According to a recent study, 92% of blockchain projects fail, and the average lifespan of a blockchain startup is 15 months. However, blockchain technology doesn’t seem to to lose its hype. What should blockchain developers know to be among the 8% of successful startups?
Vytautas Kašėta, board member of Blockchain Centre Vilnius and advisor to Swace, a blockchain-based app that is starting its token-generation event on July 4. Swace offers a rewarding system for social gaming, shared his tips for making a startup work. From designing the project to choosing the right infrastructure, Vytautas Kašėtahas answers to all the essential questions.
Find the problem you want to solve
You must have a clear picture of the market you want to disrupt and the challenges it is facing. This is where you will find the problem your project will help tackle. Make sure that the product you are creating is exactly what your users need now or will need in the future. In Swace’s case, the problem is the unsatisfactory experiences users and brands have with social networks, each from their own perspective. The solution is a social network that offers tangible rewards for social gaming and a more interactive online-offline experience.
Start with the people you need the most
The people you hire are your biggest treasure. Start with recruiting the best CTO (Chief Technology Officer) in town. Such a person will know how to solve the problem and will have the skills to do it. Also, you should have a developer on board as soon as possible. Of course, you shouldn’t stop there. Swace sees every professional on the team as an ambassador for the brand.
Become a blockchain expert
These days, everyone wants to incorporate blockchain technology in new projects. Do you have a clear understanding of the exact way blockchain will benefit your product? Everyone on your team should be in line with the answer and know the background of blockchain. If you’re still searching for the answer, read some books about distributed systems, digital and crypto economy, distributed ledgers etc. If you’re an entrepreneur or CTO, you can start with “Blockchain Revolution” by Don Tapscott and “The Business Blockchain” by William Mougayar. If you are a developer, look into the GitHub of your preferred blockchain.
Choose the ledger wisely
Two major approaches are public and private ledgers. First, decide what distributed ledger features will possibly be needed in your solution. Will you use any programmable business logic & smart contracts or just state and transaction records and metadata? Knowing what you need will make it easier to choose from this vast variety of ledgers and infrastructures.
There are at least 4–5 corporate private ledger solutions that can be easily adapted to your business case, e.g., Hyperledger, NEM. In the private ledger, you will setup some nodes and keep them running and synchronizing, so the costs of infrastructure will be on you, but you can choose to make all the transactions free for the users. If you choose an existing public infrastructure like Ethereum, Bitcoin, NEM, EOS etc., you will be free from taking care of the infrastructure or so-called consensus layer, but some transaction fees will arise. Somebody has to maintain the public key infrastructure and ledger in sync.
Identify your role in the ICO ecosystem
Have in mind that ICOs are expensive when compared to regular venture capital investments, and you need to have something more than a whitepaper. You need to clearly identify whether you are bringing value to this developing crypto economy, improving technology, or dealing with a distributed or sharing economy where you need a blockchain to help.
Be serious about your tokenomics
If you are building a closed economy platform, a marketplace, or releasing a token that allows access to your services, be sure to build a serious token economy. What will your token do, what is it for, and if you take the newly created token out of your product, will it work? For example, in Swace’s case, SWA tokens are a crucial element for it to function as a social gaming platform.
Have a clear commercialisation strategy
You are stepping into a rapidly growing market where your project will have to compete with many others. Make sure your users are aware of the benefits your product offers and are ready to pay for them.
Make sure it’s all secure
The biggest mistakes with distributed applications are programming and coding mistakes, so audit is a must. Bug bounty helps, but the code has to be revised, and the architecture and business logic have to be audited.