Guide to Blockchain Technology Business Models

A Blockchain business model is made up of four main components: 

  • Value model (core philosophy, core value, and value propositions for key stakeholders),
  • Blockchain model (protocol rules, network shape, and application layer/ecosystem), 
  • distribution model (the key channels amplifying the protocol and its communities), and 
  • the economic model (the dynamics by which protocol players make money). 

These elements together can serve as a basis for building and analyzing a solid Blockchain business model.

Types of blockchain business models


Proof-of-work (A proof-of-work is a form of consensus algorithm used to reach an agreement on a distributed network. In a proof-of-work, miners compete with each other to transact on the network, by switching problems to difficult math (i.e. hash functions) and as a result, they are rewarded in coins.

Bitcoin was the first digitized and decentralized cryptocurrency, released as open-source software in 2009. It uses an underlying technology called Blockchain, which functions as a distributed digital ledger, which can be used as a mechanism to disintermediate confidence in transactions. Blockchain technology, underlying Bitcoin, allows new business models to emerge.



Proof of Work (ETH 1.0), switch to Proof of Stake (ETH 2.0). A proof of stake (PoS) is a form of consensus algorithm used to reach an agreement on a distributed network. As such, it is, along with proof of work, one of the main consensus algorithms for Blockchain protocols (like Ethereum’s Casper protocol). The Proof of stake comes with the advantage of being secured, reducing the risk of centralization, and being energy efficient.

Ethereum was launched in 2015 along with its cryptocurrency, Ether, as an open-source, blockchain-based, decentralized platform software. Smart contracts are enabled and distributed applications (dApps) are built without downtime or third-party disruption. It also helps developers to create and publish applications as it is also a programming language running on a blockchain.

What does a blockchain technology -business world entail?

As more and more startups spring up on Blockchain technologies, it is normal to see the proliferation of Blockchain protocols that promise to disrupt any industry. Just like when the web started to go mainstream, thanks to technologies like search engines.

We have seen the birth of many search engines that have fragmented the search market; until Google became so dominant to tame most of the search market share.

Are we also witnessing a similar phenomenon today? In part. However, to understand the economics of blockchain and the business models that will flow from it, we will need a slightly different version of the business playbook!

Business Models in the Internet Age

The internet has spawned a whole new set of business models. It is no coincidence that the term “ model company ” has become widely used in the dissemination of computer technology companies:

There is a critical point to notice. Where the internet has allowed new businesses to emerge. This has created the rise of business models that were not possible before. A trivial example is Netflix’s delivery of streaming content over the Internet, with a subscription-based business model. 

Today that model has become the norm. However, when you start thinking about how VALORISONS was created and captured in the internet age, one word comes to mind: data.

As you scroll through the Facebook feed, what makes it so addictive is the ability of its algorithms to tap into the behavioral data of its users to give more and more “meaningful” suggestions that only make people want to have more.

As you continue watching Netflix, its algorithms learn more about your tastes and preferences to create a stickier experience that over time leaves you wanting more.

These algorithms learn through data, which can be categorized as interactions you have on the platform. All this data is stored and managed by massive databases, called graphs. Access to these graphs is not open.

Indeed, this data is the main asset of these technology companies. This is what makes them monetize their business models, create unique experiences for their users and build long-term loyalty.

Therefore, even though the Internet age initially paved the way for hundreds of new business models. It also created a win-win effect. Where these companies are able to capture network effects, would ultimately obtain a huge competitive advantage.

For example, according to the Venture Capital Funding Report by CB Insights and PWC, venture capital deals increased sharply in 2018, compared to 2017:

However, as venture capitalist Fred Wilson has pointed out, these deals were ” fewer and bigger.

It is true that from 2019, new internet companies can emerge and become the next Facebook or Google. Yet that may not be as true as it was ten years ago. Tech players who dominate the market could use their cash in the bank to buy them back.

In short, the Internet seems to have produced more open information business models compared to the past (initially yes). Consolidation began and new “conglomerates” formed in the market.

While this process may be normal in a world where applications powered by proprietary data have taken over, it may not be the case in a blockchain economy, let’s see why.

A blockchain economy based on big protocols and light applications

Web3 appears to be a version of the internet where data will be interconnected in a decentralized way. 

Web3 is an umbrella that includes various fields such as Semantic Web, AR/VR, large-scale AI, blockchain technologies, and decentralization. The core idea of ​​Web3 is along the lines of enabling decentralized ownership on the web.

Do we need a new business playbook?

If we want to succeed as business people in a blockchain economy (when and how it will work), then we need to change our playbook.

In an infographic from  you can appreciate how tech players that dominated in the late 1990s have become marginalized today:

For example, in 1998, AOL and Yahoo represented the Internet! Most of the web traffic is passed through these portals. In 2018, Verizon, which had created a business unit called Oath (which included the acquisition of Yahoo and AOL) wrote them off for around $4.6 billion!

In twenty years, who will still be on this list?

New business models could emerge at the protocol level

When Google announced its IPO in 2004, the world wanted to know its numbers. Everyone knew that Google was a profitable business. Yet when we finally got Google to open the hood, the reality was even better than the imagination:

Google has made over three billion dollars in revenue and about four hundred million dollars in profit! 

The Web wasn’t just that bubble that burst in the dot-com era. It turned out to be a whole new world. Business people have noticed.

If a blockchain economy can prove sustainable in the long term, understanding how the web has evolved and how tech companies have succeeded will be essential.

However, we will have to look at this phenomenon with different eyes. We might want to stay focused on the protocols that will eventually dominate the blockchain economy.

Blockchain as a new business model toolbox

When the web continued to grow at an exponential rate, new businesses and business models sprouted. In this blog, I have spoken at length about the innovation introduced by Google’s business model and why I believe this is what has made it so successful.

The paradox however is that what seemed like a business model innovation a few years ago, seems to have become an accepted and standard business model today. Another paradox is that because these tech giants have taken it all in, a lot of business people assume that’s the way it should be.

When you think about Google’s hidden revenue generation model, Facebook through advertising. This model worked exceptionally well in the internet age, as Google and Facebook could retain ownership of the data generated by billions of users around the world.

Any other business model would have been too difficult. This is also why managing this data from massive, centralized data centers makes sense.

Blockchain could change that, as it finally allows data to be controlled at a decentralized level. Each user may be able to retain ownership of the data, while the company earns money based on its protocol.

Breaking down the blockchain ecosystem business models

We can break down the blockchain ecosystem into a few building blocks. 

Among them we have: 

Layer 1 

Layer 1 protocols are the underlying infrastructure, which functions as the base layer for the entire ecosystem. Examples of these layer 1 protocols include Bitcoin, Ethereum, Solana, and many more. 

These Layer 1 protocols set the foundation for the entire ecosystem to be built on top. While Bitcoin was mainly used as an exchange currency and store,

Ethereum, for the first time, allowed many other applications to emerge. 

And as we will see, given how slow Ethereum is, at scale, many other scaling protocols (called layer 2) have been built on top of Ethereum and other layer protocols. 

Ethereum is an interesting case to look at, to understand the complete crypto ecosystem, as it has allowed various applications, layers, and platforms to be built. 


In addition to a Layer 1 protocol, tokens can be created.

Consider the case of the ERC-20 tokens, which can be easily built on Ethereum: 

An ERC-20 token stands for “Ethereum Request for Comments”, a standard built on top of Ethereum to allow other tokens to be issued. 

Based on a smart contract that determines its rules, the ERC-20 allows anyone to issue tokens on top of Ethereum. As they use a standard, these are interoperable. ERC-20 tokens are essential to understanding the development of Ethereum as a business platform.

Tokens can be of varied nature, and are generally classified according to a few main categories: 

  • Plate-forme.
  • Security.
  • Utility.
  • Transactional.
  • Governance

Smart contracts

In addition to Layer 1 protocols, automatic contracts can be created, called smart contracts :

Smart contracts are protocols designed to facilitate, verify, or enforce digital contracts without needing a credible third party. These contracts operate on an “if/when-then” principle and have some similarities to modern escrow services, but without a third party involved in guaranteeing the transaction. Instead, it uses blockchain technology to verify the information and increase trust between transaction participants.

These smart contracts allow users to build custom applications on top of the main layer, thus making them run automatically when the conditions specified in the smart contract are met. 

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Another application born on top of Ethereum is NFTs :

Non-fungible tokens (NFTs) are cryptographic tokens representing something unique and valuable. NFTs are not mutually interchangeable and contain identifying information that makes them unique. 

Unlike Bitcoin – which has a supply of 21 million identical coins – they cannot be traded identically.

A good example is the Axie Infinity game, which relies on NFT tokens to make its game much more appealing to users:  

Axie Infinity is a Non Fungible Token that is based on an online video game developed by Sky Mavis. Mavis is a Vietnamese game studio founded by Trung Nguyen sometime in 2018. Nguyen combined his interest in blockchain accountability and the CryptoKitties craze to launch the game in August 2018. 

Sky Mavis generates the bulk of its revenue through the 4.25% fee it takes on all in-game purchases. This includes land purchases, NFT monster trading, and monster farming. Axie Infinity requires all new players to purchase three monsters to start. Since the cost can run into hundreds of dollars, Sky Mavis will lend the monsters to players and collect a 30% interest fee once the player starts earning money.


In a world without banks, notaries, registrars, and regulators – blockchain technology makes us take a fresh look at the exchange of values, documents, and money. It removes intermediaries, especially the government, and allows users to directly send critical data to each other. It is a breakthrough of the 21st century, comparable to the discovery of the Internet.