When describing himself, Vytautas Kašėta of the Blockchain Centre Vilnius uses the following keywords: distributed crypto systems generalist, social hacker, Next Reality visionary. In addition to working at the Blockchain Centre and advising Swace on everything that has to do with blockchain and crypto, he is also working with such projects as Fishcoin, HUB5 and A2B Taxi.
We had the privilege of sitting down with Vytautas and writing down some advice he had for young start-ups in the planning stages of their blockchain projects. Here are his top nine tips.
1. Know your project really well.
Whatever project you are doing, whatever technology you are creating, you better know some facts. Know the market you are going to disrupt, how big it is and what problems people generally are facing. Then it’s time to identify the biggest problem you are solving. Be sure the problem is known to your future users and your solution is needed and timely.
2. It all starts with the best CTO ever.
I know you are the best entrepreneur and have lots of great ideas, but just remember that ideas are worthless in a way: nobody will buy an idea. You need the best possible execution. So you start with a CTO, a team member who knows how to solve the problem and has the skills and knowledge to do it.
3. You better have a developer.
The third team member must be a developer. Most likely, you are a software or hardware startup. So you will have to provide an MVP as soon as possible if you don’t have it yet. Investors will be looking for something really interesting to see, whether it is software or hardware.
4. Do you really need a blockchain?
Now you have a team, be sure all the team leaders are on the same page in understanding this new paradigm called blockchain. You need to gain some background on what this is all about. Read some books about distributed systems, digital and crypto economy, distributed ledgers etc. If you’re an entrepreneur or CTO, you can start with Blockchain Revolution by Don Tapscott and The Business Blockchain by William Mougayar. If you are a developer, look into the GitHub of your preferred blockchain.
Understand that you cannot put a blockchain in your product and hope that it alone will solve something. You need to be aware of the benefits and the tradeoffs. Know which technology is suitable for your product and why.
5. Blockchain. Which one to choose?
Blockchains in general are quite expensive solutions, so you have to decide what approach to architecture you will choose. There is no such thing as a free blockchain. Somebody always has to pay. You cannot make a cryptocurrency that will be free for everybody and solve all of the world’s problems at once.
Two major approaches are public and private ledgers. There are at least 4–5 corporate private ledger solutions that can be easily adapted to your business case, e.g., Hyperledger, NEM. In the private ledger you will set up some nodes and keep them running and synchronizing, so the costs of infrastructure will be on you, but you can choose to make all the transactions free for the users. If you choose an existing public infrastructure like Ethereum, Bitcoin, NEM, EOS etc., you will be free from taking care of the infrastructure or so-called consensus layer, but some transaction fees will arise. Somebody has to maintain the public key infrastructure and ledger in sync.
First you have to decide what distributed ledger features will possibly be needed in your solution and whether you will use any programmable business logic & smart contracts, or just state and transaction records and metadata. Knowing what you need will make it easier to choose from this vast variety of ledgers and infrastructures.
6. To ICO or not to ICO.
Most blockchain startups these days think they need a blockchain just because they want a “free and easy” investment round called an ICO. This is wrong.
You need to clearly identify whether you are bringing value to this developing crypto economy, improving technology, or dealing with a distributed or sharing economy where you need a blockchain to help. If not, an ICO is not the answer. An ICO is a crowdfunding effort where the crowd consists of crypto ecosystem members. If you are not seriously helping the ecosystem itself, why would anyone be willing to invest in you project? ICOs are expensive when compared to regular venture capital investments, and you need to have something more than a whitepaper.
7. Tokenomics.
Next comes a thing called a “token economy model” or tokenomics, if you are dealing with tokens in your project. If you are building a closed economy platform, a marketplace, or releasing a token that allows access to your services, be sure to build a serious token economy. What will your token do, what is it for, and if you take the newly created token out of your product, will it work? And if it will, then why do you need the token?
Many projects believe that they will create a token, build a platform and people will just come to the platform and pay for the services with tokens. This is not enough.
8. Commercialization and usability.
Will your product be commercially viable? It will have to compete with other products, so what are the benefits? To reiterate, blockchain is an expensive technology.
9. Security and integrity.
The final and probably most important concern is security.
The biggest mistakes with distributed applications are programming and coding mistakes, so audit is a must. Bug bounty helps, but the code has to be revised, and the architecture and business logic have to be audited.
We hope that these tips will help those of you who are only starting out on the blockchain path and are facing some big decisions. Swace has advanced along this path, not least thanks to the advice and insight offered us by Vytautas Kašėta, whose knowledge in the field is invaluable. If you are curious to see where we went with it (hint: our ICO is coming up!), check out our website at http://swace.io.
