Blockchain Business Model Innovation
Blockchain is a collection of immutable data records managed by a distributed network of computers that are not affiliated with any person, organization, or government. Each one of these blocks is encrypted and connected by the cryptographic chain. As a result, the name “block + chain” was coined. As a result, the blockchain is a completely automated and safe method of transmitting data. A block is created by a component of a transaction to begin the process. Thousands, if not millions, of computers dispersed around the network, verify this block. The validated block is then linked to a chain and kept on the network, establishing a unique record with a unique history. To fabricate a single record, the entire chain would have to be falsified millions of times.
This is almost unthinkable. All of the information is available for no cost. Because there is no one in charge of the block. This technology has the potential to replace all business procedures and models that rely on a single charge for any trade between two or more parties. The three pillars of blockchain are as follows:
- Decentralization: As previously stated, data is kept in the blockchain and disseminated across all networks. The records are not owned by anyone.
- Immutability: Cryptography ensures that all data is untamperable, assuring cybersecurity.
- Transparency: Their public address serves as a proxy for their identity, which is hidden behind advanced cryptography. So, while the person’s true identity is protected, any transactions made using their public speech can even be viewed. This level of openness has never been seen before.
The blockchain business model combines numerous technological models and commercial modules across the three layers to create a value-based ecosystem based on blockchain technology. A blockchain business model allows users to engage with data through a comprehensive digital marketplace, allowing them to buy goods, services, and media from third parties.
Blockchain Business Models
1. P2P Blockchain Business Model
As previously stated, blockchain has always been peer-to-peer, allowing users to communicate with one another. Token, BaaS, transaction fees, and other methods of profit generation may be used. By giving a platform for storing data and sharing, IPFS and Filecoin are two notable instances of this business model.
2. Blockchain as a Service Business Model (BaaS)
For the average person, blockchain technology and its ecosystem can be somewhat scary. This Blockchain technology (BaaS) business model, on the other hand, allows clients to outsource all backend infrastructure and focus just on the frontend.
User authentication, database administration, remotely updating, notifications, cloud storage, and hosting are typical BaaS services. As a result, it is one of the most widely used blockchain business models, with well-known companies like Azure, AWS, and IBM participating (BlueMix). In this situation, the end-users are frequently not people, but other enterprises and organizations. They also don’t have to worry about understanding blockchain or hardware infrastructure, which allows them to explore, test, and do research.
3. Token Economy – Utility Token Business Model
The utility token business model incorporates functionality into the business by utilizing tokens to facilitate network activity. The model is now used by a large number of startups, corporations, and e-commerce websites. The function, feature, and goal of the token utility are all very significant.
Each function has its own set of characteristics:
Right: The bearer of a particular token receives a set of privileges within the ecosystem.
Value Exchange: The tokens help consumers and sellers comprehensive wealth within the ecosystem by creating an internal economic system.
Toll: It serves as a toll bridge for accessing a system’s specific features.
Function: The bearer of the token can utilize it to better user engagement inside a certain area.
Currency: It’s a form of currency that may be used to perform transactions both within and outside of the ecosystem.
Earnings: It provides for an equal distribution of earnings and advantages among project investors.
4. Blockchain-Based Software Products
Many blockchain organizations develop solutions to sell to larger businesses and organizations, as well as provide ongoing support. Because big corporations don’t want to go through the process of identifying and hiring personnel, this usually works out nicely. It is far more convenient to purchase a pre-built blockchain system. Demonstrating blockchain technology to businesses can be incredibly lucrative. The MediaChain blockchain, which was just sold to Spotify, is the best illustration of this.
5. Development Platforms
Because blockchain technology and its ecosystem are still in their infancy, more programmers are needed to help it expand. As a result, several startups are using development platforms to create decentralized applications (Dapps). Metcalfe’s Law can be used to evaluate the relation between development and network value. The influence of a network, according to this theory, is equal to the square root of the number of people connected to the system. Simply put, the more people who participate, the more useful the network becomes.
However, how can they provide value to the crypto world in terms of pure business models? There are three distinct models to choose from:
Network Fee: There is a network cost linked with the blockchain in this situation. They charge the customer a nominal fee for various actions on the network. For instance, the Ethereum platform charges gas fees to utilize the platform, NEO requires GAS tokens, and Golem requests golem tokens, among other things.
Auditing: This methodology works in one of two ways: the developers engage an auditing firm to check over the shared ledger for them, or they post a reward on their contract, and a group of independent accountants and developers pore over the code and look for faults. This works when Applications deal with a bunch of cash, thus their code must function well. Any small flaw can turn into a big problem.
The blockchain business model, like every business model, can be a mix of ideas, and no hard and fast rule about how each one should run and function. Now after the day, the best option will be determined by the nature and goals of the company.