How to Build Your Own Blockchain Startup
Have you ever considered building a blockchain application? What practical steps would you need to take to move forward in such a venture? To illuminate the blockchain journey, Floww sits down with Prem Munday, from Venture Development at the enterprise blockchain company, R3. Munday’s team empowers startups to build decentralised blockchain applications, understand the complexities involved, and go to market successfully.
“As the blockchain space is still so new, there’s a lack of playbooks and established tools. Choosing to build on the technology can seem like a leap into the unknown,” explains Munday. He breaks down what is required for a successful blockchain venture in the following steps.
1. Ask Yourself: Does Your Solution Actually Need a Blockchain?
“Blockchain empowers companies to build solutions in a decentralised manner. The first thing to consider is whether you actually need decentralisation in your solution,” says Munday. “Most solutions tend to not need decentralisation; many startups just want to be able to sell the buzzword of blockchain or distributed ledger technology (DLT).”
“Yet, if you have a use case where different parties want to collaborate and remove central authorities from the equation, blockchain is the only technology for your solution. It can enhance every industry where you want to track, validate, and assure immutable information between parties who don’t necessarily trust each other, due to the sensitivity of the data involved.”
The technology is ideal for use cases such as transaction payments (as with cryptocurrencies) and recording the provenance of items (these can be either natively digital, for example, NFTs, or physical goods in a supply chain).
2. Determine whether you require a Public or Private Blockchain
“Your second consideration should focus on the differences between public blockchains, such as Ethereum, and private, permission blockchains, for example, R3’s Corda or Hyperledger Besu,” Munday tells us. “What you decide depends very much on your use case and industry requirements.”
"Public blockchains enable users to run their own decentralised infrastructure on huge networks that are accessible to anyone. As the networks and infrastructure already exist, startups can get their solutions up and running very quickly."
“However, if you’re building a solution for a regulated industry, for example, banking, government, or financial services, broadcasting your transactions across a large public network can raise issues for security and privacy,” says Munday. “In these cases, a private blockchain would be better suited. Private blockchains allow you to operate private networks solely for the relevant business case. Users retain more control over their data and can know who the parties are that they are transacting with, and what is being transacted – all on a need-to-know basis.”
3. Ensure your Solution has Product Market Fit
“When it comes to implementing your solution, do not just go build a blockchain application first off,” Munday explains. “Blockchain is about getting multiple parties together for decentralised collaboration, so the applications with the biggest network effects will be the ones to succeed. This means that before you proceed with building your solution, you need to validate that you have multiple industry stakeholders that actually want your solution and are willing to pay for it.”
“From here you should scope your solution, understand the partners you may need, and the requirements of a proposed solution. Part of my job at R3 is to connect start-ups to the right partners; this includes developers and CTOs, to business development activities with a mentor and investor network. Only once you have validated and tested your solution in your new, expanded network should you move to the build stage,” adds Munday.
4. Take the Time to Learn
“If you are technical, blockchains are easy to navigate if you put in the work. But don’t be complacent when it comes to researching this very new technology,” Munday tells us.
“I always like to say that you should do 100 hours of learning before you can feel confident to implement anything. With blockchain, this couldn’t be truer.”
You should research your chosen platform and its underlying protocols, and also seek to gain hands-on experience working with the system. Munday explains that “engaging in hackathons and developer challenges is a great way to gain practice building on blockchain and learn about which solutions can be empowered.”
Blockchain’s collaborative nature also lends well to the development stage: “talk to other companies that have been on the same journey as you or who understand the business problem you are looking to solve,” says Munday. “Not only will you gain invaluable advice about this relatively new space, but you’re likely to gain new connections who can help to build your network.”
5. Learn How Blockchain can Empower Other Technologies
You may also want to consider how blockchain can power up your existing solutions that involve other technologies: “Take any trending technology, for example, AI, IoT, or 5G, and break it down into what it’s doing and most of the time this will be transference and manipulation of data. By adding blockchain to the equation, you can provide security and traceability to this data,” Munday explains.
“AI manipulates data to gain new and useful insights through a computer. Yet, to receive this data you need multiple sources. Blockchain empowers the transference of this data between sources and provides security and verification with smart contracts that the data is being used for its expected purpose.”
“IoT and blockchain also work excellently together. IoT communicates data between disparate physical systems quickly, and blockchain can ensure that this transfer of information is secure and recorded immutably.”