6 Essential Steps to Build a Blockchain Startup

While it’s the get-rich-quick schemes and flashy non-fungible tokens (NFTs) of apes on Twitter that have been getting the spotlight, blockchain solutions – and the visionaries behind them – have been moving worlds. The technology is already transforming industries across the board, from entertainment and hospitality to real estate and healthcare.

“It’s like the early days of the internet,” remarked Mark Cuban, the prominent businessman, when “a lot of people thought we were crazy.”

Many entrepreneurs that have ventured into the new territory today find themselves running global enterprises. Just think about OpenSea, the most popular NFT marketplace. Founded in 2017, the company is now worth a staggering $13.3 billion. Addressing a well-defined purpose, OpenSea has managed to use blockchain to shift how we think about digital assets and their scarcity.

Newcomers can seize the ripe opportunities, too. In 2021, crypto and blockchain startups raised a record $25 billion, and __reports__suggest 2022 will see strong numbers, too, despite the currently bearish market.

But the high-reward potential of blockchain shows merely one side of the coin. The fast-paced and unpredictable nature of the industry makes it difficult to navigate, presenting a unique set of challenges for founders. You need to bet on agility and constant learning – because there’s a long, twisty path ahead.

“In blockchain, everything needs to happen yesterday,” Janay Symonette, the head of marketing and communications at Deltech Bank, shared with me. “There’s a big difference between launching a startup and launching a blockchainstartup. You need to understand how fast things are moving and always be curious.”

Knowing it’s a wild ride, would you still be up for it?

Having researched and spoken to blockchain entrepreneurs, as well as experts and communications professionals supporting their journeys, I’m bringing you an overview of everything you need to build a blockchain startup.

Step 1: Understand blockchain technology

If you’re toying with the idea of launching a blockchain startup just for the sake of it, stop right there. While the benefits of the technology are extensive, don’t pursue its __real-world implementation__unless you really understand it.

From pitch presentations to trend rundowns, blockchain is now thrown around as a trendy buzzword, portrayed as an omnipotent solution to every problem. That’s hardly the case, though. The technology may be a powerful hammer, but not everything is a nail.

So, what is blockchain, and what is it good for?

IBM characterizes it.) as a “shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a business network.”

Investopedia notes that this “shared database” differs from a typical database in the way it stores information. Blockchains store data in blocks linked together via cryptography. As new data comes in, it’s entered into a fresh block, and when the block is filled with sufficient data, it joins the previous block, meaning the data is in chronological order.

This order is immutable, making the data entry irreversible and permanent. On top of that, no one owns or controls the database, so forgery or fraud is almost impossible. All this brings exceptional features that __entrepreneurs can leverage__in the real world:

• Digitization: The blockchain network is fully digital. It runs across the internet and cloud-based services, presenting opportunities for greater speed and real-time information exchange.
• Verifiability: All transactions and information on the blockchain are unique, and their record is maintained forever. With multiple computers always ensuring trust and accuracy, it’s virtually impossible to tamper with the data. This also brings transparency, with anyone able to verify all activity on the blockchain.
• Security: A blockchain may be public, but the information it bears is private. Cryptographic encryption ensures security with a system that validates the entry on each block.
• Immutability: No data on the blockchain can be changed. While there’s some flexibility (if you amend records by adding a new transaction), blockchain is a precise tool to track and monitor information and transactions.
• Decentralization: Unlike many traditional structures, blockchain doesn’t rely on any central control. It’s fully distributed and can be accessed by anyone, anywhere. Goodbye, third parties!

These features have been vital in transforming how we establish trust among stakeholders, execute transactions, define digital scarcity, verify our identity, and much more. Being such a disruptive force, blockchain is bound to profoundly impact how we conduct business.

Step 2: Know what you want to build

Today, blockchain has become almost synonymous with crypto, allowing us to exchange value in new ways. However, there are countless use cases of blockchain in business, spanning industries and functionalities beyond finance – including governance, ownership history, identity, rights management, and tracking, among others.

A blockchain startup is a company built on blockchain or using the technology as an enabler or element behind its product or service. As the first step of your journey, make sure that what you’re doing with blockchain can create actual real-world value.

Find the best way to use the hammer on the right nail.

Once you have a problem, you need to know what you want to build to solve the problem – and which part of the business, information structure, and technology setup you want to use blockchain for.

Will you be ridding artists of “parasitic” middlemen? Or will you be recording patient data such as healthcare records and diagnoses in an entirely new way? Perhaps, are you planning to give back the power to the user in a sector that has been exploiting our data (such as social media)?

The options are limitless. To get your head out of the clouds, though, remember not to have a goal too broad. You may not be able to solve all problems in an industry like logistics, but could you tackle container fulfillment or fuel optimization? Well, that may be enough.

“Even in finance, there’s so much to do: NFTs, metaverse, trading, custody, staking, lending, payments… so many types of services, but you can’t do everything,” points out Bruno Macchialli, the CEO of Delchain, a digital asset and financial services platform. “Find your value proposition and go strong on that.”

Defining your product, even if in broad brushstrokes, lets you envision a strategic structure around it. You can then create an initial breakdown of the investment required to build your startup, as well as outline potential pricing, revenue, and maintenance costs.

Knowing what you want to build will help you understand the tech needs, too. Will you leverage an existing blockchain, such as Ethereum, Cardano, Ripple, or EOS? Or do you need to create your own with unique functionalities? Even if you answer the latter, keep the questions coming. Are you trying to fix a problem no other blockchain has solved? How are existing blockchains inadequate?

If no blockchain truly meets your requirements, you might want to build one from scratch or modify or forkan existing one. This means altering the network by changing the protocol – such as what Bitcoin cash did with Bitcoin. You can either work with companies like LimeChain or Softeq, which create blockchain protocols and apps based on your criteria, or do the heavy lifting in-house.

“If you just want to start a blockchain for the heck of it, or just to prove you can do it, or to use it as a learning experience, then my advice is to learn as much as you can about whatever existing blockchain you like the best, or is closest to the kind of blockchain you want to build,” suggests Joe Copley, a professor at Kingsland University, known as the “school of blockchain”. “Then fork the chain’s github repo, get it working, and start making changes.”

The decision on your setup is critical, as each of these options bears differences in costs, capabilities, technical expertise, and customization options.

Step 3: Build your product and know how to sell it

No matter how innovative your product may be, the fundamentals of building a product that engages an audience and generates revenue remain the same. That said, there are some nuances in blockchain to watch out for.

Market as fast as you can

There’s no one roadmap to follow to get your blockchain business up and running – what works best for you might not work for the next person, and vice versa. Yet, there are some best practices and common pitfalls to pay attention to.

First, don’t release a solution not ready for the market. Blockchain is already abstract as it is, so have a product that works both in a proof-of-concept and in the real world.

Second, be realistic. Don’t get fooled by cheap success or viral fame; none of these last long. “Too many projects became the hot new thing, only to see their token price crash,” __says__Suvrangsu Das, the founder of a web3 PR company. “I advise new startup founders to think about their token economics, incentives, and potential activity.”

Will your product still have added value a year from now? Is it designed to evolve with the market? And are you ready for a bear market? __Bitcoin__may have reached its all-time high of over $68,000 last November, but now, it has sunk below $20,000. Yet, a plunge like that won’t be existential for most entrepreneurs building authentic products with real value, so strive to become one of those.

Many founders are blind to the future – and blind to change – which makes them susceptible to the cardinal sin of entrepreneurship: They fall in love with their product. Instead of getting burned by the slightest change in the market, build your startup in a flexible way – and keep evolving over time.

This also means you don’t want to take too long to market. You could easily spend months optimizing only to launch something that’s already outdated. Blockchain moves fast, and you want to get production-ready fast, too. Deliver as much value as possible through quick-to-launch features that you can finetune as you go.

Two things can help you ensure your product is ready to go:

1. Get continuous product feedback

You want to build a product that’s fit for purpose. So, collect feedback from stakeholders continuously. In blockchain, a user-friendly interface and education are vital – knowing how to communicate with your audience and being attentive to their opinion right from the start will get you far.

2. Test early

Test your blockchain technology even before building a minimum viable product (MVP). David Vatchev, a venture development lead at R3, recommends the Riskiest Assumption Test (RAT) framework. It can help you validate whether your product will solve your customers’ problems, whether it’s a big enough problem to solve, and whether you have a viable business model. This can save you time and resources, preventing you from building the wrong product.

Decide on your business model

Your blockchain-based business model will be your revenue engine andthe key to defining your go-to-market (GTM) strategy.

You can use various models to __monetize__your blockchain startup:

• Peer-to-peer (P2P) blockchain: End-users are empowered to communicate directly, meaning that your startup can monetize via tokens and transaction fees, as well as blockchain-as-a-service (BaaS) offerings. Filecoin, a data storage and sharing platform, is a great example.
• Utility token: Crypto token owners can use the services provided by a decentralized platform, and you work to make the utility tokens interesting and valuable (aka tokenomics). By holding a portion of the tokens, you earn profits once their value grows.
• BaaS model: This is where you build a whole platform to offer other businesses an environment to manage their blockchain system, such as Microsoft’s Azure, Google Cloud Platform, or Amazon’s AWS. Even Ethereum has EBaaS to do that.
• Development platforms: Here, the focus is on enhancing blockchain functionality by designing apps that boost the infrastructure, including systems, tools, frameworks, and know-how.
• Blockchain-based software product: You can also sell ready-made blockchain software solutions to other companies they integrate based on their own needs.
• Blockchain professional services: This is a more individualized service model, ideal for development companies or blockchain consultants.

Your choice should depend on your product and the audience you’re marketing it to, but it’s worth noting that today, P2P and utility tokens are the most popular models. One of the most prominent examples of the latter is Ethereum, which is both a cryptocurrency as well as a token utility that provides access to the decentralized computing service of its network.

Don’t underestimate regulations

If you’re enabling some form of crypto, you can’t escape regulations. Make it a priority from the start to familiarize yourself with state and federal laws, taxation systems, accountability, intellectual property and privacy, cybersecurity, and insurance policies.

“What you learn today about new legislation could be changed tomorrow, so you have to get used to this pace without losing your breath,” notes Jeremy Foo, the founder of TripCandy, a travel crypto cashback startup.

Some countries and regions are naturally more blockchain-friendly than others. “You need to understand the regulatory aspect of crypto, as it affects where you establish your company – be it the Bahamas, El Salvador, or other jurisdiction,” acknowledges Bruno Macchialli from Delchain. “This will ultimately shape the legal structure of your startup.”

Crypto startups also have to comply with anti-money laundering (AML) and know-your-customer (KYC) standards. For additional regulations, always do your due diligence to guarantee you’re safe to operate within a particular jurisdiction.

Step 4: Find the right team

Many heads turned when Sandy Carter, the vice president of AWS, Amazon’s cloud computing unit, left her job to work for a crypto company. “The momentum we’re seeing in this space is just incredible,” she commented.

The blockchain world may be wildly attractive, but many companies struggle to draw in the right people. “Even today, finding the right team remains a big challenge in the industry,” says Bruno Macchialli from Delchain.

The founding team is always a key priority for investors, and in blockchain, this is taken to new heights. They’ll want to check if you have key roles, especially tech positions (such as CTO or VP of engineering), filled with the right talent.

Your solutions can’t come to life without technical experts. Always have one on your team to oversee the architecture. Blockchain may be complex, but your users shouldn’t feel or experience that complexity. A technical expert can also become a bridge between your business goals and customers, advancing a seamless user experience (UX). After all, navigating your product or service should be as easy as scrolling through Instagram or setting up an Asana task.

Moreover, surround yourself with people you can trust and that are eager to keep learning. In blockchain, you’re learning as you walk – and you’ll keep learning as you run and grow. Not only do you need to maintain the mindset of “everything is new and will keep on being new,” but you must also be comfortable and thrivein such an environment.

Apart from the traditional platforms, such as LinkedIn, Glassdoor, Indeed, or AngelList, turn to networking (even on apps like Discord) or explore crypto-specific job boards such as CryptoJobList or CryptocurrencyJobs to find the right talent.

Step 5: Explore funding options

Even though May saw a cooldown for the blockchain space, Q1 of this year was a hot time for startups in the sector – representing a record quarter with over $100 million of raised capital.

Blockchain startups have all the standard __fundraising strategies__at their disposal: crowdfunding, bootstrapping, angel investment, venture capital (VC) funding, incubators, accelerators, and so on. And while some have slightly adjusted to the needs of the space, most have remained unchanged compared to other industries.

When looking for investors, know their focus. Do they have any interest in blockchain? And does your startup fit the themes that appeal to them? Angel investors, in particular, have been flooding the space, but you need to find those whose portfolios could benefit from a startup like yours. You can use websites such as AngelList to find them, but know you have the best chance when reaching out through an introduction from someone else.

Joining accelerators and incubators can pay off, too. Beyond the business lessons, they open the doors to new networks of mentors and investors. Graduating from a program also adds credibility – an important aspect for investors. Nowadays, there’s a broad spectrum of accelerators and incubators that target blockchain innovations – and lists like these can help you explore them.

However, you can also consider token sales, a blockchain-specific approach. More and more startups today simply pitch their idea, set up their blockchain for a new token, and get the seed capital they need to get their venture off the ground. This strategy, known as Initial Coin Offering (ICO) can work well, but it’s worth noting that investors have been very cautious.) after various scams have made the headlines.

Even after you receive funding, don’t underestimate managing investor expectations. “What you have [in blockchain] is a brand new generation of investors that are high on the idea they could become overnight millionaires – and count on you to get them there,” notes Jeremy Foo from TripCandy. Over the past year, Jeremy has seen many projects crumble because they felt pressured to hasten their process or do things that weren’t necessarily beneficial for their business.

Matthew Niemerg, the CEO of consultancy Cardinal Cryptography, highlights the importance of trusting your own judgment. “It's fine to listen to others' opinions and take them into consideration, but you can't please everyone. You'll waste more time doing that than working on what you want to build.”

Step 6: Get communications right

In blockchain entrepreneurship, communications can serve to educate or update the community – but also to build accountability and trust for your project.

These two ingredients are critical, and you can only advance them by putting yourself out there. Forget dull and impersonal marketing. “It’s all about getting in touch with the customers and being open to feedback, getting deeply involved with the community, and hosting AMA sessions,” says Jeremy Foo from TripCandy.

The best thing you can do is advance a mix of earned media and public opportunities, as well as owned media and social channels.

Earned media and public opportunities

Earned media is a little more tricky than owned media, as you have to invest in building relationships with journalists, influencers, and media contacts.

For starters, develop a media monitoring habit. Manuela Villegas, my colleague and a senior account executive at Publicize, explains why that’s important, “It can help you newsjack. Have a soft pitch you can quickly use when you spot news or a tweet you can talk about.” So, don’t miss out on piggybacking on big news just because you’re adamant about discussing your product only.

“Initially, the biggest publications may not take you into account, but it’s important to be on their radar right from the start,” Manuela Villegas adds. “With industry publications, it may be easier to get coverage. You can start with smaller outlets and slowly move up to bigger ones.”

But there’s another thing to keep in mind. “Editors, journalists, and the media, in general, are very skeptical of crypto projects, blockchain startups, and everything related to NFTs,” notes Catalina Carvajal, my colleague and an account manager at Publicize. “Many have had negative experiences and don’t want to promote a project that could fail or be fraudulent.”

This is why you want to share your social proof when pitching the media. Catalina Carvajal suggests every blockchain startup has answers to these questions:

• What well-known partners do you have?
• Who are your customers?
• What is the background and success story of your founders?
  

Next, you want to focus on the aspect of your project that might be newsworthy. “Find an angle that generates curiosity – there always needs to be a hook,” Catalina Carvajal notes.

Once you start getting media coverage, Manuela Villegas suggests having your own “press room” on your website. That way, you can aggregate all content about you in one place.

Additional communications strategies you can try:

• Attending events, hackathons, webinars, and workshops
• Contributing to Medium and Hackernoon
• Sharing press releases about the most important announcements
• Appearing as a thought leader in industry publications
• Providing commentary on current issues in the space
• Securing a podcast appearance
• Publishing your product on discovery platforms like ProductHunt

Owned media and platforms

If you look at all the well-established blockchain startups, you’ll notice their websites have clean, crisp design and are packed with valuable content, such as blogs and whitepapers.

Start by including a clearly defined vision, mission, and “about us” page, highlighting the key team members. Make sure to stress the problem your product is solving, as well as token details, where relevant. Steer clear from any jargon or overly technical words – by using a lighter, engaging tone, you present the perfect marriage between humans and technology.

Some strategies to try out include:

• Publishing a whitepaper about your project
• Creating a company blog with SEO-informed content
• Setting active presence on traditional social media, such as Twitter
• Setting active presence on channels popular for blockchain projects, such as Discord and Telegram
• Contributing in relevant Reddit threads (r/CryptoCurrencies, r/blockchain, r/Crypto_General, r/CryptoMarkets, etc.)
• Investing in influencer marketing

As a rule of thumb, remember to focus only on a few channels at once. In his content marketing domination methodology, Joe Pulizzi points out you should start with a narrowly defined focus so that you can build your content fundamentals before throwing yourself into more channels and “trying to do everything.”

The bottom line

Bob Greifeld, the CEO of NASDAQ, declared, “Blockchain is the biggest opportunity set we can think of over the next decade or so.” If he’s right, the 20s will indeed be ruled by blockchain.

As a last piece of advice, remember this equation:

Solution to a real-life problem + Interested, large-enough pool of future paying customer+ Strong team guided by a growth strategy + Transparent and consistent communications = Success