Social media is a marketing tool that has proven its effectiveness over the past few years. It has at the same time inspired many businesses to make online business website free of charge and share its content on different platforms to increase their reach.
The very nature of running a startup is hard, but when you decide to add blockchain to it, you will end up opening a Pandora box. The blockchain system is currently disrupting many industries. One successful blockchain baked startup will alter the platforms used by businesses and consumer, while the modes of networking will undergo an undeniable upheaval. Still, some challenges need to be overcome to take things to the next level.
Before you consider integrating blockchain in your social media startup, you need to be aware of the challenges these startups face in the market. Here are some problems that seek a solution.
1. Incorporating Blockchain
This is considered the biggest challenge blockchain based social media startups face. Staying within the jurisdictions of a particular field and adding an innovative aspect can be tough to manage. Therefore, you need to have an in-depth knowledge of blockchain regulations to avoid legal minefields in the future.
2. The Business Model
The token model is considered as a must wherever blockchain is to be involved. The issue is that the regulations keep on changing for blockchain companies, which at times require a complete overhaul of the business model. This means that to be legally compliant, the startup needs to introduce a new business model.
Unfortunately, finding people who are highly skilled in blockchain has become difficult. The knowledge among the masses is scarce, and one needs to dawn onto a proper training and mentoring approach to keep things running.
Funding is the lifeline of any startup. The entrepreneurs need to think about how much money to raise and where will it be spent. Moreover, the source of the funding is also at a debate for blockchain based startups as the investors matter a lot. Investors think twice before investing in blockchain based social media startups as they increase running costs in no time.
5. Receiving Funding Through an ICO
For startups considering taking the ICO funding route, it must be remembered that receiving an ICO funding will increase legal challenges. Thanks to some of the crypto funds that are filling the gap left by traditional investors.
6. The Valuation Dilemma
Most startups make а mistake of wrongly evaluating their startup. Given the current scenario of blockchain backed startups, make sure you calculate your profits before placing a value to your business. Also, make sure you know how much money you will have to make so that the investors start getting a return.
The Blockchain is Changing Social Media
Startups in the blockchain and social media domain are destined for potential growth as the following trends show that things are getting interesting in the blockchain-social media world.
- Marketplaces and online identities are being verified.
- Blockchain helps take care of fake content through its smart contracts.
These are the two major trends that are shifting social media and blockchain. Startups working on these trends are likely to make it big if they can overcome the challenges mentioned above.
Carolyn Coley is a blockchain reporter. She joined Smartereum after graduating from UC Berkeley in 2018.