Blockchain Business Model
Peer-to-peer technology powers the P2P business model. P2P blockchain enables end-users to communicate with each other directly.
These firms can make money through transaction fees, tokens, or BaaS.
Blockchain As A Service Business Model (BaaS)
One of the most well-known blockchain business models or concepts out there is blockchain as a service. It ultimately comes down to offering an ecosystem so that other companies may manage their blockchain systems.
Other firms can administer their blockchain system in an environment provided by BaaS. One such example is Ethereum Blockchain as a Service (EBaaS).
Token Economy – Utility Token Business Model
Utility tokens or crypto tokens enable owners to access the services offered by a decentralized platform.
Consider Ethereum as an example. It is a cryptocurrency and utility token that provides access to the network’s decentralized computing service.
When using this strategy, a company will keep certain utility tokens and release the remainder to maintain the network’s functionality. Once the utility token’s value changes, profits are realized.
Blockchain-Based Software Products
In this case, ready-made blockchain software solutions are sold to other businesses, who can then integrate and use them as needed.
The process of hiring talent is one that businesses prefer to avoid. Because of this, it is considerably simpler for them to purchase a blockchain solution that meets their needs.
This decentralized business model focuses on creating applications that can give rise to blockchain infrastructure.
Companies are increasingly concentrating on creating applications that could lead to blockchain infrastructure. These apps can be sent to the user via blockchain and cloud, enabling quick development. For instance, Hyperledger provides a collection of instruments, frameworks, and expertise for developing such systems.
Blockchain Professional Services
This business model works well for established development firms that can offer customized blockchain solutions to smaller businesses.
Leading professional development companies offer these services to other businesses or startups to help them prepare for blockchain. Utilizing directly the services of businesses that have mastered blockchain development is the key in this situation.
Network Charge Fee
Having a network charge connected to the blockchain itself is another distinct blockchain business model.
This kind of blockchain business model is applicable to both blockchain products like Ethereum and decentralized applications (dApps), which charge users a nominal fee for a variety of network-related activities. The Ethereum network, for instance, charges developers Ethereum for publishing their dApp. The same is true for NEO, which charges for the publication of dApps.
Finally, depending entirely on what the company aims to achieve, the business model may also be a blend of many concepts. There is no set formula for how a business model must operate. Businesses and other groups are free to experiment however they like.
Choose a framework for your blockchain application
Blockchain frameworks are software solutions that make it easier to create, use, and maintain technically challenging products.
Frameworks provide a structure that allows programmers to create programs rapidly. Choosing the ideal blockchain framework for your company to operate on is one of the most fundamental and crucial factors to take into account.
Some of these frameworks include:
- Hyperledger Fabric
- Hyperledger Sawtooth
- Internet of Things (IoT).
- Ripple (XRP)
- NEM (XEM)
Verify Legal Compliance
As blockchain technology evolves, so do the rules put in place to manage how these solutions develop and expand.
The community of blockchain enthusiasts and businesses is faced with new legal issues as more startups are created. State and federal regulations, intellectual property and privacy laws, cybersecurity, and insurance are just a few of the important legal matters that blockchain entrepreneurs need to be completely aware of.
Any blockchain business will likely need to adhere to some sort of anti-money-laundering and know-your-customers (AML/KYC) regulations, especially if its operations involve bitcoin transactions or other crypto-related activities, regardless of the jurisdiction it chooses. AML and KYC compliance is actually a need for any money-service business that wants to run in a specific region.
Every blockchain startup should be cautious while navigating the regulatory environment and keep current with any recent changes to the law. To ensure that the company complies with the relevant laws, you must support your startup with due diligence.
In every country the business intends to operate in, the appropriate licensing must be secured. Be sure to speak with a lawyer experienced with the sector as regulations differ by jurisdiction.
For any start-up, obtaining finance is a top priority. For new business owners, raising money is a major pain in the neck. Companies in the blockchain sector are not just restricted to using conventional fundraising techniques.
Initial coin offerings (ICOs) using blockchain technology can be useful in this situation. An ICO can be used by any company or startup to acquire capital for the development of new software, coin, or service. Tokens issued by the company may be obtained by investors who participate in and fund the ICO. The tokens might be used as payment for goods or services.
Blockchain firms can also rely on angel investors, who use their own money to put money into speculative but highly lucrative business ventures. Angel investors typically contribute to the seed stage or the first formal fundraising round. The benefits in this situation include the freedom to negotiate, the lack of repayment obligations, and the chance to learn from and share information with seasoned angel investors.
You don’t have to wait until you have the ideal product. In fact, you might begin by assessing minimal fees to platform users.
As soon as revenue starts coming in, it will keep your project moving along at a reasonable rate.
Even if there might not be a secret formula for building a successful blockchain company, the most important thing is to have knowledge of the potential that blockchain technology has to offer.
When you have the appropriate mentality and a solid plan in place, success will not be out of reach for you.
Keep the aforementioned key points in mind as you launch your blockchain startup in order to capitalize on the potentially enormous profit opportunities.