Blockchain business model
Over the years of development, bitcoin and the blockchain technology seeped into everyone’s life as an integral element of fund transfer. With more and more companies coming forward with their technical knowledge and its implementation on the same, blockchain as an entity formed a new identity of its own. The technology is currently in extensive use across various businesses and is rapidly gaining success and utility across various verticals and streams.
What is a blockchain?
In simple words, blockchain is an array of unchangeable and time-stamped data records that are tracked back in its managerial head to a cluster of computers rather than a singular entity. Now, each such data block is tightly secured and interlinked by chains, which are nothing but cryptographic encryptions. Blockchain technology is bounded by three intrinsic properties at its core of systematic framework; decentralization, immutability, and transparency.
Traditional Business Models
A business model basically consolidates the workflow within a company that is followed across the systematic framework of the business with the objective to generate profit. Business models vary from company to company where the one best suited for the flow of work of the business will be employed to garner revenue at the end of each financial year. Traditionally, there are four business models in vogue namely manufacturer, distributor, retailer, and franchise, each bridging the gap between steps that finally culminate into a sale or a purchase for the business. Now with blockchain technology as one of the most significant elements in most business structures, these traditional models have branched out to provide more insight, functional independence, and workflow benefits.
Blockchain Business Models
Transaction through blockchain technology is encrypted with the help of a complex cryptographic algorithm. This will hide user identity but transaction history through public address can be viewed. In the history of various transaction systems, transparency of this kind has never been viewed before. This paves the way for substantial accountability that needs to be accepted and carried forward by businesses making use of blockchain technology in their financial system. In the scope of cryptocurrency, if the public address of a business is known, their transaction history can be viewed easily. This is a new line of integrity that companies need to maintain while dealing with cryptocurrency, something that was never a part of concern in finance. Blockchain technology deviates from the standardized rules of the transaction and as a result, businesses adopt various blockchain business models that work for the benefit of the company. The following are some of the business models that have earned popularity over the years.
Utility Token Model
One of the most prevalent blockchain business models that are prevalent across industries, utility token model is used extensively by both well-to-do business ventures and startups. The working principle is that businesses retain a few of their utility tokens while the rest are released for network functionality. When the value of the tokens changes, the business makes a profit. In generic concepts, Utility tokens ideally have three variables; purpose, features, and role. Each has its set of functional features and for it to work efficiently and effectively, roles need to be multiplied considerably.
Blockchain As a Service
Another popular blockchain business model, blockchain service is where a business ecosystem is provided through which other businesses can also manage their blockchain system that also provides the platform for companies to experiment, research, and test in-house technologies. Some of the most popular blockchain as a service (BaaS) in the market include Amazon(AWS), Microsoft(Azure), IMB(BlueMix) among others that carry out decentralized business intricacies with perfect coordination, and support.
In BaaS, the end-user that is the business, company, organization or startup itself need not have the knowledge of blockchain broken down or go through any setup process before use. The most advantageous aspect of BaaS is that it does not require hardware support which is beneficial for the business in a way that they can utilize their work in developing their projects. Popular blockchain solutions like Ethereum or Bitcoin are presented as a service.
A new inclusion as a blockchain business model, security toke offering is a rapidly growing model across businesses and companies. Here, a token is basically described as security if there is profit flowing in from external services. It goes by extremely strict policies and if the ICO does not abide by pre-approved regulations, there can be penalties. However, if the process is followed maintaining the rules of the system, they are quite powerful and substantial as use cases. The value of security tokens is in its underlying meaning of ‘ownership’. They have to ability to democratize assets and systematically distribute it across the globe.
Even after so much insight, the collective blockchain technology is still in its developmental stage. There are still many unanswered questions that companies are trying to bring to the conclusion with their unique knowledge and technological implementation. This is where the onset of another decentralized blockchain business model comes into focus known as development platforms. Many companies are developing applications to build an infrastructure dedicated to blockchain. These apps will be utilized for further developmental courses.
Open source blockchain projects like Hyperledger, Tendermind, EthCore provide frameworks, guidelines, and tools for various blockchain development. The central objective is to pave the path for rapid development. Development platforms have many intricacies but with time and technological efforts will surely reach the epitome of what companies are aiming for.
Blockchain For Business
Key features of blockchain which can make blockchain technology as a key ingredient for any prominent business case are -:
· Immutability and transparency for all have been touted as a key feature of the blockchain.
· One of the advantage is we can verify everything on the blockchain; we won’t need to appeal to any central authority, and everyone will have the ability to set in stone any information they like.
· Using a public blockchain for any kind of verification offers the ability for people to keep their identity private.
Other related services
If somebody is a blockchain startup, there is a lot of work that goes into its development. From designing a website to managing good content, and displaying a structured framework, everything needs to be put together in one pathway. Nowadays, freelancing has been making considerable progress with maximum output and as a result, they are often hired by companies for various services during their developmental process.
There are various models that are currently in use in various companies that used blockchain technology in their spectrum of the workflow. And with time and technology shooting up like never before, the chances of establishing a bigger ground is not very far.
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