How Do Blockchain Businesses Earn Money?

The recent times have been seeing blockchain technology assume increasing levels of importance. Many even believe that blockchain has become the harbinger of a fresh transition. If you were to ask them, “is blockchain really the fourth revolution?”, you’d probably hear an emphatic “yes!” in response. That makes us wonder, are the drivers of this technology making enough money? If yes, how are they earning in return for running blockchain businesses? Here we discuss exactly that: how blockchain businesses earn money. There are many ways for them to earn and following is a list of some of them:

1. Selling Blockchain Solutions:

Many of these blockchain-based companies create customised solutions to handle specific use cases their clients have in mind. They sell these solutions to the client companies and receive payment in return for their professional service. Companies like IBM, Deloitte and Gem often do this as they are blockchain experts adept at customising tech solutions.

2. Transaction and Subscription Fees:

Many of these blockchain companies develop and maintain enterprise-level blockchain networks that are used by companies or consortiums of companies for their own use to coordinate business goals. Naturally, the user companies pay a subscription fee to the developer company in lieu of using their network for database management as well effecting transactions. R3Cev and Chain are two examples of companies that do this.

3. Software As A Service:

Blockchain companies like Tierion or Blockcypher earn money by allowing users to work on their blockchain APIs and use their infrastructure. In return for this, they take a certain payment and that forms their primary revenue.

4. Building Host Infrastructure:

Some blockchain companies make money by entering into SLAs or Service Level Agreements with companies that require them to build, host and maintain blockchain networks. Blockchain architecture is a difficult thing to build from scratch and companies such as Bloq and Microsoft generate substantial revenue out of such services.

5. Speculating on Value of Cryptocurrencies:

Usually blockchain networks each have a native token and the developers hold a large number of them. They actively work towards pushing the price of the token up and once that’s done, they sell off their holdings, thereby earning some profit out of it. Examples of companies that did it include Lisk, ConsenSys and Factom.

6. Receiving Funding:

Many blockchain and crypto-oriented businesses earn substantial amount of money through funding which can take either of the following forms:

a)Hosting Initial Coin Offerings or ICOs help blockchain based companies raise significant amounts of funds.

b) Attracting funding from Venture Capitalists.

Examples of receiving funding include the recent case where we saw Novogratz and Goldman Sachs stake $15 million to BitGo Funding and other instances like that of JP Morgan Chase investing in Axoni, Circle and Digital Asset.