Seizing the $2 Trillion Crypto Economy: A Guide to Blockchain Business Models
Cryptocurrency adoption has reached an inflection point. Over 300 million users now interface with blockchains – whether trading NFTs, earning yield or purchasing goods using Bitcoin.
Behind the volatility and headlines lies an open, permissionless economy interfacing with traditional systems. Entrepreneurs are actively building ramps.
This guide explores business models unlocking that value across infrastructure, financial services and frontier applications.
The widening crypto infrastructure stack
Public blockchains rely on extensive tooling for secure onboarding, transaction, development and insights. While base-layer protocols establish cryptoeconomic incentives and consensus mechanisms, the surrounding tooling ultimately determines user experience.
Many such services mirror web2 needs around computation, identity, payments and data analytics but with emphasis on decentralization and censorship-resistance values. Developers are reengineering these categories for the open metaverse.
Early movers focusing on usability and specialization can capture significant share as more applications eventually migrate on-chain over the coming decade. The traditional analogues they’re rebuilding into decentralized services represent trillion dollar category opportunities longer term.
We delve into promising picks across emerging blockchain infrastructure segments:
Onramps & Payments
Fiat gateways, debit cards and payment processors solve key challenges around safely bridging traditional banking with crypto. They enable both onboarding new adopters and real-world spending capacity for hodlers.
2021 Market Size: $700 million \
2028 Projection: $1.6 billion, 18% CAGR
Representative Firms: Moonpay, Banxa, Bitpay
Key Factors for Success
- Fast KYC and funding settlement
- Cross-chain support for assets
- POS integration and card issuing
Payment facilitator Moonpay raised at a $3.4 billion valuation last year signaling massive room for growth.
Wallets & Data Dashboards
Wallets securely enable users to custody, send, receive and interact with blockchain apps. Data dashboards map transactions and inventory across chained activity.
2021 Userbase: 77 million wallets
2028 Projection: 1.6 billion users, 34% CAGR
Top Firms: Metamask, Coinbase Wallet, Nansen
Opportunities
- Multi-chain & DeFi wallet features
- Indexing and analytics for investors
- Freemium models around security / tax tools
Metamask continues gaining mainstream traction, exceeding 30 million monthly active users last year.
Mining Infrastructure & Financing
Specialized mining hardware solves complex computations to verify transactions while earning newly minted coins. Next-gen clean data centers cater to industrial operations.
2022 Revenue: $18.7 billion \
2030 Projection: $240 billion
Top Firms: Core Scientific, Bitdeer, Blockware Solutions
Upsides
- Cheaper electricity via renewables
- Equipment financing partnerships
- Reselling marketplaces
Large publicly-traded miners like Core Scientific now operate at $1.1 billion revenue runrates as institutional capital continues flowing into crypto picks-and-shovels plays.
Data Source: GrandView Research, Statisticsa
As visualized above, essential blockchain infrastructure segments already generate billions in annual revenue – but remain less than 3% penetrated of their full potential. Extrapolating category analogues forecast massive growth ahead.
Democratizing finance via DeFi protocols
Decentralized finance (DeFi) brings principles like accessibility, transparency and composability to traditional services including lending, trading, insurance and more.
Also called open finance, DeFi aims towards permissionless, trustless and highly modular alternatives operated by users rather than centralized intermediaries.
Developers combine open source building blocks across exchanges, stablecoins, non-custodial wallets, automated market makers, derivatives and synthetics within and across protocols.
Value accrues to platform owners and liquidity providers via tokens aligning network incentives. Speculators and power DeFi users also benefit from capital efficiency.
Mainstream adoption is still nascent but accelerating – McKinsey estimates upwards of $50 trillion in global financial assets could port to blockchain within the decade.
Below we analyze emerging DeFi niches primed for new entrants:
Crypto Lending & Borrowing
Allowing crypto holders to supply assets in return for yield or take out overcollaterized loans without credit checks.
2022 Lending Volume: $700 billion
2026 Potential: $5 trillion
Key Factors
- Collateral risk scoring models
- Auto liquidation capabilities
- Supporting wider range of assets
Lending founders turned VCs are eager to fund next-gen entrants like Alkemi Network bringing unique value propositions.
Tokenized Investment Funds
Crypto native hedge funds trading digital assets while offering investors transparency via on-chain audits.
2021 AUM: $57 billion
2026 Potential: 10% of crypto market cap
Opportunities
- Tax optimization services
- Custom indexing/ETFs
- Integrating prediction data
Pantera Capital and other pioneers in the space manage over $5 billion allocated to crypto today.
Crypto Insurance
Protect traders and protocols against smart contract exploits or exchange hacks via pooled coverage networks.
2021 Premium Volume – $500 million\
2025 Potential – $8 billion
Where to Add Value
- Novel coverage offerings
- Streamlining claims assessment
- Building out capital reserves
Prediction Markets
Events futures enable betting on outcomes like elections, sports and trials with gameable, information-rich odds.
2022 Volume – $900 million
2030 Potential – $100 billion+
Differentiation Factors
- Market maker incentives
- Integrations with data feeds
- User acquisition efforts
Leading platform Polymarket already sees 10x growth amid better understanding of uniqueness from gambling.
In addition to the above, a wide range of further modeled financial instruments from options to swaps, structured products and more stand to benefit from blockchain settlement rails improving efficiency, transparency and accuracy.
Web3 & Metaverse application frontiers
Emergent segments like NFTs (non-fungible tokens), the open metaverse and blockchain gaming demonstrate new design spaces where cryptocurrency incentives collide with digital creativity and user-owned virtual economies.
They expand blockchain utility into culture, identity, community, self-expression and immersive user experiences – while unlocking nascent real-world asset categories tradeable online.
We summarize key application frontiers below:
NFT Platforms & Marketplaces
NFTs transform anything unique into verified digital assets – whether tweets, artwork, music, videos, avatars, tickets or more. Marketplaces like OpenSea host minting, discovery and secondary sales.
2022 Sales Volume – $25 billion \
2030 Potential – $1 trillion+ total market cap as NFTs permeate gaming, social, fashion, patents, licensing, certificates, event access and beyond.
Winning Strategies
- Curating collections
- Building engaged communities per niche
- Funding for artists
NFT upstart Magic Eden recently raised at a $1.6 billion valuation pointing to industry excitement around new chains and use cases gaining traction.
Metaverse Virtual Worlds
Multi-participant simulated environments combining VR, AR and blockchain features where users socialize, play games and trade via digital avatars.
2022 Land & Item Sales – $500+ million \
2030 Potential – $800 billion+ cumulative volume as virtual living becomes commonplace through new device form factors
Paths to Own the Space
- Building creative tools
- Seeding content partnerships
- Leveraging freemium models
Brands ranging from Gucci to JP Morgan are acquiring virtual space pointing to a longer-term parallel economy measured in the trillions.
Blockchain Games
Crypto-native games allowing players to truly own in-game assets as NFTs earned through skilled gameplay rather than purchasing. Unlocks play-to-earn models and permissionless economies.
2022 Transaction Volumes – $22 billion+\
2030 Potential – 5% of $300 billion gaming market cap as the next generation grows up natively digital.
Key Moves
- Seeding viral growth loops
- Bringing traditional games on-chain
- Leveraging influencer networks
Last year‘s record breaking series A for Forte and similar bets represent investor bullishness on blockchain gameplay mechanics reaching the mainstream.
Data compiled from Messari Research, Grayscale, PwC, TechCrunch
As depicted above, applications like NFTs, metaverse worlds and blockchain gaming promise to unlock entirely new digital asset classes – while redefining modern notions of property, community and identity itself online.
Their scope for reinvention remains magnitudes larger than current traction today. Developers crafting engaging user journeys can capture that value creation over the long-term.
Specialized crypto services
Beyond directly interfacing with blockchains, the wider ecosystem spawn many adjacent opportunities – from media platforms explaining the industry, to co-working spaces bringing stakeholders together, to consultants guiding legal and tax optimizations.
A few niches witnessing growth include:
Crypto Journalism – Sites explaining technological innovations, trading analytics, policy changes and human interest stories around adoption command surging readership among curious newcomers. Platforms like Coindesk and Cointelegraph blend news and data.
Influencer Marketing – Crypto influencers surfaced organically on Twitter and YouTube educating millions of followers daily across trading calls, token analyses and ecosystem commentary. They command advertiser attention and token projects seeking awareness.
Industry Events & Conferences – Hundreds of events connect crypto builders, users and investors globally both online and in emergent blockchain hubs like Miami, Dubai, Singapore and Lisbon. Production capabilities and venue partnerships carry value.
Legal & Compliance – As regulations evolve across jurisdictions, lawyers and auditors able to appropriately structure new crypto ventures offer indispensible nourishment to the ecosystem especially around taxation nuances.
Both crypto-native firms like Anderson Kill and traditional practices are expanding to support founders and investors launch blockchain firms while mitigating new risks.
Evaluating blockchain business viability
Hopefully the range of models outlined above inspires some ideas SparkToken could potentially execute on!
With so many niches though, focusing effort based on viability and team strengths will prove essential.
Parameters to evaluate when assessing new crypto venture potential from an entrepreneurial lens include:
1. Assessing Total Addressable Market (TAM) Size
Top-down estimates benchmark the total spending your solution can target over a multi-year period based on analogues, growth forecasts and comparable traction.
Bigger TAMs signal more room for capturing meaningful share – though competition often correlates too. Niches under $500 million remain harder to scale.
2. Evaluating Existing Solutions as Analogues
Studying early category leaders showcases product-market fit direction including pricing and positioning approaches.
Where their gaps or chokepoints emerge offers opportunity areas for disruptive entry.
3. Projecting Better-than-Average Economics
Crypto startups enjoy leveraged growth models whether via tokens aligning users, freemium user acquisition or composability between protocols.
Analyze assumptions required to reasonably sustain 30-50%+ CAGR revenue expansion for 3-5 years – a bar many subsectors can clear.
4. Neutralizing Regulatory Risk
Evolving government sentiment introduces uncertainty though thoughtful compliance and jurisidiction selection early allows mitigating.
EU countries like Switzerland plus Asian regions like Singapore and Dubai compete attracting crypto projects through incentives and framework clarity today.
5. Roadmapping Team Skill Gaps
A 12-month runway balancing core crypto build talent like Solidity developers with adjacent needs – whether banking, legal, growth marketing or operations talent serves well across seed stage ventures.
Investors weigh team extension roadmaps heavily to fuel scale. Grants can supplement hiring too.
Thoughtful venturing along the above dimensions offers strong probability of an above-average outcome.
Conclusion: The Road Ahead
We stand amidst one of history’s great platform shifts not unlike the rise of mobile phones or personal computing decades ago. Cryptocurrency empowers users as never before with self-custody and unrestricted access – capacities gatewayed applications and business models tap into.
A parallel permissionless financial system continues taking shape fueled by open source tinkerers orderly restructuring legacy services into decentralized alternatives optimized for programmability, connectivity and transparency.
Adjacent spheres like identity, social networks, gaming and content now upgrade integrating ownable digital assets, verifiable data trails and direct incentives unlocking new token-gated experiences.
The rate and breadth of change makes blockchain infrastructure both essential plumbing and immensely fertile ground for entrepreneurial ideas as more applications inevitably transition across coming years.
Seizing opportunities along the widening frontier today allows riding an accelerating industry growth curve. Targeting niche value-adds crafting better user journeys matters more than initial scale.
With prudent team building, user-centric product refinement and community engagement, new crypto ventures can hatch impactful protocols primed to flourish serving needs of the open metaverse this decade.
Are you ready to build what’s next?
