What are blockchain startups and how do they differ from other types of business?
Creating your own crypto startup today is a million times easier than, for example, in 2017. Five years ago, the digital world did not yet have the necessary infrastructure, which today is supporting the project and preventing it from dying immediately in case of a small crisis. What used to take years to develop now is possible to create in a few months.
Today’s blockchain startups have an undeniable advantage over their early counterparts — they have an analytical base. The mistakes of young entrepreneurs in the crypto space in 2016 were still forgiven due to the bullish trend in the growth of the price of Bitcoin, but its collapse in the winter of 2017 has shown all miscalculations. Nowadays blockchain startups can avoid such mistakes simply by finding real examples of projects that failed in 2017. Yes, not all new businesses are successful, and you should research what they did wrong.
Crypto developers today have the best working conditions: on the one hand, they do not have fierce competition in this field, and on the other, there are real instructions on how not to make huge mistakes.
An online school, a shopping app, or a coffee shop around the corner are not startups — their business models are clear and they have been used many times. To be considered a startup, a business must meet several characteristics. Among them: a unique business model, a clearly defined date of launch, and the need to attract external investments.
A startup always relies on new technologies and new ways of selling. Its main features are:
- the uniqueness of the project idea and/or method of its implementation;
- the need to find investors;
- short, time-bound project launches.
There are several myths about a startup team. For example, it should always be small and young. Startup teams have mandatory functions: they relate to sales, product creation, and communication with investors and the press.
It is one of the youngest and most promising areas of the blockchain industry. Crypto experts suggest that in the near future, books, music, art objects, and much more will be sold using NFTs.
Examples of NFT startups: Rarible, Yield Guild, and Dapper Labs.
The idea of recreating the traditional blockchain-based financial system came to the crypto world in January 2021. Liberation from intermediaries in the form of centralized banks, freedom, and transparency of financial transactions attracted a new wave of young entrepreneurs.
Examples of DeFi startups: AAVE, and Uniswap.
- Development and adjustment of blockchain applications
Venture capitalists have recently taken great care to maintain the functionality of blockchain applications in any conditions. This became especially relevant after the collapse of the crypto market in January. In order to prevent the freezing of the entire blockchain system, it is necessary to constantly keep its vital centers afloat, for example, validation nodes. These are systems that ensure the operation of blockchains, the slightest malfunction of which will instantly affect the entire crypto industry.
Examples: Fireblocks, Moonpay.
The digital financial system grew out of the traditional one and did not abandon traditional economic models. The principles of the crypto lending system do not differ from the traditional one — people can borrow tokens and return them on certain conditions established by the crypto exchange.
Examples of crypto lending startups: Celsius, and Compound.
Most successful blockchain startups have been developed step by step:
#1 Idea. A startup will not last even three minutes without a good idea. It should be clear, specific, and down to earth, it should meet public needs, identify the problem and offer a competent solution. A successful business project either simplifies some process or solves a problem that slows down the development of the industry.
#2 Team. An important thing in developing IT projects is the careful selection of like-minded people. The crypto environment is not yet stable, it is associated with constant risks, so sometimes you have to work on bare enthusiasm and faith in a good future. It is also necessary to search for specialists who already have experience in the field of blockchain: developers of smart contracts, programmers with knowledge of the specifics of cryptocurrency codes, targetologists, sales managers, etc.
#2 Funding. Let’s take a look at the experience of “past generations’’ — specifically the stories of young crypto entrepreneurs. They will show us that we should not be afraid of crowdfunding. Due to the transparency of the system, third-party users can follow every step of creating a startup. Typically, entrepreneurs promise their investors profits in the form of new tokens they have developed, which can later be traded on crypto exchanges.
#3 Technical implementation. At this step, the most important thing is to be able to retain the team and investors of the project. It will be extremely difficult for new developers to join the development at this stage. It’s also essential to make the project pay for itself as quickly as possible, but since it takes a couple of years on average, the team and investors should always have access to the relevant roadmap.
#4 Marketing. It is good to start promoting the final product of a blockchain startup even at the stage of its development. To do this, it is necessary to study the target audience of consumers and understand why and for whom a startup exists. The task of a startup is to quickly find customers and convey to them the value of a new unfamiliar product. Therefore, startup marketing should be more active than experienced companies in introducing a new product to the market. There are several strategies like a referral program, the launch of an exclusive beta version, giveaways, airdrops, and so on.
#5 Optimization, scaling, and strategic management. The most difficult and unpredictable stage. Profitable sale of new technology will ensure the life and profit of the project and will pay off all the efforts invested in it.
Blockchain technology for sure has its problems, but it has the chance to completely change the entire financial world. In the future, decentralization will sneak into other areas of our life and will modify other aspects of our existence. And now startups in this field are becoming more common.
