The Difficulties with Running a Blockchain Startup (Part 1)

Clay Space
Aug 25, 2017 · 3 min read

Step One: Search Smith and Crown’s website on Token Sales.

Step Two: Notice that more than 300 companies plan to launch an ICO over the next few months.

Even half a year ago that number would be unimaginable. The speed with which crypto has caught on with the entrepreneurial public is astonishing. In August 2016, the entire market cap of the crypto industry was $12.5 billion. One year later and it is now over $150 billion.

https://coinmarketcap.com/charts/

This unbelievable industry growth has provided an extraordinary new vehicle for companies to gather funding, but it has also created an increased amount of competition. In the “old days,” companies could have a successful crowdfund with minimal advertising and a bitcointalk announcement. Now startups need hundreds of thousands of dollars to pay for marketing and audience engagement, and that number is only going to go up.

The sudden influx of new money has flooded the market with lots of differing ideas, beliefs, and people. Many newcomers don’t completely understand what blockchain technology is, or how it is being used differently between Bitcoin, Ethereum, Ripple, and other large crypto projects. The scary thing is that these people are launching their own tokens and starting their own blockchain companies in pursuit of instant riches.

Not to mention, a lot of journalists are still learning the space and the forces behind the markets. Their attempt to write articles for mainstream appeal is filling newcomers with misinformation (Laura Shin is one of the few exceptions to this, along with a small handful of others).

As we can see from the bitcoin scaling debate, or the ETH vs ETC debacle, the community is also beginning to grow apart with how they believe the industry should be shaped for the future. Philosophical differences in the importance of centralization vs decentralization has caused certain “camps” to form around projects that are becoming increasingly more disdainful of other camps.

Most importantly, the space is growing so quickly it is nearly impossible to keep up with all the innovation and news. Developments in the industry need to be simplified into bite-size headlines in order to be consumable — especially for those who are part-time or hobbiests in the space.

There was a time when I knew something about every single coin listed on Coin Market Cap. Now I barely recognize the top 50!

Industry developments are moving quicker than crypto’s investor community can adapt their expectations, and as that gap widens, new problems for blockchain startups are rising. Over this series of posts, I hope to give a unique insight into the obstacles present in running a blockchain startup, and the ways in which my company has both successfully (and unsuccessfully) dealt with them.

This is the ugly side of running a blockchain business. Sit back, relax, and let me temper your optimism. Enter if you dare.

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