10 Things to Know Before Starting or Joining a Blockchain or Crypto ProjectFaith Obafemi
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These days blockchain and crypto is all the rage. Everyone from individuals, organizations and even governments are in a race to build the chain to rule them all. Perhaps, the best part is that decentralization has somewhat leveled the playing field, meaning even your dog can partner with you to save the world. A market projected to reach $2.3 billion by 2021 is not one to ignore.
As usual, courageous entrepreneurs are entering the decentralized space with the ‘next big idea’ they desire to actualize, for the use of humanity and other species. Some already have some experience starting or working for traditional startups which were either bootstrapped or venture-backed.
Alternative (IXO) and faster fundraising methods like ICO (Initial Coin Offering), STO (Security Token Offering), DAICO (Decentralized Autonomous Organization + ICO), etc have made it easier for entrepreneurs with even just an idea, to raise millions in a few minutes, days or weeks. However, this article is not about analyzing this fundraising route. Our focus in this article is giving you a rundown of what anyone interested in blockchain business development (BBD) should tick off their list before starting a project in the space.
Let’s dive in!
1. Global By Default
This is the first point of discussion because it is the first thing you recognize when you get involved in blockchain and crypto. Traditional businesses follow the classical route of starting small and then expanding as they grow, from one city to the next, from one country to the next.
For blockchain and crypto projects, even where the beginning is small, the reach is fundamentally global. In fact, blockchain founders incorporate the distributed feature of the blockchain into building their teams. Thus you’ll find that the graphic designer could be in Japan, the chief technical officer in Turkey, with the chief financial officer in Nigeria.
Unfortunately, this global and distributed feature does not reflect on a gender scale. It’s a known fact that the tech space is bro-dominated. The situation is worse in the blockchain and crypto space. Initially, when I got into the space in 2017, I could count on one hand females I found at events. Over time, the number increased, but still nowhere near 20% of all attendees at current events.
2. Read the Bitcoin White Paper
You are not a true believer in the space until you have read the Decentralized Bible: Satoshi Nakamoto’s Bitcoin white paper. Preferably, you should read it more than once. Unless you have a tech background, chances are, like me, a major part of your first reading will feel like ancient Greek to you. But read again, and again, and again. After a while, the pieces will begin to fall into place.
3. What is Blockchain?
Anyone looking to start a project in the space must be ready to answer this question a zillion times with their own informed definition. Lip syncing another’s definition just goes to show you have little understanding about what you are doing. Here’s my own personal introduction to blockchain. There are tons of free online courses and other materials to help you get started.
Closely related to this question is answering for yourself the question of whether your project truly needs a blockchain? Majority of blockchain entrepreneurs simply want to ride on the blockchain hype wave, when their solutions can be implemented without a blockchain.
4. Never Ending – 24/7
In the blockchain and crypto space, it is a never-ending market and work cycle. The fact that the space is global contributes to this. By the time you are rising in the morning, half of the crypto world has been awake for hours. So, expect to find tons of messages waiting for you at work.
Moreover, the never-ending cycle runs faster than the traditional world thanks to speculation in the most volatile market in the world. Within 24hours, bitcoin could go from $8,000 to $11,000 and down to $5,000. That’s how hyper-volatile and fast, time runs in the decentralized space.
5. New Business Models
Blockchain on its own is a new business model. The particular act of removing the middleman means Bob and Alice can transact together, faster and cheaper since it doesn’t go through a third party. In a traditional business model, this is usually not the case.
There are several new business models being adopted in the decentralized space. Most popular, or if you will, saturated, is the utility token model. This can be used in various ways like crowdfunding for a blockchain startup, customer or employee rewards and means of gaining access to the company’s products and services. There are other models like blockchain as a service (BaaS), network fees, blockchain development platforms and blockchain professional services. I will expand more on blockchain business models in a future article.
6. Build for the Masses and Not the Techies
Unless you’re a technical engineer, I bet you have no idea how your WiFi works. But of course, to get online, all you have to do is tap on the WiFi icon somewhere on your screen and perhaps enter a short password. You have zero interest in the technical details.
This same scenario, translated in blockchain and crypto will not be so simple. First, you will probably need to generate a key from your device, to be matched with a key stored on the WiFi device. Then, you might need to set up a network port, so that traffic to and from your device is properly routed. By now, you’re probably already losing interest. Unfortunately, this is the average reaction of new users when they encounter blockchain and crypto solutions.
At the moment, 90% of solutions in the crypto space, including the grandfather of them all, bitcoin, are used by mostly techies. Totally explains why the first wave of people in the space was of course techies, more specifically mathematicians, cryptographers and gamers.
But if you have read the bitcoin whitepaper, Satoshi’s real aim was to bring financial freedom to the masses while bypassing the government. So, until blockchain and crypto projects start building for the masses and not the techies, mass adoption will continue to be a mirage.
7. Competitors are Middlemen
Virtually all blockchain businesses base the foundations of the solutions they offer on eliminating the middlemen, namely the governments, banks and those with uncensored authority. It follows that the real competitors of blockchain businesses are not even similar projects, but the middleman sought to be removed.
On the other side of the coin, the so-called middlemen could also leverage blockchain to upgrade their service offerings since they are in the best position to understand the nuances of all stakeholders in multi-party transactions.
8. Must Not Code But Must Get Technical
This is especially crucial if you intend to be a founder/ entrepreneur. While it is not required that you bother with writing a line of code when you can hire programmers, it is important that your understanding of the technical aspects relating to your blockchain business idea is not shallow. Covering the basics and more will enable you to tackle questions thrown at you (by users and investors) eloquently.
This knowledge will come in handy when making decisions on what blockchain platform to build on, what features your solution should have, how to handle data integration issues, etc. Perhaps a positive downside to this is that the process of getting your bases covered could lead you down the infamous blockchain rabbit hole. More than any other tech industry, blockchain has an overabundance of available resources.
9. Adopt New Digital Tools
While previously you were familiar with just Slack, WhatsApp, LinkedIn and Twitter. Blockchain and crypto folks spend their time on Discord, Telegram and Steemit. Fortunately, they work similar to what you’re already familiar with, so worries there. In the startup world, users are able to directly interact with founders. For blockchain and crypto founders, the accountability bar is higher, although they could be pseudonymous. Founders in the space can expect to be summoned to a social hearing (packaged as AMA) to answer to community queries, as is common on CryptoTwitter.
10. A Decade-Old, But Still Early
A favorite comparison in the space is likening the blockchain era to the internet era of the ’90s. Some say the ICO bubble is the equivalent of the dot.com bubble. Whether any of these assertions are true or not is yet to be determined. However, what is certain is the fact that the technology is still in its early stages.
For this reason, enthusiasts and businesses in the space should devote more attention to education over speculation. Moreover, the more Satoshi converts, the larger the market size. Education and adoption rates will always tally.
11. Funds, Funds, Funds
Okay, I know I said 10, but FINT is benevolent! After all, you need to know the cost of what you are getting into upfront. So we have added four more points.
Like every other startup project, an entrepreneur needs funds to start a blockchain and crypto project. Fortunately, alternative fundraising methods are available in the crypto industry. Ranging from the (bubble-burst?) ICO to DAICOs and even IFOs (Initial Futures Offering). There are also venture capitals like a16z which have set up crypto funds specifically for blockchain and crypto projects. Several other projects also chose to go the bootstrapping route.
I dare say a blockchain and crypto project needs more funds considering that talent, especially blockchain programming, is scarce. And a huge chunk of available funds go to research and development. These are generally uncharted waters, someone needs to take the risk.
Experienced blockchain talent comes at a premium. The average salary of a blockchain programmer starts from between $80,000 – $100,000, depending on the type of company and country.
Blockchain programmers are not the only cost to prepare for. Other costs like use of a blockchain platform, team (and miners) compensation, shipping the product (solution) and marketing are equally to be prepared for.
12. Spam and Scam
If you previously had a laissez-faire attitude to your digital security before entering the space, then you should be near paranoid in blockchain and crypto. Hackers target crypto companies because they want to take advantage of the pseudonymous feature when asking for ransom or making away with the loot. You do not want to start a project, raise funds and then enter the spotlight for the wrong reasons: a hack.
There are several measures that could be adopted to detect and handle spam and scam, but generally, the most important is when the humans involved are appropriately equipped defensively.
13. Legal Uncertainty
Blockchain raises tons of brand new questions that were not existing several years ago. Each country and government have diverse reactions to these legal questions. Some have adopted a strong unfavorable approach, some are on the fence, trying to monitor the developments. While a courageous few like Switzerland, Malta, and Kenya have a favorable stance and approach, either through sandboxes or policies and regulations. On this point, working with a lawyer who understands blockchain is crucial. But also helpful for you to be conversant with the basics.
14. Protect Your Intellectual Property
On this point, I gladly direct you to an article written by our Head of IP. Although the article focuses on protecting your IP in a pitch competition, which is common in the decentralized space, by the way. She also succinctly addresses why you should even bother with protecting your IP.
You should note however that by default, the blockchain and crypto space is community-driven using open-source software. On the other hand, there are also patented solutions by legacy businesses like IBM, Microsoft, and new startups like Hedera Hashgraph.
It’s a wrap-up!
Are there other points you would like to add? Please, drop them in the comments!
From all that has been discussed, it’s obvious the blockchain and crypto space is a vibrant interesting one. Like I always emphasize, the system that wins tomorrow might not be the blockchain, however, it would have the fundamental feature of decentralization. So, joining now is your best chance at being a pioneer and not a spectator.