Hustle · Tech

Bitcoin Business Models that Work

In just 2.5 years, I went from pitching a “blockchain” startup in a business plan competition, to becoming a so-called “Bitcoin Maximalist”.

My reasons for abandoning alts? Read My Path to Bitcoin Maximalism by @btcsessions

After leaving the shitcoin casino, I began to explore ways that I could create value and build a business on Bitcoin. I’ve identified several unique business models that operate in the bitcoin space.

Let me know if I’ve missed something, I’ll try to keep this list updated.

Bitcoin Business Models

After the dust settled from ICOs, I began to wonder how to make money in the Bitcoin space.

Is something missing? Reply below and I’ll add it to the list!

Sell things for Bitcoin

E.x. eCommerce store, Brick and mortar shop, dark-web market

Perhaps the easiest way to get started making money in the Bitcoin ecosystem is to simply accept Bitcoin as a payment option.

Exchanges

E.x. Coinbase, Binance

I’m defining “exchange” as a platform for trading many cryptocurrencies including Bitcoin. Exchanges are successful because they capitalize on FOMO around trading “crypto”. Exchanges are at the mercy of regulation around converting fiat to crypto. They owe much of their success to the popularity of “shitcoins”. As trading shitcoins becomes less attractive, so will using an exchange.

Fiat On-Ramps

E.x. CashApp, Amber

Fiat On-ramps help with the conversion of fiat money to Bitcoin. They are like exchanges except they deal exclusively in Bitcoin. They may provide scheduled auto-buy services or use spare change from rounding up your purchases to auto-buy BTC.

Some on-ramps may provide custody (where they hold BTC on your behalf) or allow direct deposit to a BTC wallet.

Mine Bitcoin

The de-facto method of earning Bitcoin and supporting the network is by mining. It is very difficult to turn a profit in Bitcoin mining today unless your electricity is free or nearly free. This is why over 74% of the mining power comes from renewable resources or energy that would otherwise go to waste (like methane from landfills, remote geothermal vents, or flaring excess natural gas).

Distributed Payment Platforms

E.x. Freelance platform, shared computing resources platform, crowdsourcing platform, online video games

Bitcoin excels in distributed payments. This makes it super easy to reward people around the world for completing some action. No more dealing with local currency conversions, trade sanctions across countries, or waiting several days for a payment to clear. Bitcoin addresses transcend locality. Sending 1, 000 or 1, 000, 000, 000 payments to addresses owned by a single person is no different than sending the same number of payments to addresses dispersed all over the world.

This makes a ton of sense for freelancing platforms as many freelancers work in remote countries.

This also enables some new distributed applications. For example, Storj allows people to rent their hard drive space to a global cloud storage network. Storj is able to easily pay their Node Operators using their ERC20 Token. With Lightning, it’s already possible to make instant micropayments in BTC.

Payments Processor

E.x. BitPay

Sending millions of dollars to another country can be an expensive nightmare. With BTC, it costs about the same to send $1 as it costs to send $100M. Companies here use BTC as a payments backend and handle the conversion to local currencies immediately, thus removing volatility risk.

They may also facilitates smaller payments, usually taking a fee on funds received.

Loyalty Programs

E.x. Lolli, Pei, Fold

These companies curate a network of merchants that will pay the company a referral bonus for every shopper that the company sends to the merchant. The company then passes a majority share of the referral bonus to the shopper in BTC. This creates a Bitcoin back incentive to shop at the participating merchants.

This model is brilliant as it significantly lowers the barrier to start earning BTC.

Hardware Manufacturers

E.x. Nodl, Casa, Trezor, Ledger, Coinkite, Bitmain

These companies build and sell Bitcoin Nodes, Miners, and hardware wallets.

Premium Software

E.x. MyNode

Any software worth its salt in the Bitcoin space is open source. However, there are ways to create a business model around open source software.

Read: Open Source, Open for Business: Eric Raymond’s 9 Open Source Business Models

Financial Services

E.x. Unchained Capital

These are financial institutions which have built investment vehicles, loans, and multi-sig solutions around Bitcoin.

These include Bitcoin ETFs, Bitcoin collateralized loans, and safe custody of a portion of one’s multi-sig keys.

Privacy Services

E.x. Mixers, Wasabi, Samurai

Provide privacy services typically in exchange for a percentage of Bitcoins sent privately. Wasabi and Samurai are companies who use a software program to coordinate many Bitcoin transactions for Coin Joining, enhancing the privacy of the transaction for everyone involved.

Provide Information

E.x. Podcasts, Blogs, Books, Videos, Courses, Talks, etc.

Currently, one of the biggest hurtles to adoption is lack of accessible information. Providing Bitcoin news, privacy techniques, self custody guides is helping the community and can be monetized like other media.

Helping people realize the need for Bitcoin is equally as important as providing technical information.

Did I miss something? Let me know in the comments below.

Leave a Reply

Your email address will not be published. Required fields are marked *