Everything runs on money. This is no different for blockchain technology nor for cryptocurrencies. In fact, you would likely struggle to find a single crypto investor who doesn’t want to make money off of their investments. And that’s entirely normal, because everyone wants to see a nice return on the money they invested.
I don’t say this to clump blockchain projects and cryptocurrencies together with traditional business models, technologies, and ways of making money. Blockchain is disruptive new technology that can transform industries, distribute power across its users, and make processes cheaper and more efficient.
But that doesn’t take away from the fact that your blockchain technology, your DApp, or your cryptocurrency, will need to make you and ideally your users some money. Otherwise, it’s unlikely to take off.
So if you’re a blockchain or DApp developer, you need to give careful thought to how you will earn money with your DApp. That’s what this article will explore. First, I will guide you through an example of how Netflix was able to disrupt an entire industry by leveraging a new way of doing things. Then we will talk about the threats that blockchain poses for big companies, and how those companies are reacting. And finally, we will discuss specific ways for you to earn money with your DApp.
How Industries Are Disrupted
The term disruptive innovation was coined by professor Clayton Christensen of the Harvard Business School in 1995, and it’s been called the most influential business idea of recent years. Disruptive innovation happens when a company new to a certain market targets overlooked customer segments with an offering that’s more affordable, convenient and simpler than what’s currently available.
Not all innovation is disruptive. Uber isn’t disruptive innovation, because they still targeted the same customer segment (i.e. people looking for a cab) that regular cab companies did, although they did so with a much better technological offering.
Netflix is a great example of disruptive innovation. And I’m not even talking about the streaming company that we know today. I mean the Netflix before that, which sent DVDs to people. It’s a testament to how disruptive Netflix is that most people forget about that part of Netflix’s history.
But that’s how they originally disrupted the market. Having a DVD sent to you might not have had the instant gratification of going to a Blockbuster store, but it was a lot easier and less expensive to do so. The people who used Netflix were different people from the ones who visited Blockbuster.
Disruptive innovation exists on the fringes and worms its way in. Slowly but surely, Netflix took more and more market share from Blockbuster until they became an unstoppable force. Then Netflix disrupted themselves by focusing on streaming, and now they’re doing it again by moving into content production.
You might now be thinking: what does this have to do with blockchain? Well, there are a lot of similarities with Netflix that show blockchain technology is a disruptive technology too. It certainly exists on the fringes and serves a specific set of people. The many different blockchain applications offer a cheaper and better way to do things (although not always as convenient). And they’re slowly but surely chipping away at the centralized power of big companies.
Big Companies Are Reacting
Every action has a reaction, so it comes as no surprise that companies with plenty of centralized power are figuring out ways to respond to the decentralized threat of blockchain. The first few months of 2018 saw all major social media platforms banning cryptocurrency ads. No longer could startups advertise their ICOs (or anything related to crypto) on Google, Facebook, SnapChat, or Twitter.
The reasons for these ad restrictions were to stop people from being scammed and defrauded. And there’s certainly an element of that in the blockchain and cryptocurrency industry. But you still need to be relatively knowledgeable before you can invest money into a cryptocurrency (scam or not). Sign up for Coinbase, verify your identity, send money to Coinbase, buy an established coin, possibly transfer that established coin to a different exchange to exchange it, send it to a crypto address, etc…
There were different underlying reasons for the blanket ban on crypto ads. It was an act of censorship against a whole technology. And although Facebook and Google have since softened their regulations, it still gave them enough time to understand blockchain technology and come up with ideas on how they should react to it. After all, Web 2.0 giants earn money by selling the user data they own and by keeping control over their assets, something that blockchains threatens to take away.
History Sets the Example
In order to avoid this loss of power, companies are increasingly adopting blockchain instead of trying to vilify it. The China Construction Bank Corporation uses IBM’s blockchain platform to streamline how third parties sell their products. Berkshire Hathaway uses blockchain to figure out the origin of shipping freight. And JP Morgan open-sourced its own blockchain platform platform Quorum, even after its CEO Jamie Dimon called Bitcoin a fraud that will eventually blow up.
Microsoft, Walmart, Daimler, Mitsubishi, Alphabet, Apple, and many other major companies are now investing in blockchain in one way or the other. But they’re likely to use the technology somewhat differently from blockchain startups. And it’s worth paying attention to what they’re doing. Here’s an example of how a major company turned disruptive technology to their hands:
Google open-sourced its Android Operating System (OS) a few years ago. That was a strange move. Why would they give away the proprietary technology they worked so hard on? It didn’t seem to make sense, but it turned out to be a great move. Android is now by far the dominant mobile OS and Google uses official and unofficial updates to steer mobile manufacturers in the direction they want. Google Search is now the main search engine for nearly all Android phones.
Major companies will use blockchain no differently. It will serve its best purpose as a way to make it strategically easier to earn money in other ways (with their core product, for example).
But this doesn’t mean you can’t make money with blockchain. On the contrary, it means blockchain can make it much easier to earn money in traditional or new ways.
5 Concrete Ways to Earn Money with DApps
I thought it was important to give you a broader understanding of the blockchain industry, its relationship with big companies, and how the technology will likely be used by big players. With this in mind, here is a list of concrete ways you (as a DApp developer) can make money with your DApp or with your skillset:
- Charge a transaction fee. This is likely the best-known way to make money with a DApp. CryptoKitties charges a fee every time you purchase a kitty. It’s a revenue model that’s been proven highly lucrative.
- Do an ICO. Although the ICO craze of 2017 is over, ICOs are still a good way to gather money you can invest in the development of your DApp. Just make sure you check regulations and are KYC-compliant (depending on whether your token will be considered a security or not).
- Build Your Own Blockchain. This is more technically complex and it requires people to use your blockchain before it becomes a viable way to earn money. But a blockchain that allows people to build DApps on it can be a goldmine with the right amount of traction. This is essentially how Ethereum came into existence.
- Work as a Freelance DApp Developer. You don’t need to build your own DApp! If you can code in Solidity (the programming language for smart contracts on Ethereum), many people will require your skills to build their DApp. CryptoJobsList gives an overview of companies looking for DApp Developers. If you’re good, you’ll be in demand.
- Other creative ways. The possibilities of earning money through a DApp are only limited to your imagination. You could allow people to buy reputation points that give them higher visibility on your platform. You could offer people to skip cooldowns or skip hours of grinding for a certain fee. You could charge them for a subscription on your platform. Or you could show ads or simply take donations for your DApp.
When developing your DApp, think carefully about how you’ll charge and how much you’ll charge. Because the industry is new and vibrant, it could strongly favor one way of charging money over the other. Selling user data to advertisers, for example, might not go down very well, as it goes against the decentralized philosophy of the blockchain.
Additionally, you can’t go out and charge a 25% fee for every action on your platform, because the open-source nature of blockchain will allow other developers to fork your blockchain and charge a lower fee.
But that shouldn’t discourage your from developing your DApp. There is certainly money to be made, if done ethically and in exchange for a lot of value. And it’s still early days too. If a good DApp idea with a carefully thought-out revenue model is executed well, even a small DApp developer can make a big impact.