Monetizing Blockchain: A case-solving approach


More and more startups are exploring blockchain technology. This is illustrated by a 619% increase of startups listed on AngelList from 2016 to the end of 2017, from 187 to 1.335 [1]. Yet, the business models supporting the long-term survival of these startups seem to be of lesser importance. More often than not, the buzz on blockchain is driven by IT-minded individuals and organisations (e.g. IBM’s big bet on blockchain). The profitability of the developed applications is then left to the industry. Not an easy task, as the technology promises to completely transform business models.

The problem

Blockchain is certainly “hot”, but its popularity might be levelling off [2]. Multiple barriers are surfacing when implementing a solution (e.g. legal, political and technological [3]). This explains the contrast between the large support of blockchain initiatives by C-level executives (acknowledging the benefits the technology could bring), and concerns raised by middle management (actually implementing the change) [4]. These could be a signs of a slowly maturing technology and industry. At this moment, most companies find themselves in pre-commercial sales cycles or will have established a “provisionary” commercial sales cycle only recently. This article will investigate the business models further.

Classical ways to make money in software are:

  • Development services
  • Product sales
  • SaaS / subscription model
  • Servicing/support fees

Is this also possible for blockchain software? The rationale behind blockchain technology breathes openness, including concepts such as open source and open governance. How can a technology that counters single-party control, still provide revenue for a controlling company?

As Takahashi perfectly calls entrepreneurs to action: “While it may be difficult to envisage what profit-making opportunities exist when an open blockchain ledger is used, we can expect that the business acumen of entrepreneurs will spot them. Creating a business model where none hitherto exists is often a key to success in the commercialisation of a new technology. Indeed, at the dawn of the World Wide Web, few would have thought that providing a search engine could generate so much revenue from advertising” [5]

The approach

A business model is a company’s plan for how it will generate revenues and make a profit. It explains what products or services the business plans to manufacture and market, and how it plans to do so, including what expenses it will incur [6]. Business models can be extensive, such as the plans required to found a company or apply for a loan. Multiple frameworks exists, with the most popular one arguably being the Business Model Canvas.

In this article however, I will use the most basic formula in business. One of the formula’s suggested in the Ivy Case System [7]:

Profits = (Revenues – Costs)

A simple P&L analysis. For now, our model assumes revenues can only be counted when made in fiat currencies. Costs almost certainly have this property too.

The results

The table below lists the business models found today.

Fixed insurance feesSales, testing, risk handling, provisions and settlementSpeculation gainsInitial investment opportunity cost, speculation losses

Method Explainer Revenues Costs
Hardware/platform provider Providing hardware: from dedicated containers full of ASIC mining rigs to virtualized nodes Sell or rent (virtualized) hardware / Servicing fees Hardware depreciation,  servicing costs
Education & Training Educating people in blockchain and its use cases. Company workshops, HR training courses, seminars, webinars,… Workshop fees, hourly rate Preparatory work, salary
Education Books & blog writing Author fee per book, advertising income Preparatory work, publishing & distribution costs, marketing
Application development 2nd tier: Development of Proof-of-Concepts and applications for industry companies Fixed project fee / hourly rates Sales & development team salary, infrastructure
 Application development 1st tier: SDK/API/Core development Licensing fee / subscription model / Premium support fees / education fees Development team salary, infrastructure
ICO ICO (Initial Coin Offering) used as a speculative instrument, keeping a significant amount of the tokens for the founders / in a foundation. If the app is successful, tokens can be sold to users. E.g. per transaction in smart contract, tokens are consumed that are (wholly or partly) redistributed to the foundation. Discounted pre-sales, Token sales in production Marketing, Product development
 ICO ICO as a mere fundraising instrument, by issuing own token in exchange for BTC or other cryptocurrency BTC from investors, converted to fiat currencies Marketing
Reference clients & APIs Develop an open/free blockchain application, but charge for usage of the reference client or for usage of SaaS APIs Licensing fee / subscription service Product development
Consultancy Explore possibilities of blockchain for existing companies on a high(er) abstraction level, assist in set-up of POCs Fixed project fee / hourly rates Sales & consultants salary
Insurance Ensure the reliability of blockchain software releases and/or cover risks of outage in production systems. (note: NOT equal to using blockchain to digitize processes in current insurance industry)
Gatekeeper In permissioned blockchains: the producer is also gatekeeper/CA and charges for entry into the system Entry fees / subscription models Sales, product development
Operator/servicing The network operator of a private blockchain charges participants for servicing Fixed fees / subscription models Sales, servicing costs
Crypto-exchange Providing a platform for crypto-to-crypto or crypto-fiat exchange Transaction fees Product development, marketing, infrastructure
Crypto-speculation Buy/sell cryptocurrency speculating on increases or decreases in exchange rate values (rather short term)
Crypto-investment Buy/sell particular cryptocurrencies as an investment, speculating on a future appreciation of the coin due to application usage (rather long-term) Positive investment results Investment opportunity cost, losses
Mining Mine a cryptocurrency and cash the rewards Mining fees Hardware depreciation, electricity



Profit can be made with blockchain technology in multiple ways. This includes the traditional ways, some modifications thereof, and some technology-specific business models.
Note that a business model is more than just the P&L statements. Every startup will have to build its own complete business model, measure results and learn.

For more information, feel free to contact me.


Michiel Valee
[email protected]

Conact me on LinkedIn

— sources —

[1] AngelList Blockchain startups,

[2] Gartner Hype Cycle for Emerging Technologies, 2017,

[3] Valee Michiel, “Barriers to Blockchain data sharing in maritime logistics”,

[4] Hackius, Niels & Petersen, Moritz. (2017). Blockchain in Logistics and Supply Chain: Trick or Treat?. . 10.15480/882.1444.

[5] Koji Takahashi, “Blockchain Technology and Electronic Bills of Lading” (2016) 22 Journal of International Maritime Law.

[6] “Business model”, Investopedia,

[7] Marc Cosentino, Case in Point: Complete Case Interview Preparation

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