Opinion: What is the correct profit model for blockchain projects?

Author: Kao Cheng real

The world's first blockchain project, the Bitcoin system, has been around for 10 years. After the climax of 2017 and the first half of 2018, the entire blockchain industry has entered a trough. Most of the once-popular blockchain projects have died in the middle of the battle, and a small number of them are still struggling, and there are few blockchain projects that can take root and blossom. The earliest systems developed by Bitcoin and Ethereum are still the most successful projects in the industry. This result is of course related to the natural utopian idealism of the blockchain project, but more directly, most blockchain projects have not found the correct profit model.

Abstraction, the profit model is an organizational mechanism and commercial structure that realizes value creation, value acquisition, and benefit distribution through the integration of resources of itself and relevant stakeholders. Specifically, the profit model is a systematic method of identifying and managing the value of business elements, finding profit opportunities in business factors, and exploring the source of profits, production processes, and output methods.

1. Which profit models correspond to different stages of the project?

In the general sense, the profit model can be divided into two types: the spontaneous profit model and the conscious profit model.

In the spontaneous profit model, the enterprise (project party) lacks a clear understanding of how to make a profit and whether it can make a profit. Even if there is profit, the profit model is not clear and unclear. This kind of profit model has the characteristics of concealment and ambiguity, which is the result of natural formation rather than active design.

The conscious profit model is the profit mode that the enterprise (project party) consciously adjusts and actively designs the business behavior by summarizing the business practices, and then forms the characteristics of clarity, pertinence, relative stability, environmental adaptability and flexibility. .

In the early stage of market competition, enterprises (projects) are mostly in the growth stage and are still not mature, and their profit models are mostly spontaneous. With the intensification of market competition and the continuous maturity of enterprises (projects), enterprises (projectors) will increase their research investment in market competition and their own profit models. But even so, not all companies (projects) are fortunate enough to find a profit model. The profit model needs to analyze the business (project) business elements in depth, identify and manage the value of these business elements, and improve the existing profit methods to make a successful match.

Second, what kinds of value models does the industry have?

Enterprises (projects) can be profitable in a certain period of time, and must contain certain value creation and value acquisition. In a general sense, there are generally three types of industrial value models.

Product profit

Enterprises (projects) pay attention to the realization of the actual profits of individual and concentrated products, and more to the growth of current interests, profits and assets or owners' rights with concentrated technology, capabilities and products. Product benefits are fully expressed in the natural state and individual businesses.

2. Leading stakeholders value

Based on the industrial chain or platform, design the industry or integrated resources around the industry chain or platform, design the relevant interests of the industry or services, and form a mechanism for the industry or platform to create profit and value through collaborative services, and each type of entity obtains profits or benefits separately. value.

3. Social value dominates

In the middle and late stages of industrial agglomeration, industry-oriented enterprise platforms will be generated at the infrastructure level of the industry. These enterprise platforms will generate a level similar to the monopoly state in the fields of industry rules, industry common basic technologies, and industry-recognized fair ratings. The way social synergies take up most of the profits and value. The platform value of this kind of infrastructure level exists in the way of common social identification, has broad boundaries and huge scale, and is often dominated by minority groups in a non-market competitive manner.

3. What kind of industrial value model is included in different types of blockchain projects?

The blockchain concept was born only 10 years ago. The entire industry (industry) is still in its infancy, and its profit model is still unclear. Most of the projects that can be sustained are in the stage of spontaneous profit model. The entire industry has changed extremely rapidly, and a clear profit model has not yet emerged.

At the same time, the world economy has been in a period of continuous downturn, and global asset shortages have plagued all investors. The concept of the blockchain was born, and immediately affected everyone's nerves, and became the Red Sea that competes with each other. Blockchain-related enterprises (projects) face fierce competition, and there is great pressure to survive and develop.

Corresponding to this is the utopian thinking and idealistic color that the blockchain project is born with. From its original Satoshi Cong white paper to a series of public chain projects, from the original intention, it is necessary to become a social value-oriented project through extensive social collaboration.

But for any project to survive and develop, the first thing to do is to find its own source of value, that is, where the profit of this project comes from. Judging from the development of blockchain projects in recent years, most of the projects do not have hematopoietic function. Even if they have great ideals, they will fall down in the middle. Whether it will usher in the future is still unknown.

Public chain

The public chain is a non-permitted chain that is open to everyone. Anyone can enter freely at any time, or they can quit freely. The public chain is the most original project form of the blockchain, and it is also the project form of the decentralized spirit of the richest blockchain.

In terms of the public chain application system, according to its own service and scope of influence, the public chain should be either a product profit project, a stakeholder value project, or a social value project. However, from the perspective of the public chain itself, the public chain should be the most social value-oriented project.

It must be noted that any product or service exists on the premise that it meets specific needs, and that public-chain applications are no exception, and that products and services should be the source of the most basic profit. On this basis, the public chain creates more value for stakeholders and more people by integrating its own and relevant stakeholder resources. Finally, through product, service, technology, standards, patents, etc., grow into a social value-oriented project.

The public-chain underlying technology project is closely tied to the application of the public-chain project, mainly providing technical support for the public-chain application project. Therefore, the underlying technology-based project of the public chain should also have product profit, and finally grow into social value-oriented Projects, but their stakeholder value is relatively weak, except for specific needs in certain areas. However, from the perspective of the development of the public chain, most of the public chain projects set the goals of social value-oriented projects from the beginning, including public-chain application projects. Such projects focus on expanding impact and scale from the outset of operations, but have less consideration for the products and services and value creation offered by relevant community users, and do not take into account the ultimate source of value and stakeholders of their product profits. Source of value. Therefore, this type of project quickly fell into the situation of passive water and was unsustainable. This is not difficult to verify from the current development of many public chains.

2. Alliance chain

The alliance chain is a license chain and is a blockchain business system for multi-service entities. The alliance chain is born to cross the boundaries of the enterprise and the organization. Therefore, the alliance chain is inherently a stakeholder value-oriented project. In addition, the alliance chain must be based on specific business scenarios and specific business needs, and therefore, it must also have product profits, but the profit of such products needs to be distributed among relevant stakeholders. This is most clearly defined in the Libra system white paper that Facebook is preparing to issue. Facebook has joined forces with many companies to systematically transform the problems existing in the current currency payment system, and the benefits are shared by all parties.

The alliance chain is difficult to become a social value-oriented project, unless part of the content of the alliance chain application system has broad universality, can exist independently of the alliance chain scene, and is used and promoted in more scenarios.

3. Private chain

The private chain is the license chain, which is a blockchain business application system for a single business entity. From the nature of the private chain, the private chain should be the most profit-oriented project, but it also has the potential to become a social value-oriented project.

In the general sense, the private chain is suitable for the internal use of a single enterprise or organization. However, from the definition of the private chain, the private chain can completely be defined across the enterprise or organizational boundaries, according to the business scope rather than the actual enterprise or organizational category. This kind of business can be a real business category or a virtual business category.

The biggest feature of the private chain is the unity of the business subject. The single business entity means that the system must have its specific business scenario. Therefore, the premise of the establishment of the private chain system must have specific application requirements, and its existence must also exist in the form of products or services. The user of this product or service becomes a direct source of value creation for the private chain.

The private chain will basically not become a value-oriented product of related stakeholders. Because the private chain is the license chain and the business carried is single, a single business entity means that the system is largely organized by him, not self-organized, and is strong, not multi-center. Therefore, the private chain will also be organized by him in terms of business form. The general business entities involved in the private chain obtain corresponding benefits even when using this system, but because they are organized, their interests will have greater uncertainty. Therefore, it is difficult for the private chain to form a multi-stakeholder win-win situation through internal negotiation or game, and evolve into a relevant value model.

If the application scenario faced by the private chain system has high universality and the system construction and operation are very successful, the private chain system may be separated from the original business scenario and oriented to more similar business scenarios. Promote replication, in the sense that the private chain system has the potential to become a social value-oriented product. But this social value-oriented type is more of an overflow of the product's own value, rather than directly from the value of the product itself. Some application systems in the traditional segmentation of the Internet background, such as financial management systems, personnel management systems, and library management systems, have such characteristics. This is also the case for products in the segmentation area of ​​the blockchain background.

4. What is the correct profit model for different types of blockchain projects?

In addition to the user group classification faced by the blockchain project, it can also be analyzed from different project levels.

Blockchain technology project

Blockchain technology projects can be analogized to some extent to current software company projects that provide technology-based solutions for specific scenarios or products. This type of solution is mainly represented by products or services, so blockchain technology projects have product profits. If such projects and the users of the project reach long-term cooperation, strong alliances, deep digging and sharing profits, they will generate profits of relevant stakeholders. If the product and service can be separated from the current project background, have certain universality, and dominate the market in some areas or specific areas, it will have certain social value.

As the blockchain related technologies are still in the process of rapid evolution, the corresponding project scenarios still need further matching, so such projects are still in the stage of spontaneous profit model. As for whether or not to enter the stage of conscious profit model, it depends on the project implementer's exploration of future technology development and the expansion and adaptation of product service scope. Therefore, the correct profit model for such projects is to consolidate product profits, and then gradually transition to the profit model of relevant stakeholders to find suitable long-term partners and continue to deepen. If the technologies, products, services, standards, patents, etc. formed during the deep cultivation process can be promoted on a larger scale, it is possible to enter the stage of social value creation. When the project implementer has deep research and exploration, its products can occupy a certain market share, and will enter the stage of conscious profit mode.

2. Blockchain application project

Blockchain application projects are definitely product-led projects. However, in the early stage of development, such projects will certainly have long exploration and trial and error. This stage is the stage of spontaneous profit model. Once the project enters a stable profit period, the project implementer will theoretically study and summarize the project practice, and summarize the successful practice of the project as project experience, promote and copy, and steadily enter the stage of conscious profit model, and then target Product design improvements.

Such projects have a unique background and are therefore difficult to promote horizontally. The more unique the background of the project, the more difficult it is to escape the corresponding background and extract its intrinsic successes and practices, generating a wide range of social values.

3. Blockchain derivative projects

Currently widely used items such as wallets, exchanges, mining machines, and mines are not strictly blockchain projects. They are derivative projects of the blockchain industry. Since this type of project relies heavily on virtual cryptographic assets issued by blockchain projects, this type of project will be in the stage of spontaneous profit model for a long time. And because the issue of the virtual encryption assets of the blockchain project is sustainable, and the trend of asset price changes, it cannot be determined for a long time. Therefore, the profit model of this type of project itself is difficult to determine. The profit model depends to a large extent on the external environment. The external environment here includes both the regulatory policies and regulatory powers of countries around the world, as well as regulatory policies and people's expectations and responses under different regulatory pressures.

Like the blockchain application project, this type of project will also be a product profit-oriented project for a long time, even if it can enter the leading stage of stakeholder value, such as mining machine manufacturers and mining pools to cooperate for profit sharing, Unclear business prospects will also remain an unstable partnership, and it is still difficult to enter the stage of conscious profit model.

5. What is the feasible path for the development of blockchain projects?

The blockchain has been in existence for 10 years since the birth of the first project Bitcoin system. For an industry or industry, 10 years is just a moment. The blockchain has its own industry specificity, which is all-encompassing, integrating most of the past concepts and technologies, and constantly breaking through existing systems and regulations in each segment. Therefore, it is crucial for the industry or industry to develop a classification study from different angles and then study the development stages and profit models corresponding to different types of projects.

Most of the blockchain projects, from the initial grand ideals, return to product profit leadership and the value of relevant stakeholders, lay a solid foundation for value creation and profitability, both now and in the long run, are rational select. On this basis, according to the characteristics of the project, the transition to a social value leading stage in a timely and appropriate manner may be a feasible road.