Building MVP for Blockchain Projects
What is MVP?
Entrepreneurs and developers should form their own idea of the purpose and essence of MVP. MVP is a product with minimum functionality and base operational flow that helps test a project’s assumptions through alpha/beta versions. Prior to MVP, Proof of Concept (PoC) should be developed (this is the stage at which we can define a product’s framework and minimum requirements for development). MVP can be used to convey the proposed value of a future product to users, and check whether they support the concept. A minimal viable product is launched in order to test the market for readiness to accept a “raw” product. This is the fastest and easiest way to get real customer feedback on your idea. The minimum viable product should be as simple as possible and contain only what is most needed to give the customer a realistic experience of how your product will work.
MVP should include a minimum necessary set of functions in order to quickly throw it to the market. The goal is not to release a raw product (users don’t really like that), but to quickly test basic hypotheses: does your product need a target audience, and is it ready to pay for it? Only entering the market will give you accurate answers to your questions. And in this case, it makes sense to get rid of unnecessary functionality: you go out to the consumer, find out his or her opinion, and return to finish or redo your product.
More accurate feedback from your audience can be obtained by trying to sell your product. But creating the final version of it often requires a lot of resources. In order to reduce risk and better understand the target characteristics of the final product, MVP is established. This product includes characteristics that ensure realization of the value proposition, despite the fact that all other characteristics can remain at a minimum sufficient level so the product remains valuable.
In recent years, the topic of reducing costs associated with the development of software has become particularly relevant. If an organization has spent years promoting a new product on the market, only to understand that it does not satisfy the needs of new or existing customers, it will be a waste of time, energy, and money. MVP is a prototype of the finished product that can be checked for compliance with requirements with minimal effort. Creating this type of product is advisable in cases where there is a high probability of making major changes in the finished product. At the same time, you will save a significant amount of time and effort. In MVP, some minor functions or advanced settings that are not needed to evaluate basic concepts are disabled; or it focuses on functions rather than design or performance. Similar to lean development and continuous-delivery methodologies, MVP allows for faster iteration and improvement of the product, thereby reducing cost and waste.
MVP can function as a simple, minimalist prototype of your product, and may even create the illusion of launching your product.
Why Does Your Project Need MVP?
Blockchain startups are a new sphere of human activity, the purpose of which is to create innovative products and services in conditions of almost complete uncertainty. Whether a project is assembling a new device, working on a venture startup, or trying to introduce innovations in a commercial or non-profit organization, it must know how to turn a “raw” idea into a really successful product.
All companies, from large to small, strive for constant renewal and continuous growth and sooner or later find out that this requires new forms of interaction with existing and potential consumers. The task of a startup is to understand what exactly should be produced, and in the shortest possible time for developing a new product. Lean startup methods increase entrepreneurs’ chances for success. How can you find out if your product is needed by consumers?
The new method of consumer development differs from traditional marketing research, which helps you understand the needs and preferences of consumers and to study consumer experience (understand how customers use a particular product or service). The new technique allows you to take a step forward — not just to understand the behavior of consumers, but to change it, ensuring the sustainability of your business.
This process involves conducting a series of tests at the micro level, the goal of which is to launch a business growth mechanism that turns a startup into a large company. Consumer development is not an easy task: to summarize the information received, it is necessary to work simultaneously in many areas, and in constant contact with marketers, engineers, operators, and customer-support specialists — that is, with everyone involved in the development and implementation of the product. At the same time, scientists and engineers can, without the support of marketers and retailers, learn the opinions of consumers about the product. Vendors see how important customer feedback is to the innovation process. Support-service employees are able not only to respond to customer complaints but also to satisfy their needs.
Define the input data for your MVP model by answering the following questions:
- What is your business built around? What is its key value?
- Who is the consumer of your product?
- Is this consumer willing to pay?
- What are the analogs of your product?
- Does the consumer pay for your product analogs?
- Can you affect consumer willingness to pay for your product?
- How many consumers will your product have in a month, in three, in half a year, in a year?
- What are your costs?
- How much do you need to earn to reach payback? Look at your estimated number of users. Is it realistic to get this amount from consumers, or is it necessary to look for additional sources of income?
- Determine what you are actually selling: products, services, information, platform, audience?
Startups and large IT companies are increasingly using MVP as a starting point for creating successful software products. Focusing on a minimal set of key functions within blockchain framework development, companies develop a product base, which, if successfully validated for demand, efficiency, and viability in market conditions, is used to scale and create a full-fledged business.
In fact, a minimum viable solution is meant for validation of economic feasibility; therefore, development speed can be prioritized only if the MVP analysis and testing objectives are quickly achieved.
What Does it Take to Build Blockchain MVP?
With regard to standard product development in a centralized manner, it’s not an easy task to build MVP for CTOs. The planned launch date and actual launch date of a product are almost always different. But what about blockchain? What is the problem with a blockchain that causes 90% failed ICOs? The answer is technology. It’s something new to the market. Each blockchain acts under different technical languages (Java, JavaScript, Python, etc). There are also blockchains that decided not to operate with existing languages, and created a new one — Solidity.
Real products are not always built on distributed applications (DApps) or on a public blockchain without contact with a centralized (off-chain) environment. It is a complex job to combine the blockchain ecosystem with the ecosystem of real business and make it live. The issue is that nowadays, there are no ideal blockchain solutions. Some of them are fast, but don’t support smart contracts (IOTA); some are funding in business logic, but are slow (Ethereum); some are fast and “smart,” but not scalable (HyperLedger). It isn’t a one-minute job to find the solution best suited to your idea.
The market is experiencing a lack of developers, and, as a result, a lack of good businesses that could benefit from using blockchain in real life, not just for marketing.
To create MVP for a blockchain startup, it is necessary to build the business logic of the whole project, and identify process flows from A to Z. Only after this can you start shortlisting blockchain requirements.
MVP on Board Before Token Sale
Ihor Bauman, the business analyst at Applicature shared his thoughts:
“Investing, in this particular case, means truth. The market has changed due to the huge shortcut of crypto capitalization of more than $500 billion. Currently, there are almost no crypto investors that have money for projects. Why? Imagine yourself a few years ago with $100 in your pocket, which you then invested in Bitcoin. In just a few years, your little investment is worth a thousand. And you’re feeling lucky. So why not invest in some ICO which ensures that your thousand dollars will go to the moon, and will turn into ten thousand? Surely, you will invest in it. But the main problem of the crypto market is that there are hundreds and hundreds of ICOs with different ideas, but with zero ready products.”
The first question that each project should answer is how to make the product successful and how to generate real cash flows. However, most projects are only interested in how to attract more at the token sale. The reason for this is that the development process is a real challenge, and after receiving investments, project teams start to spend funds for development, obtaining no real results.
The crypto market, if filled with venture investors, can see the great potential in blockchain technology. They also need serious proof, however, that your product has a certain value, and actually needs the blockchain. You have to know your clients’ expectations.
This is where MVP comes to the rescue. It doesn’t guarantee that your investment deal will be 100% successful, but it will confirm a serious means of creating a real product, as well as showing its value and technical capabilities.
As a result, having MVP on board will make your private sale successful and help attract not only money but reliable partners — which are worth a lot more than money. The next step will be to successfully close the hard cap on the public token sale.
Building MVP Under Specific Legal Conditions
When dealing with any technology, you have to implement it into a real business. In any case, the business will be cooperating with external parties. Private data will go into the platform (remember the Government Data Protection Regulation) and it's recent updates. Each user must have the right to delete all private information from a particular source at any time. In terms of blockchain, it doesn’t work this way. The transactions form the block, and miners (verifiers) verify the block and put it into blockchain. Starting from this moment, it is impossible to change or delete information from that particular block.
Let’s consider China as an example. If your business is operating in that country, the servers with the data must be located in China. In the opposite situation, you will be forbidden to operate there. And, as in the previous example with GDPR, this goes against blockchain logic and decentralization completely.
But we have a solution on the shelf already. And it is building not only platforms that are strictly bound to public blockchains, but also hybrid blockchains that allow combining public and private environments and private blockchains.
Summary
The blockchain is a very flexible technology, and it will result in brilliant value if utilized properly. Before that happens, we need a business view, and we need processes and clear requirements to build anything further. This is the homework that should be done before going to class.
MVP is not just a version of a product with minimal functionality, but also the most cost-effective tool for validating the economic feasibility of a business idea, which also serves as the basis for a final offer.
