Five Tips for Launching a Blockchain Startup
September 25, 2023
As blockchain technology advances and gains widespread recognition, it becomes increasingly clear that its potential extends beyond smart contracts and digital currencies. The underlying mechanisms of blockchain have the potential to revolutionize business processes across various industries. While this frontier is relatively new and unexplored, numerous blockchain businesses are already exploring the advantages of immutable, distributed ledgers.
Furthermore, the emergence of blockchain-powered decentralized autonomous organizations (DAOs) has introduced the concept of Internet-native businesses to the world as well. But more on that in another post.
While launching any startup presents its own challenges, establishing a blockchain startup undoubtedly sets a higher bar. Armed with a well-crafted plan, such an organization can tap into a wealth of opportunities. In this blog post, we share 5 tips for launching a blockchain startup. We’ll take you through every step, from strategically planning your business and ensuring proper legal registration to developing a market-ready product, assembling a proficient team with technical expertise, and crafting compelling content to raise funds. Whether you're an experienced entrepreneur or just starting out, this resource will steer you in the right direction to launch your own blockchain company successfully.
Read more: Entrepreneurship in Web3
Why Start a Blockchain Business Anyway?
Although blockchain technology is still relatively young, it’s an avenue with great potential in the real world.
Blockchain is revolutionizing data sharing, sending transactions, and establishing trust among multiple parties in a system. It’s an exciting opportunity as it’s fully digitized, doesn’t rely on a central authority, it’s easily verifiable, and most importantly – immutable. The protocols and mechanisms that blockchain employs ensure enhanced security and reliability. These properties of blockchain technologies can be utilized greatly in several industries and could profoundly impact how business is conducted.
Blockchain-based startups wield the transformative potential to disrupt various sectors, spanning from banking and healthcare to supply chain and logistics, among others. The inherent capabilities of blockchain technology encompass process optimization, heightened transparency, and cost reduction across many industries, rendering it an enticing proposition for startups seeking a competitive edge.
Yet, blockchain startups encounter a myriad of challenges. These encompass the imperative for a profound technical acumen, the necessity to cultivate a thriving community around their endeavor, and the intricate task of navigating a regulatory landscape that is in its nascent stages. Nonetheless, despite these hurdles, there are compelling reasons to explore blockchain technology for startups.
Choose Your Business Model
At the heart of any successful blockchain company lies its foundational model. The future looks bright for blockchain-based startups. Blockchain technology has opened up opportunities for startups to secure funding and develop innovative business models that were previously out of reach.
One key innovation facilitated by blockchain technology is the creation of decentralized applications (dApps). These applications operate on decentralized networks like Ethereum, offering numerous advantages over traditional apps. Importantly, dApps are not under the control of any single entity, making them highly appealing to businesses and investors.
Read more: DApp Marketing Guide
DApps also pave the way for inventive business models. For instance, a startup could develop a dApp enabling users to buy and sell products or services without relying on a central authority. This approach eliminates the fees typically imposed by traditional intermediaries like banks or credit card companies, giving startups a competitive edge.
Let's delve into some of the most prevalent blockchain business models that cater to enterprise organizations:
P2P Blockchain Business Model
In a peer-to-peer framework, end-users engage directly with one another. Such startups can generate revenue through tokens, transaction fees, or Blockchain as a Service (BaaS).
Blockchain as a Service Business Model (BaaS)
BaaS offers businesses an environment to manage their own blockchain applications and systems. Examples of companies employing the BaaS model include Microsoft's Azure, IBM's BlueMix, and Amazon's AWS. Popular blockchain platforms like Ethereum and Bitcoin can also be offered as services, exemplified by Ethereum Blockchain as a Service (EBaaS).
Token Economy – Utility Token Business Model
Utility tokens or crypto tokens grant users access to services on a decentralized platform. Consider Ethereum, which operates as both a cryptocurrency and a utility token, providing access to the network's decentralized computing services. Businesses following this model typically retain a portion of utility tokens and release the remainder to support network functionality, generating profits as the utility token's value fluctuates.
1. Blockchain-Based Software Products
These involve selling off-the-shelf blockchain software solutions to other companies, which can then integrate and leverage them according to their requirements.
2. Development Platforms
A decentralized model focused on designing applications that foster blockchain infrastructure. For instance, Hyperledger offers a toolkit, frameworks, and expertise for crafting such platforms.
3. Blockchain Professional Services
Suited for established development firms capable of delivering tailored blockchain solutions to a small business.
Research the Market
The blockchain space is continually evolving, making it essential to develop a comprehensive understanding of the market landscape before launching your own cryptocurrency or company. This involves staying vigilant for emerging trends and developments, such as the growing adoption of decentralized finance (DeFi) and non-fungible tokens (NFTs).
Furthermore, research strategies for promoting your blockchain startup and its cryptocurrency must be researched to cultivate a robust community around your project. Community engagement and active participation play pivotal roles in the success of blockchain networks, and effective crypto marketing can facilitate this.
Moreover, a firm grasp of the regulatory landscape surrounding consensus mechanisms and blockchain systems and cryptocurrencies is crucial. As the blockchain ecosystem matures, regulations change, and these rules can vary from region to region. Compliance with established norms, including adherence to anti-money laundering and Know-Your-Customer (KYC) laws, is paramount.
Check the Regulations for your Blockchain Platform
As blockchain technology continues to advance, the regulatory framework evolves in tandem, shaping how these solutions mature and expand. With the birth of numerous startups in this realm, a distinct set of legal challenges emerges, confronting the community of blockchain enthusiasts and businesses. Among the prominent legal considerations that demand the full attention of blockchain startups are state and federal regulations, intellectual property, privacy laws, data breaches, cybersecurity, and insurance.
Irrespective of the chosen jurisdiction, it is highly probable that a blockchain startup will encounter some form of anti-money laundering and know-your-customer (AML/KYC) regulations. This is particularly true when the startup's operations involve cryptocurrency transactions or other crypto-related activities. In fact, AML and KYC compliance are imperative for any money-service business aspiring to operate within a specific jurisdiction.
Navigating the regulatory landscape demands meticulous attention, and staying on top of recent regulatory shifts is paramount. Ensuring that your startup complies with relevant regulations is a vital aspect of due diligence, essential for the sustained and lawful operation of the business.
Build a Team for your Blockchain Network
A robust team is the cornerstone of your blockchain startup's success. Since blockchain technology remains relatively new and intricate, your team must possess a profound comprehension of its technical and business facets.
Hence, it's imperative to assemble a team who understands blockchain, and skilled blockchain developers with experience in distributed systems and blockchain development. They should exhibit a thorough understanding of the underlying technology, encompassing consensus algorithms, transaction validation and blockchain application.
In addition to technical proficiency, the importance of a team with diverse skills and expertise cannot be overstated. When building your team, prioritize filling key roles such as:
- CTO/Lead Developer
- Blockchain Developer
- Product Manager
- Legal and Compliance Expertise
- Crypto Marketing Team
This multifaceted team will be instrumental in steering your blockchain startup toward success.
Develop and Apply a Marketing Strategy for Blockchain Technology
All the preceding steps can be meticulously followed, yet the fate of your startup remains uncertain if you disregard blockchain PR and marketing. Regardless of how innovative your small business is, it won't reach your intended customers unless you utilise different resources to market it properly.
Furthermore, the paramount challenge for most blockchain startups is earning users' trust, primarily because blockchain remains unfamiliar to many investors. Crypto PR is the conduit to secure this trust and enlighten your target audience about your product and technology. It allows you to establish a robust online presence, vital for success in today's digital age.
When esteemed crypto and blockchain news platforms feature your startup's narrative, it propels your project to new pinnacles. In addition to PR, you can harness many other blockchain marketing tools to bolster your blockchain startup. These encompass social media marketing, influencer marketing, email marketing, and more.
While critical steps such as securing funding for your blockchain platform, the ultimate fate of your brand often hinges on marketing. Nevertheless, crafting and executing a seamless blockchain PR and marketing strategy is complex. Furthermore, if budget constraints or a lack of in-house expertise hinder your efforts, it's prudent to seek the guidance of a crypto marketing agency.
With the right blockchain solution and marketing efforts, any startup can raise money and reap the many benefits of this new technology. Ultimately, starting a business in blockchain technology is the same as in other industries where you need to gauge the market, identify a problem and offer a solution.