Using Blockchain in Business Models

Using Blockchain in Business Models

Introduction


Blockchain technology has drawn the attentions of many industries these days. New Blockchain technology has influenced not only the performance of businesses but also on the growth of creativity and new methods of their lives. The number of the companies and organizations which are using Blockchain in their system is on ongoing increase. Decentralization of the system Blockchain offers will be beneficial in resolving many business problems. In the other Blockchain-based business models, there will be no sign of overseeing and management of central cores and this means more transparency and clarity. But how is the method of the companies in applying and using Blockchain to take different measures? Everything depends on the approach of Blockchain-based businesses which enjoy it in the route of their activities. The more powerful and appropriate a Blockchain-based business is designed, the higher its success chance will be. Blockchain, its related approaches and business models based on it will be addressed in the following parts.

What Is Blockchain in Simple Terms?


Blockchain is a set of immutable data which are managed by a cluster of PCs. These PCs do not belong to a specific unique person or a company. Each Blockchain is considered a decentralized ledger wherein the data are stored in the form of blocks. These blocks are secured via cryptographic or encryption. The major foundation and principle of Blockchain is the transparency, immutability and the decentralization of its data.

What Is Blockchain-based Business Model?


Business model is a formal and bombastic term to describe the plans and strategies of every business to sell products and services and of course producing benefit. In fact, it is a plan and a model that every business designs and deploys its plan in order to produce its products and services and market them. Each company is seeking for a business model which is more consistent with its needs. The model which is designed according to Blockchain is a decentralize model which allows P2P communications to the network members. In this Blockchain network, communications enjoy transparency and the relationships proceed based on the trust the network features bestow their users. 
Models of Blockchain businesses use the tokens for profitability. Every person who helps Blockchain in business to reach a conclusion and administer a purpose will receive a token and the value of that token is dependent on the market condition. Tokens can be Bitcoin or Ether.

Is There Any Need to the Existence of Blockchain-based Business Models?


The decentralized nature of Blockchain alters different performances of the businesses in different aspects such as transactions, ownerships, profitability and the growth in the volatility status. Blockchain-based business models are beneficial in the improvement of businesses and more profitability for their customers. An ideal business model should concentrate on the investors and attend more to the investors than the entrepreneurs. So, the look of the business is drawn to the profitability instead of value creation. Models and ideas of Blockchain-based business should be implemented at micro- and macro-levels in order for all stakeholders to benefit. 

How Were the Traditional Business Models?


Many different businesses still employ traditional methods to design and implement their model. Traditional business models address producing services which are profitable for them. The consumers and customers of the business buy products and services with a specific rate. These rates are composed of elements wherein the wage and the charges of production route are considered. A centralized model is used in these methods and they are uniquely designed and implemented. Traditional business models are divided into four parts of producers, distributors, retailers and franchise. [1]

How Are Modern Blockchain-based Business Models?


In the modern Blockchain-based business models there is no need to trust in an overseeing management and central core for the data. In these new networks and models, the users trust in a decentralized network which continues its activity according to mathematical calculations. Blockchain-based economy can also give new capacities and abilities to different companies. Active technologic companies like Facebook are attempting to employ Blockchain in their business models.  The assets of many important companies of the world are their users’ data. With Blockchain and its protocols and the practical method it has, these companies can no more abuse and make revenue from their data without the permit of the users. 

How Are the Best Blockchain-based Models?


Blockchain can manifest itself in different forms in various business models. For instance:

Blockchain as a Service


In applying Blockchain as a service, the business continues its activity in Blockchain ecosystem. This ecosystem allows the companies to further different activities such as research, experiments and carrying out operations. The existence of ready infrastructure for the activity of the startups will be very excellent; since they will not need different worries to find necessary background and budget to start their work. There will be no need to hardware infrastructures and because of that, the companies quickly enter the practical and administrative field.

Blockchain and Its Token-based Economy in Business Model


Profit is very important in every business whether it is a service or offering a product and supplying it. In business models which work with Blockchain and tokens, tokens can guarantee profitability of the businesses. Ripple is one of the best examples that employ the tokens in their work model. In Ripple, the banks which are a part of it network are capable of transferring fund using Ripple cryptocurrency; i.e. XRP. These are Ripple tokens and prepare the network for the activities they do. Different businesses can maintain profitable tokens and set the others free to proceed different works and affairs of the network. With changing the value of profitable tokens, the business profit too.

P2P Blockchain-based Business Model


Various businesses can enjoy Blockchain capacity to make communication and P2P contracts. In this case, the final customers of each country directly communicate with each other. For example, the businesses which work in storing and sharing information between users comfortably change their business models with the help of Blockchain and enter a new level of activity. [2]
Selecting an appropriate Blockchain-based business model depends on the nature of every business. There is no special law and condition to dictate the method of applying a specific model to all the companies and organizations. Every business should take measure in using Blockchain in its model considering its capacities and needs.

References


[1] Blockchain Council, Toshendra Kumar Sharma, “The Best Blockchain Business Models”, August, 2019
[2] Fourweekmba, “Do Blockchain Business Models Imply a New Business Playbook?”, 2018

 Written by:

Dr. Pooyan Ghamari

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