by Sanjeev Kapoor 30 Jun 2017
What’s the business behind Blockchains?
share on

What’s the business behind Blockchains?

Blockchain technology is one of the most trending technologies of our time, which possesses a prominent position in Gartner’s hype curve for emerging technologies. Originally focused on cryptocurrencies, blockchain is nowadays considered as an innovation vehicle for Fintech applications, as several financial services take advantage of the open, transparent, trustworthy and scalable nature of distributed ledger infrastructures and of the “smart contracts” built over them. Beyond financial services, blockchains are also applied in other application domains including Industrial Internet of Things applications in energy, manufacturing and supply chain management.

The ubiquity of blockchain and its technical advantages over existing solutions are the primary source of the hype that surrounds it. Nevertheless, when dealing with emerging technologies it’s always important to consider the business aspects i.e. the business models that can lead to improved bottom lines and new revenue streams.  Companies need to know how to make money using blockchain in any of the above-listed sectors, either as a user or as an operator of blockchain services. The answer is not very obvious as blockchain is usually a network that nobody controls. In following paragraphs we explore some of the business models of the blockchain era, including practical examples of blockchain-based companies.

 

Blockchain Business Models

In general, blockchain companies leverage one of the following business models depending on their role and position in the value-chain of blockchain services:

 

Beyond Conventional Blockchain Services

While the BaaS model is the foundation for the operation of blockchains and smart contracts, additional business models are emerging as startup enterprises exploit distributed ledger databases and smart contracts to roll out novel services. Fintech is the area where most startups are active. For example, tØ a subsidiary of on-line retailer Overstock.com is currently issuing and trading stocks over the internet based on a blockchain network. This is a rather unique way of trading financial securities, including blockchain-based private and public equities. Likewise, Openbazaar provides an on-line marketplace that is empowered by blockchain technology (i.e. like a blockchain-based eBay). Openbazaar’s value proposition is that it does not rely on any centralized authority, which lowers the possible cost for e-commerce infrastructure and tools for people and companies wishing to start an e-commerce business.  Also, there are several mobile apps, which exploit blockchain networks in order to enable micro-payments, bank transfers and card transactions. Examples include Sentbe and Abra.

A great number of blockchain-based startups are emerging in other sectors as well, offering services such as:

 

Outlook

While business models for fintech startups are already there, the business models for innovative enterprises in other sectors are still in their infancy. During the last couple of years, enterprises have been enthusiastic about the innovative functionalities and the unique operational model of the blockchain infrastructure. This enthusiasm would lead to novel blockchain ideas, along with models that will lead to monetization. Such models will not be confined to the use of basic blockchain services, but would rather entail the use of more advanced blockchain features such as consensus protocols and smart contracts tied to monetization mechanisms. It’s certainly time enterprises dispel the blockchain hype and focus on business model innovation.

Recent Posts

get in touch

We're here to help!

Terms of use
Privacy Policy
Site Map
2015 IT Exchange, Inc