Blockchain, Business

7 Blockchain Business Models & Examples | How Do Blockchain Companies Make Money

Blockchain has changed the way businesses function, innovate, and reach out to customers. At the forefront now every business is changing itself...

Written by Niel Patel · 7 min read >
business model for blockchain

Blockchain has changed the way businesses function, innovate, and reach out to customers. At the forefront now every business is changing itself and figuring out the strategies to survive in this world of blockchain. 

All of these survival instincts of business have led to the invention of new business models and that is also what this article will look into. Business models describe the map of plans and strategies a company activates to sell, earn, and profit itself. Blockchain business models stand distinguished from the current business models. They are more decentralized and transparent, which is the need of today. And here this guide will explore some of the blockchain models that have gained massive acceptance among small to large businesses. 

7 Successful Blockchain Business Models for Future

  1. Smart Contract
  2. Cloud Storage
  3. Electronic Voting
  4. P2P Blockchain Business Model
  5. Development Platforms
  6. Network Fee Charge
  7. Blockchain Professional Services

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Baas – Blockchain as Service Business Model

BaaS or Blockchain as a service is a preferred and widely practiced blockchain business model among all the other blockchain business models out there. 

The model delivers the companies a secure environment to manage their blockchain system. Using this model companies can freely research, experiment, and test and about the scope of different services on blockchain. The model hides the complexities of the blockchain from the end-users.

End-users for example, business owners, startups, or organizations, do not need to understand how blockchain works or set it up before operating on it. BaaS also eliminates the need for hardware, allowing startups, businesses, or organizations to specialize in their development phase.

With the help of this model, companies provide the majority of today’s blockchains, including Bitcoin and Ethereum. One such example of these services is EBaas (Ethereum Blockchain as a Service). Microsoft, in collaboration with ConsenSys, manages and provides the service. Along with Microsoft (Azure), Amazon (AWS), IBM (BlueMix), and others, they provide blockchain as a service (BaaS) and fit the perfect blockchain business model examples.

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How Enterprises Benefits From Successful Blokchain As A Service Models

  • Blockchain reduces the need for unnecessary manpower and helps companies achieve automation. That means the blockchain will provide self-executing computer software that handles complex legal agreements. 
  • Blockchain technology reduces fraud by using digital signatures for identification and authentication.
  • Operating costs can eat away at enterprise profits significantly. But, with the advent of blockchain technology, enterprises can now use it as a service and save money.
  • In traditional business models, companies face a major setback when determining whether a new technology will work effectively or not. Blockchain as a service business model reduces this risk and helps the companies perform testing for reliability on greater levels.

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Token Economy – The popular blockchain business model

The utility token business model incorporates functionality into the business by utilizing tokens, which enhance network operations. There are many startups, businesses, and e-commerce websites that use the utility token business model nowadays. 

The role, function, and purpose of the token utility make it important. In this Business Model for Utility Tokens, tokens provide different roles, where Each role has its own set of characteristics and functions. The business model provides the holder of a specific token to receive a certain number of rights within the ecosystem. And tokens create an inner economic system that allows buyers and sellers to trade value within the ecosystem. To run this ecosystem tokens act as a toll gateway for specific system functionalities.

Not only this, but tokens also allow their holder to enhance the user experience within a specific application making it one of the best blockchain based business models. To make transactions secure, it stores the value mandating to conduct transactions inside or outside of the given ecosystem. And finally, when it comes to earrings, the models allow an equal distribution of the profits between the investors of a particular project. 

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How Enterprises Benefits From The Token Economy

  • The token economy helps the business to reach a stable prize in the Crypto. Crypto is known for its violating nature. So companies create the equilibrium in the token prices and then increase the price depending on the demand. 
  • Companies can use the token as the primary source of exchange for services and products. 
  • Token also helps the companies to create more governance in the ecosystem through voting and giving the rights to users. 

Blockchain Development – Most companies doing

The blockchain concept continues to develop at a rapid pace with each passing day. And it provides a lot of opportunities to the startups trying to solve problems in novel ways. These startups can find a lot of development and research going into the blockchain. This concludes this next decentralized business model, development platforms. However development is not one of the blockchain new business models, but it is an impactful one. 

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Following this model companies can now concentrate on developing apps that will result in a blockchain infrastructure. Further, companies can serve these apps to end-users via blockchain and cloud, allowing for rapid development. Businesses can find a lot of successful examples out there and one such example is Hyperledger. Hyperledger is the foundation for developing, structures, and guidelines for blockchain development. In this model, rapid development holds the key for the business to profit from it. 

How Enterprises Benefits From Blockchain Development 

This business model helps the business to tackle the issues persisting with the traditional business model.

  • The business model solves the concrete problem of autonomy, which prevents the business from genuine information gathering, analyzing, and employing those who belong to the same process. By eliminating all these issues, the business model transparency, and trust ability. 
  • The second major issue with traditional models is the time taking process and cumbersome. The model can reduce the need for the same steps and speed up the development process while providing a much more trustworthy platform. 
  • Another problem that blockchain concurred with its advent is payment barriers. Now businesses can achieve secure, fast transactions through this model without needing to invest extra money to do day-to-day transactions. 
  • The model helps the companies to make secure transactions without worrying about fraud and any cyber-attacks on sensitive information. And due to third-party involvement, the companies have to pay higher costs, which can now be eliminated on the blockchain. 

Blockchain Backed Products Development- 

The current business model for blockchain section will look at blockchain professional services. The model revolves around leading experts offering services to startups and other businesses to help each other get ready for blockchain.

For example, if a company may require the development of a custom blockchain project, In that case, they can hire Deloitte, IBM, or another firm providing blockchain as a service to complete the project for them.

The business model helps the startups by skipping the step of hiring hardware, software, or building a team, but rather hiring companies that have mastered the art of blockchain development. The ecosystem of this business has become vast consisting of every small player to experts delivering blockchain as a service. 

Overall, this model offers an excellent marketplace for talented blockchain professionals seeking to put their skills to use.

Other types of blockchain service companies exist as well. Many blockchain-powered businesses, for example, provide blockchain-related services such as consultancy services, constructing legal documents such as smart contracts, and auditing the business.

How Enterprises Benefits From The Blockchain Backed Products Development- 

The model does not only help the business that develops blockchain-based products, but also those who avail its services.

  • It reduces the need to buy the hardware and hire a team, so the companies can directly invest in the development process skipping all other stages. 
  • The investor and services can build trustworthy relationships with the help of smart contracts reducing the risk of any fraud. 
  • The model makes the costs transparent so both parties are involved while margining the benefits for both. 
  • Because blockchain serves a much more transparent platform it becomes easy for the business to find what customers desire and build a strong customer base. Businesses can attain it by selecting the best Blockchain-as-a-Service provider. This includes giving users control over their personal information, adding the power of transparency to the business model, fostering quick transactions, and assisting entrepreneurs and marketing companies in identifying loyal users and building trust.

Peer-2-Peer Business Model-

The P2P business model works on peer-to-peer technology. Blockchain technology has always operated on a peer-to-peer basis. P2P blockchain allows users to interact with one another directly. As a result, it is included in almost all of the other blockchain models we have discussed previously. Tokens, BaaS, and transaction fees have the power to monetize the P2P business model. Because of these, the IPFS like the interplanetary filesystem has used this blockchain model. Not just it,

Some mining software also allows users to share their unused storage space. 

How Enterprises Benefits From The Peer-2-Peer Business Model 

  • Traditional businesses must invest in designing, production, hiring, transporting, bargaining, sales, advertising, insuring, and a plethora of other assets and transaction costs that are too numerous to list here. However, by providing individuals with the structure they require to deliver their services, this P2P business model has helped to reduce this type of expense.
  • Individuals selling their products or services can specialize more deeply in their area of expertise thanks to the peer-to-peer business model. Because the expert does not have to focus on other tasks required to monetize their services, they can devote all of their equity and energy to developing their expertise, thereby improving the quality of what they deliver.
  • In the P2P blockchain business model, in addition to the cost savings mentioned above, the company acting as the service provider can directly reduce a significant portion of the risks associated with the help of legal agreements like smart contracts. These platforms significantly reduce the losses and ambiguity that the business would have to face by comprehending a large portion of the different steps in offering services.

Network Fee Business Model

Another typical blockchain business model is to charge a network fee for using the blockchain. This type of blockchain business model appears to apply to both blockchains such as Ethereum and dApps that charge users a small fee for various network activities. The Ethereum network, taking it as one of the best blockchain business model examples, charges developers Ethereum to make their dApp live. The same is true for NEO, which charges a fee for the publication of dApps.

It provides transparency. The blockchain network records all transaction information. A user will see who performed the payment and track the complete history of the block at any time. It builds trust among both consumers and the business.

How Enterprises Benefits From The Network Fee Business Model-

  • The business can feel the global impact of this mode as cryptocurrencies are not tied to the economy, they are resistant to political reforms. It also implies that for all users, regardless of location, the model treats them equally.
  • It also implies that for all users, regardless of location, the model treats them equally.
  • The data is stored on a decentralized network rather than a single server. If a business utilizes a traditional database, it will need to invest heavily in its security. Blockchain, on the other hand, can secure all data stored on various devices, and hackers cannot access it – Blockchain offers this feature by default.
  • Investors constantly search for companies that can use blockchain to solve real-world problems so the development companies will never run out of options.

Common Features In All The Blockchain Business Models- 

All the models work on the core concept of blockchain and operate on a single platform with servers owned by only one entity. No central power owns and controls the data or software stored in Blockchain’s distributed computer network (known as nodes). Each node can trade without requiring the intervention of another party.

Because of the decentralization and protection by cryptographic codes, there remains full transparency. Which is another important aspect of Blockchain business models. No matter how many businesses function on a single model, there will remain full security with the blockchain. 

That’s all for now. These were all the business models that have emerged on the blockchain till now. However, there are a lot more to come. Although blockchain has been almost a decade old now, it is still under development. So, only the future can unleash the endless possibilities embedded in this technology. But as for now, the business models that have appeared this decade succeeded to make a positive mark on the industry. 

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