Founding a Blockchain Startup as a Student

Blockchain is changing the world. By shifting from centralized services to distributed ones, we can not only create new products but also augment existing ones. You don’t need to be an expert to make a decentralized application, and you surely don’t need to tackle the difficult technical issues even if you are one.

Jump Genesis, hosted by Founders and Jump, is a startup competition focused on empowering students at UIUC to think about entrepreneurship in a new light: with decentralization in mind. Blockchains can be wielded as powerful tools to reduce costs and create services that weren’t possible before. In case you haven’t had a chance to look into the crypto space, we’ll be posting about a few of the fields blockchain is prime to disrupt and some necessary background to do it.

This 4-post series will cover a few topics we think are essential for students looking to start a blockchain startup:

1. Web 3.0
2. Incentives
3. Financial Applications
4. Does it Work?

But first, why is this important to student entrepreneurs? What makes blockchain useful for startups?

What is Blockchain? An Entrepreneur’s Guide

To understand why, you need to know the concepts. Think of a blockchain as a database spread across many computers. This database can contain any data, and it can have different rules as well. In some blockchains, the data is publicly viewable; anybody can see it. In others, the data is hidden. Both of these examples have applications — banks don’t want anybody to be able to see their users’ transactions, but Wikipedia wants everybody to view its articles.

When you make a startup, you’re going to have information. Whether your data is at the core of your business model (Google, Facebook, etc.) or just a byproduct of your services (banks, consulting, auditing, etc.), you’ll need to store it somewhere. The way in which you store it is important, though — think about how many database engineers and IT employees big companies hire.

Over time, data storage has turned from a centralized service to a distributed network.

Traditionally, companies have opted for centralized databases. It started off as mainframes: giant computers that stored an entire company’s trove of data on one device. Then they moved to scalable databases, empowered by relational databases (“SQL databases”). Then came NoSQL databases, but these schemas still suffered the same drawbacks — the more data the business has, the more servers it has to buy. Many thought this was it; it couldn’t be improved.

An old mainframe could take up an entire room. (Photo by Patryk Grądys)

When Satoshi Nakamoto described Bitcoin, he began the virtual currency movement. But more importantly, he created something much more powerful and adaptive: the blockchain. It was a new paradigm — instead of sharing data between databases you own, you let your users handle it. Businesses can store data between their users, and it’s secured using cryptography.

In the years since, the space has exploded. We’re now at the stage where developers are no longer researchers, but hobbyists. This is the perfect stage for startups to grow: when science has advanced into a new field and created the groundwork for new kinds of services.

There’s multiple layers to this technology, and you can innovate in all of them. You can make a new protocol, a service that uses a token, your own token that can be used across multiple services, or something else. Depending on the scope of the problem you’re trying to solve, you’ll want to create a service on one of these layers.

So let’s loop back: how can we use blockchain for a student startup? There’s a few approaches:

Build a new protocol

Protocols are the foundation. Developing a new protocol involves considering the economics behind what you’re doing. You can create a completely novel service that “puts x on blockchain,” but you have to consider what you’re putting on there, why, and how. The “how” involves questions such as “do we make the data public?”, “Who owns it?”, and “How is it accessed?”

Build an application on top of a protocol

There’s been a lot of work recently focused on buildings tools, such as Solidity and web3.js, that make it easy to build applications on top of a blockchain. For example, CryptoKitties was a popular application built entirely on the Ethereum protocol. They designed the game, tested out the economics behind it, and deployed it.

Build tools to analyze blockchains

Because blockchains are complex and hard to visualize, there is a large demand for tools to analyze and visualize blockchain technologies. From individual block explorers to analysis tools for predicting when an application is being attacked by malicious parties (or preventing it yourself), these tools are severely lacking and in high demand.

Build cryptocurrency/token applications and services

Cryptocurrencies are a well-known part of the space — tokens power many decentralized applications and are traded on exchanges, causing their price swings to become the image of the crypto space. Whether building a decentralized exchange, a trading bot, or a payments system, there are plenty of fintech applications for blockchain.

There’s many ways you can use blockchains, and you don’t need to be an expert to do it. Your quickstart guide to making a blockchain startup is this:

1. Find a problem with a current business or field (especially a problem that involves how data is stored/handled or involves unnecessary manual labor)
2. Brainstorm how to solve that problem using a blockchain, which can include putting some data on a blockchain or using a protocol to automate or reduce costs of a certain service
3. Design the business. Figure out what kinds of infrastructure needs to be put in place (what protocol should you use? Are there any layer 2 solutions that would help?)

There’s plenty of work to do. Many fields are ready to be disrupted, and blockchain is the perfect tool for the job. At Genesis, we’ll get you up to speed so that you can start disrupting the world with blockchain.