How To Start A Blockchain Business
Today, blockchain is so hot that putting the word blockchain into your company’s name can make your sales soar. Everybody wants to put their hands on blockchain. It is understandable because the technology provides a public ledger for companies that wish to organize their projects, finances, and information in a better way. Even though blockchain is most commonly associated with cryptocurrency, it can be used for almost every kind of business transactions.
But what’s all the fuss about? They say, blockchain is the future, no hacker can beat it. Let’s figure out is it really so and how to use blockchain technology to your advantage.
There are definitely a lot of benefits of applying blockchain technology in any industry. It offers new opportunities and benefits for businesses due to greater transparency, enhanced security, and easier traceability. However, unless you have a good understanding of what it really is, how it works, and offer a top-notch product or service you won’t be able to see the benefits for your business. The good news is you don't need to be a blockchain expert to start a blockchain company or build your own blockchain. But there are a lot of things to know before going for it. So, let us make things easier for you by explaining what blockchain is, how to make your own blockchain, how to use blockchain technology, and help you understand if your business could benefit from becoming a blockchain company.
Blockchain Business Technology, Briefly Explained
Simply put, blockchain technology allows for the sharing of information and transactions between multiple people, businesses, software, and others. Blockchain is a new way to get things done because it’s a digitized, decentralized, verifiable, immutable ledger. Let’s take a closer look at each of those terms.
All blockchain frameworks run digitally, usually through the internet and cloud-based services. Blockchain technology sends, receives, processes, and verifies information digitally.
Blockchain does not rely on the central control of one particular organization or technology setup. Instead, it can be accessed by any properly-authorized machines and users from anywhere. This means multiple computers contribute to the efficient running of the blockchain.
A particular blockchain ledger stores records of all the transactions and information that’s ever been shared across the blockchain network. This data is verified by multiple computers, which means it’s almost impossible for a user to “fool” the blockchain network by introducing fraudulent or erroneous information.
Once a record has been entered into the blockchain and verified, it can never be changed. Anything that’s recorded into a blockchain network is fixed at that particular moment in time. Subsequently, records can be modified, but any changes would be captured as separate transactions. This makes it easy to audit blockchain information and transactions.
The ledger is a place in which all blockchain information and transactions are recorded. It’s sort of a database powered by the blockchain technology. As new transactions and information are added, they are appended onto the end of the blockchain ledger, so any connected machines can get the latest information.
Ok, now that that’s out of the way, lets talk about the things to know when starting a blockchain business and building a successful blockchain business model.
First, you need to make sure that a blockchain application is the best solution for your business needs. Secondly, you need to decide on exactly what parts of your business, information, and technology you want to use the blockchain for. Thirdly, you need to build your blockchain solution into your business plan, costs, revenues, and profit estimates. Then, you need to decide on the best framework for your blockchain application. And finally, you need to develop the blockchain application taking into account wishes and request of all stakeholders.
So, ok now you can make heads or tails out of blockchain and found a perfect blockchain business idea. What you need to do now is to follow each step carefully to start a blockchain company. There is more to starting a business than just registering it with the state. Your blockchain startup should be planned out, registered properly, and legally compliant.
Step 1: Plan Everything Beforehand
You got to have a clear plan. It is crucial if you want to succeed as an entrepreneur. Having a well-thought-out plan will help you map out the specifics of your business and avoid some pitfalls. There are a few important questions to consider here:
What are the startup and ongoing costs?
What is your target market?
How much can you charge customers?
What are the costs involved in opening a blockchain startup?
What are the ongoing expenses for a blockchain services business?
How does a blockchain startup make money?
How much profit can a blockchain services business make?
How can you make your blockchain business model more profitable?
STEP 2: Learn the Blockchain Features
Knowing the strong sides of the technology will help you make the most of it and get you where you need to be.
Step 3. Choose the Best And Most Promising Blockchain Platform
There are a lot of different platforms which you can use to create unique apps with lots of benefits. We need these platforms because decentralized applications run on top of a blockchain in a peer-to-peer network. These are software programs that can run on their own blockchain, use another already existing established blockchain, or use only protocols of an existing blockchain solution. Simply put, you don’t need to create your own blockchain when there are many existing platforms, all you need to do is to create your own application that will run on top of the platform.
Step 4. Find Skilled Blockchain Developers
Order professional coders to create a custom blockchain-powered application tailored to your company specifics.
Step 5. Review the Stages of Development
You need to have direct impact on what your application is going to be like. Make sure it’s as tailored to your industry and, most importantly to your company specifics, as possible.
Step 6: Create a Legal Entity
You need to establish a legal business entity, such as an LLC or corporation, because it will protect you from being held personally liable in case your blockchain business is sued.
STEP 7: Register Your Business With The Tax Authority
You will need to register for a variety of state and federal taxes before you can open for business.
STEP 8: Open a Business Bank Account
Using dedicated business banking and credit accounts is essential for personal asset protection.
STEP 9: Obtain The Necessary Permits And Licenses
Operating without the necessary permits and licenses can get you hefty fines or even cause your business to be shut down.
STEP 10: Define Your Brand
Your brand is the backbone of your organization. Also, it is how your business is perceived by the public. A strong brand will help your business stand out from competition.
STEP 11: Create Your Business Website and Logo
Here are some insider tips for jump starting a blockchain services business?
Even despite the fact that blockchain technology is in crazy demand right now and everybody in every industry can cash in on it, you got to have a viable product behind all this hype. Starting with just one industry can make it easier for you when it comes to promotional tactics, but you will get a lot more benefits if you try to go for several industries.
You can also try thinking outside the box. Try changing the conventional approach the things are done in traditional industries, offering some unique and new possibilities.
You can try launching a crowdfunding venture.
Companies try to take advantage of this whole blockchain thing, hoping to discover some unseen before benefits in their business processes. However, there are common missteps to avoid if you decide to get into blockchain.
Here are some of the mistakes companies make:
- Do not use blockchain to create immutable data audit trails;
- Do not confuse protocol with complete business solution;
- Do not think the technology is mature;
- Do not have misconceptions about scale;
- Do not expect interoperability too soon;
- Do not assume smart contracts are fully baked;
- Do not misunderstand governance.
There are also 6 pitfalls to avoid
Evaluate your use case based on whether blockchain has the right impact on your business model not the technology itself.
Don’t think Distributed Ledger Technology (DLT) is going to fix everything for you. Figure out what the real value drivers for your business are.
Be careful about the data you share. It should be about shared control of data not about data sharing.
Go Beyond The Database.
Don’t just use DLT as a database, be creative.
Prove The Business Case.
Choose the right case and go for Proof of Business (PoB) instead of endless Proof of Concepts (PoCs).
Choose An Experienced Partner.
Select a partner who understands the business not just technology.
Blockchain technology is a fascinating thing. When applied in the right way, it can fundamentally alter the way enterprises, financial institutions, and other entities share data, exchange assets, and enforce contracts. Blockchain can definitely improve many industries, help your business grow, and streamline your business processes. However, there are a lot of things we just don’t know about it! Thus, you got to be careful when opting for a blockhain-powered business system. In any case, blockchain for business is a great thing, it is definitely a game changer, and maybe one day it would change the world for the better.