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Author Topic: Understand Blockchain Business Models: Complete Guide  (Read 133 times)

riyasteve

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Understand Blockchain Business Models: Complete Guide
« on: November 20, 2019, 01:36:32 PM »
Satoshi Nakamoto introduced the Bitcoin in 2008. Today, besides the Bitcoin, it is the technology behind data that has found an increased relevance. Blockchain, as we all know , is an immutable, transparent, and secure digital ledger that can be used for record-keeping and for effecting secured transactions. The data is stored in blocks and are bound to each other by cryptographic principles forming a ‘chain’ of ‘blocks’, and hence the name.

A copy of the blockchain is stored in every computer that is a part of the network, and the inherent technology ensures that the data on all the nodes is periodically checked. If there is any inconsistency, the transaction is not stored.

It is these key attributes of this new technology that present the blockchain an amazing alternative for a lot of traditional processes. Let us look at these attributes in detail!

Decentralization

Decentralization is one of the biggest advantages of blockchain. This implies that the data that is stored inside the blockchain is not owned by any single centralized entity. It is shared by everyone on the blockchain network.

This would mean that there are no points of vulnerability making the blockchain extremely secure. A hacker with a malicious intention might be able to attack a single node but since the consistency is checked periodically, there is no use of entering just a single computer.

Immutability

Immutability simply implies that the data cannot be tampered with. This characteristic of the blockchain comes in extremely handy when handling highly sensitive data. The cryptographic hash function of the blockchain insurance that top-notch cybersecurity is assured for the data and transactions.

Transparency

The third vertex of the blockchain-attributes triangle is what makes the technology awesome. It might, the surface, seem like an oxymoron -  it is hard to perceive an Ecosystem where security and transparency can co-exist.

Blockchain achieves this by providing a public address - the public address makes all the transactions available to everyone but does not reveal the real identity of the person. This can be considered as a Holy Grail when it comes to balancing accountability and security.

These attributes have contributed to the idea of creating Business models out of blockchain technology. The new technology is in its infancy right now and the floodgates to the opportunities are yet to be opened.  Let us look at the different business possibilities that are brought about by blockchain technology.

Utility Token

Classic English defines ‘utility’ as a state of total satisfaction received by a person while consuming certain goods or services. Access to goods and services is controlled by a privilege that is either monetary or by virtue of position. Blockchain enables a business to sell its utility for certain tangible units called tokens. Ripple and Stellas are good examples of Business models achieved using utility tokens. A token needs to have a role, certain features and specific purpose for which it is created. There are different roles that a token can take:

  • The token can represent a right within an ecosystem. Possessing DAO coins entitles you to voting rights in the ecosystem. You can put to decide which projects will get funding and which won’t.
  • The token can represent a value exchange within an internal economic system. The token can be treated between buyers and sellers and can also help gain rewards for completing certain tasks.
  • A token can be used as a tollgate way to access certain functionalities of a system. If you need to use a Golem supercomputer, you will need to have some amount of GNT (golem tokens).
  • A token can also be used to enrich a user Experience within an ecosystem. The holders of BAT tokens can do advertisements and other attention-based services on the Brave browser.
  • Tokens can also store values to conduct transactions and can be used as currency. It can also help in the distribution of profits or financial benefits to the investors

Blockchain as a Service (BaaS)

Blockchain is complicated technology and is still in its nascent stage. It might be intimidating and unaffordable for a company to hire blockchain experts in-house. Also, not all the processes might demand the technology to be used. Therefore, companies can consider Outsourcing the processes that use blockchain technology. This will help them concentrate on the front end and the processes facing the customers.

The company that handles blockchain as a service can provide services like database management, authentication, and cloud storage. This would greatly help companies focus on their core instead of worrying about auxiliary aspects and the security issues surrounding them.

For a company that offers blockchain-as-a-service, it is a lucrative business opportunity. Since the talents in the new technology are rare and expensive, it might be a good idea to hire one of them and use their skills for multiple industries and companies. Companies like Microsoft IBM and Amazon  have started to offer blockchain-related services. Oracle offers cloud hosting services on blockchain as well.

Securities

Since the records on the blockchain are immutable and transparent, the technology gives an amazing alternative for classical financial transactions. One of the biggest and the most recent manifestations of blockchain in the world of Finance is the security token offering, commonly abbreviated as STO. In line with the Howey Test, a security token, in this context represents fractional ownership in a real-world asset with a tangible value. The security is tradable and can be converted into mainstream currency at any point in time.

Before STOs became popular, the most popular way of getting investments for crypto projects using blockchain was the initial coin offering (ICO). However, ICOs were largely unregulated, and this made them susceptible to fraud and a lot of malicious practices.

With the acceptance of blockchain technology by established authorities like the Australian Stock Exchange and leading banks like JP Morgan, this decentralized ledger technology can be expected to dominate the world of financial transactions and the securities.

Application Development

Technology can grow only in proportion to the number of developers. Today, there is a lot of research and development that goes into making blockchain technology more universally acceptable and mainstream

Most of the development efforts today are focused on creating decentralized applications (Dapps).

Conclusion

When it comes to technology, any new advancement has faced its fair share of resistance. Blockchain cannot be an exception to this pattern. However, with its growing acceptance, endorsements, and utility, blockchain can surely be expected to become mainstream in the next few years.

If your company wishes to venture into the blockchain, it might not be easy for you to find the right blockchain development company. Blockchain App Factory brings you all the possible expertise in blockchain technology development including but not limited to cryptocurrency decentralized applications, security tokens and anything that might even remotely fall into the umbrella of ‘Blockchain’!

Blockchain App Factory

 

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