In the current Blockchain landscape with the countless amount of Cryptocurrencies and Blockchains which ones are actually making revenue? If you are an entrepreneur or investor looking to get into a blockchain business where should you focus your attention? The way I see it there are only really a handful of uses cases that have currently proven themselves. The ones that have shown that there is a possibility in making a viable business work. All of these have more than one player and is not really dominated by anyone in particular. Showing that there is room for more people to participate and get a slice of the pie.
1. Cryptocurrency Exchanges
No doubt the top spot goes to Crypto exchanges. Where else can you be in operation for less than 1 year and rake in $1 Billion revenue? Binance which came into operation just last year is set to pull in this amount in 2018.
Bitmex is so profitable they are set to take up office residence for $600k USD a month in one of Hong Kong’s most expensive office buildings.
Coinbase is another unicorn that will be a household name by the end of 2019.
These guys have got a head start but they are operating as centralised exchanges. The opportunity still lies there for the next version of decentralised exchanges.
Any business which has fees on transactions related to the trading of cryptocurrency assets is sure to do well.
2. Collectibles
Next up comes the collectable marketplace like Cryptokitties. When they first launched they clogged up the Ethereum network and caused congestion on the network. Traffic has since slowed down but they are still getting 300+ users a day according to Dappradar. The team generates revenue through the sale of generation 0 cats. That seems to be the revenue generation model for most of these dapps.
Other popular collectible platforms are Ethermon and soon to be released Gods Unchained which is getting good press lately.
I’m also keeping an eye on Cryptocarz. Recently met the team at Rise in Hong Kong and got to talk to them about their upcoming plans. Can’t wait to get my hands on a car that you can race and if you lose you will even lose the car!
3. Gaming and Gambling
These games are easier to implement through the use of smart contracts. One such game FOMO3D just gave off a jackpot of $3 Million to one lucky winner. Controversial in the fact that they openly admit to being a ponzi scheme. But the code is clearly visible to everyone through the public blockchain so I wouldn’t call them scammy.
One big miss that I was disappointed in is related to prediction markets platform Augur. As one of the earlier ICO’s I was really looking forward to their platform but it has not passed my smoke test. The UI is a nightmare to navigate and is pretty much unusable for a normal person. Just goes to show that even with a huge warchest of funds it doesn’t necessarily equate to platform success. Other gaming platforms such as Etheroll raised about $300k in their ICO compared to $5 Million for Augur. Both platforms currently have about 50 daily users.
4. ICO Advisory
The amount of Linkedin requests I get a week relating to someone claiming to be an “ICO Advisor” is just crazy. Seems like everyone and their dog is a Blockchain expert these days. There is just so much demand for Blockchain and Cryptocurrency SME’s out there and it’s bringing all kinds of characters to the table. I am sure some of these people are making a decent chunk of change even with not much real knowledge.
For people with real Blockchain expertise however this might be an easier path to get involved with exciting projects without the overheads of establishing your own startup.
5. Payments
Probably one of the earliest use of Blockchain technology has been in the payments space. Remittance startups such as Bitpay have been around since 2011 and are still around. Nowadays the space is getting more and more players with lots of startups focussing on cheaper, faster ways to send value around the world. Considering the various P2P, B2B, B2C, C2C opportunities out there the market is huge and there is plenty of room for everyone.
6. Mining
I am putting Mining up for the reason that Bitmain is now a huge enterprise having started out early. They are worth an estimated $12 Billion! Still the industry is in decline since blockchains are moving away from energy intensive Proof of Work (POW) models to Proof of Stake (POS). Mining has most likely seen its hey day and if you got in early it has been hugely profitable but I would not look into getting into this industry as a late comer. Do not fall for cloud mining services without punching in the numbers yourself to calculate profitability. You will most likely not come out on top and are just paying for someone’s hardware costs.
What I would look at instead if the Pooling industry and opportunities that will soon arise. Rocket Pool is one such company that is staying ahead by getting ready for the migration of Ethereum to POS. As the date for POS switching comes closer there will be more of these startups.
Final Thoughts
There are so many Use Cases for Blockchains that are currently being worked on by many startups. The ones I have pointed out are just the current models which I believe are doing quite well in terms of generating revenue. That’s not to say that in the coming medium term there wont be more emerging successful models. Personally I am looking forward to when we will see Blockchain IoT startups starting to pick up with transactions on a Blockchain.
