In 2024, the blockchain technology market is worth an estimated $7.4 billion. This figure is expected to rise at about 66.2% compound annual growth rate over the next years.
According to the report, the growth is occasioned partly by blockchain’s influence spreading to various industries.
This shows leaders across industries need to pay attention to how they can use blockchain business models to enhance their company’s growth. By harnessing the power of blockchain, organizations can unlock new opportunities, gain a competitive edge, and propel their companies toward sustainable growth.
In short, leaders who fail to recognize and capitalize on this trend may leave their organizations lagging behind in the advancing world. Let’s explore why and how you should seize the opportunity.
Benefits of Blockchain for Business Strategy
Before discussing the specific blockchain business models available to leaders, it is worth determining if blockchain is even valuable to business strategy. This is what this section explores.
a. Increased Transparency and Accountability
Due to the fact that blockchain transactions are recorded in real-time and cannot be altered retrospectively, the potential for fraud is reduced.
This enhances accountability since every action taken by any party creates a clear chain of responsibility.
For industries like supply chain management, this can be a game-changer by providing traceability from source to consumer, ensuring ethical sourcing and quality control.
b. Enhanced Security and Data Integrity
As mentioned, blockchain technology’s cryptographic foundations make data alteration extremely difficult.
In essence, there is no single point of failure, and records, contracts, or any stored data are safeguarded against manipulation.
In the healthcare industry, for instance, the MediLedger Network uses blockchain to track pharmaceutical supply chains, ensuring drug authenticity and reducing counterfeit medicines.
c. Improved Efficiency and Reduced Costs
One of the ways in which blockchain technology streamlines operations is by cutting out intermediaries and automating processes.
Blockchain-based smart contracts can automatically execute terms of agreements based on pre-set conditions; this improves efficiency in many ways, especially by significantly lowering the potential for delays and errors.
d. New Revenue Streams and Business Models
So far, blockchain technology has enabled businesses to rethink their strategies and create innovative ways to monetize assets, services, and data.
A popular example is the creator economy and the art industry, where NFTs have transformed how artists and creators monetize their work.
Through platforms like OpenSea and Rarible, artists can tokenize their work and receive royalties backed by immutable smart contracts.
e. Enhanced Customer Trust and Loyalty
Due to all the features above, customers are coming to trust blockchain technology more, and leaders should be focused on creating an environment where customers feel more empowered and confident in their interactions with businesses.
Retailers like American Express have explored blockchain for loyalty programs, creating blockchain-based points systems that can be redeemed across multiple merchants.
Exploring Blockchain Business Models
There are various ways in which blockchain can be integrated into an organization’s business model and strategy. Let’s look at a few of them.
1. Blockchain as a Service (BaaS)
Like every other ‘as-a-service’ model, BaaS allows companies to benefit from blockchain infrastructure and services provided by third-party platforms without having to invest in the infrastructure themselves.
The major cloud computing providers have positioned to fill this gap for blockchain-based organizations through services such as Amazon Managed Blockchain, Google Cloud Blockchain Node Engine, and Microsoft Azure Blockchain Service.
Industries such as financial services, logistics, and healthcare especially benefit from BaaS infrastructure to build blockchain applications and improve operational efficiency.
2. Token Economy (Utility Tokens)
In the blockchain space, ‘token’ is a frequent term that is guaranteed to be present. Specifically, utility tokens exist to grant holders access to certain features of a platform or a service.
So, typically, businesses create and issue tokens, often through crowdfunding mechanisms like Initial Coin Offerings (ICOs). These tokens can represent various things, from access rights to voting power within a decentralized platform.
Utility tokens are common gaming, where they are used to represent different items and even characters. Brave browser famously relies on what it calls “Basic Attention Tokens” to enable users to earn as well as support their favorite content creators.
3. Peer-to-Peer Business Models
As discussed earlier, blockchain technology’s ability to eliminate intermediaries makes it a viable model for enabling direct interactions between users.
In fact, the P2P model was the foundation of Bitcoin, the first cryptocurrency, allowing for direct digital transactions without the need for traditional financial institutions.
Beyond finance, services such as the Interplanetary File System (IPFS) exemplify this model in providing decentralized data storage. The removal of intermediaries leads to reduced costs, faster transactions, and increased efficiency.
P2P models also enhance transparency and empower users by giving them greater control over their data and transactions.
4. Decentralized Autonomous Organizations (DAOs)
Core blockchain-powered organizations are DAOs in the sense that they are entities governed by smart contracts, where decision-making is decentralized and automated.
In other words, decision-making relies on code rather than a traditional hierarchical structure.
One main benefit of DAOs is that no single entity can manipulate the system because of how transparent it is. Every member can track decisions, fund allocation, and overall operations. This leads to enhanced trust and accountability.
Some of the major DAOs in the industry are Uniswap, Compound, Decentraland, Lido Finance, AAVE, and so on.
In-article ads:5. Professional Blockchain Services
One benefit of the blockchain industry is that not every person has to be a blockchain developer to participate fully in the industry. Companies are seeking a diverse range of professional services to integrate blockchain into their workflow.
Such services include blockchain project management, consulting, legal services, auditing, training, marketing, and the like.
As an entrepreneur and business leader, you can adopt a blockchain business model for your business even if you don’t have core blockchain development expertise.
For Leaders Navigating the Blockchain Landscape
When it comes to blockchain technology, there are endless opportunities available. As a leader, you need to carefully assess your organizational readiness by analyzing existing business processes to identify opportunities for blockchain value delivery.
At the end of the day, it’s all about solving real business problems.
At the same time, do not believe the hype and assume that blockchain business models are completely risk-free. There is no business model that doesn’t come with its own set of challenges.
One of the major issues with blockchain is regulatory uncertainty. So, ensure that the evaluation is not just of the technical feasibility but also of every other possible associated risk.
To mitigate against risk as a business leader, you need to keep yourself informed with up-to-date data and reliable insights. StartUp Growth Guide keeps you covered by enabling you to access the latest industry insights that will equip you and your organization for sustainable business success.
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