You may be thinking of launching your own blockchain startup. Well, good for you! Blockchain has the potential to revolutionize almost every industry and sector. But before you get too excited, let me tell you something: blockchain startups are hard. Like, really hard. And most of them fail.

Why is that?

Here are some of the common reasons why blockchain startups don’t make it.

NOT UNDERSTANDING THE TECHNOLOGY

Blockchain is not a simple technology. It involves cryptography, distributed systems, consensus algorithms, smart contracts, and more. It requires expertise to develop and maintain a blockchain-based product or service. Understanding the challenges and issues that may arise along the way.

You need to have a strong understanding of how the technology works and how it can be applied to create value and solve problems. You also need to ensure that your product is scalable, reliable, secure, and user-friendly.

CREATING SUSTAINABLE VALUE

Investors will tell you that this is their number 1 priority. Most of the startup failures are a result of not creating sufficient value. There must be a compelling reason for people to use it. The equation is simple: if it doesn’t solve a problem for them, they won’t use it!

Many blockchain startups have a cool idea, but they don’t have a clear problem they’re solving or a specific target market they’re serving. They think that just because they’re using blockchain, people will flock to their product. But that’s not how it works. You need to have a compelling value proposition that addresses a real pain point or opportunity for your customers.

You need to find your niche and focus on it.

REGULATORT UNCERTAINTY

Regulators struggle to keep pace with the technological innovation. It is important to understand that it is not their role to innovate, but rather ‘regulate’ to protect individuals and organisations, and this usually happens only when something goes wrong.

Blockchain is still an emerging technology, and the legal and regulatory landscape is constantly struggling to keep up as it evolves. Depending on where you deliver your products or services and what kind of product you offer, you may face different challenges and risks related to regulatory compliance, taxation, privacy, security, and more. You need to be aware of the rules and regulations that apply to your application and comply accordingly. You also need to be prepared for possible changes and adapt quickly where needed.

These are my TOP 3 reasons why blockchain startups fail. Of course, there are many other factors that can affect the success or failure of any startup, such as team dynamics, funding, timing, luck, etc. But you can avoid or overcome these common pitfalls.

I have spent over seven years researching and writing about how entrepreneurs and organisations transitioning to blockchain can best be prepared to address these challenges.  

If you are thinking of launching your own blockchain startup, then you should at least get an understanding of how blockchain actually works. I have some foundational short courses that will prepare you so you’ll have a better chance of making it in the blockchain space. Good luck!

PS: Stay Tuned if you want to learn ‘how to generate a Disruptive Blockchain Business Model’

In this next post I will share some of the secrets that I teach to through the actual qualifications in applied blockchain

About Marcus Xavier

I am a freelance blogger and course developer. I help blockchain start ups
and enthusiasts learn how to apply blockchain technologies and create real
value for their users. Visit my website here: https://marcus-xavier.io