In this post and infographic, we want to explain one of the biggest financial breakthroughs in a century to you, built on top of Bitcoin. This innovation will eventually enable new, consumption-based business models, microtransactions and even the livestreaming of money. The implications of this are hard to overstate.
Why haven’t you heard about this before?
You’ve probably heard some things about the cryptocurrency Bitcoin, the global network that allows people to directly transfer value without middlemen.
The media has been talking a lot about the explosive price action over the past year, but they’re not doing a great job at educating people how all of it works and what amazing innovations are being created. Admittedly, explaining Bitcoin isn’t an easy job. Even the inventor struggled with it!
Writing a description for this thing for general audiences is bloody hard. There’s nothing to relate it to.
– Satoshi Nakamoto, 05/07/2010
Bitcoin is complex to understand, because it combines so many different fields. It’s like trying to understand how the Internet technically works. Most people don’t, but they still trust it with their sensitive information.
When it comes to money, we’re much more reluctant with our trust. Even though most people don’t have a clue how the existing financial system works either, we still want to understand this new thing. So let us explain!
The simple idea behind Bitcoin
In essence, Bitcoin allows you to be the absolute owner of your money, instead of trusting someone else to take care of it at a cost. Not everyone is interested in that or happy about it, which is fine. It can help a lot of people that don’t have access to financial services today.
Bitcoin was not invented to replace your bank, but to provide an alternative financial system that allows you to transfer value anytime, anywhere in the world. It consists of several components that make this possible.
One of them is the widely praised Blockchain technology. This is a database that permanently records ownership of the money and value on the network throughout time. Contrary to popular belief, it is an unattractive tool for criminals, because they don’t want to leave permanent evidence of their crimes.
Bitcoin’s popularity problem
Over the past years, this system has become more popular than the technology can handle. There are huge amounts of people that want to send near instant and near free transactions anywhere in the world, because they can’t do this with their banks.
To process so many transactions, you would eventually need a centralised system with a small amount of powerful computers, with the best Internet speeds in the world. Unfortunately, most of the world does not have that luxury, but we also don’t want a small amount of people to be in control of Bitcoin.
As a result, only a few hundred thousand transactions can be processed per day, and when there is a lot of demand, it can become slower or more expensive to do so.
So a bunch of developers have been spending a lot of time to create promising solutions for this scalability problem.
We created an infographic to explain their innovation to you in simple terms.
You can find it at the bottom of the post.
The Lightning Network
Lightning is a system that works on top of the Bitcoin blockchain, so it uses actual bitcoins. It is like a checking account to your savings account, which allows you to instantly transfer money at almost no cost.
On the blockchain, everyone who helps to secure the network needs to store all of the transactions, but on the Lightning Network this is not needed. This way bitcoin can be used cheaply, by far more people around the world.
The Lightning Network is already live today, but is still in its very early stages. On this site you can see all the connections people have already set up (About 1000 at the time of writing this).
This is what the early Internet looked like as well, hopefully the Lightning Network will become a global success as well.
How can you get started with the Lightning Network?
Later this year, more and more applications will allow you to use the Lightning Network yourself, keep an eye out for this! For now it is being tested by experts.
If you want to learn more about the Lightning Network, we highly recommend you to check out this megathread on Reddit.
If you’re interested in more simple explanations about Bitcoin, Cryptocurrencies and Blockchains, you can follow @SDWouters and @CnuddeLouis on Twitter, or hire them as speakers for your event or organisation. We can bring you an accessible story, tailored to the interests of the audience.
We also give workshops to work out the possibilities for your organisation to use blockchains and/or cryptocurrencies, and to set up new types of business models and revenue streams using innovations such as the Lightning Network. Contact us for more information.
Whether you’re a startup or an existing company launching a new venture, you have to find a way to make money. When thinking about your business model, you need to have both a ’tomorrow strategy’ and a ’North Star vision’ of where you want to end up.
The cashflow or the gold?
A couple of months ago I launched a new startup together with 3 friends called Speakersbase, which is a platform connecting speakers and event organisers. It’s a dual-sided market place needing traction from both parties to make it fly. There are many ways to monetize a market place, but it’s challenging to focus.
During one of our brainstorm meetings around the business model one of my partners, David Bintein, pointed out that we had to figure out how to combine the short term and long term vision to create and capture value. Meaning we had to think about ‘the cashflow’ and ‘the gold’: how are we going to make money today to fund what will make us successful tomorrow? It struck me because it’s a crucial metaphor as many companies are focusing either on one or the other: the cashflow or the gold.
Many startups are golddiggers, they focus on the big long term value they hope to create in the future, when everything goes according to plan. While doing so they forget about how to actually run the business on the short term and how to generate the necessary resources to go forward. So they turn quickly to investors, giving away too much of their company early on.
Corporates on the other hand are mostly focussed on the short term value, profits and cashflow. As a result, they forget to focus on the long term which is one of the reasons they are being disrupted by challengers in the market with new and bolder propositions. If an idea is not bringing in short term revenues, it’s not fitting their spreadsheet. They leave a lot of future value on the table as their eyes are only on the cashflow and not on the gold further down the road.
The magic is in the combination
Whether you’re a startup or an existing company, think about how to find the cashflow for today and where you will find the gold that will make you successful in the end. You need to generate the short term resources to build the long term future you believe in.
The Cashflow: what is the most easy to sell solution that you can offer which is fulfilling a concrete need for someone in the market? It doesn’t need to be unique, it needs to be useful.
The Gold: what is the unique value that will make your product or service incontournable and successful in the end? It needs to be a big ambition.
The magic is in the combination. You need to generate the short term resources to build the long term future you believe in.
For Speakersbase we have created dynamic event- and company pages that we can sell to organisations in the short term (The Cashflow), while we believe that the real gold is in mining and matching the data of the speakers and event organisers (The Gold).
Let me know what you think, follow me on Twitter via @dadovanpeteghem or reach out via email@example.com.
Monetizing your website in 2010 was easy. But it’s a lot harder now and it will only get worse by 2020. You’ll need to look for new business models to generate income for your website.
But don’t worry…
We’ve listed 14 different business models in the presentation below to monetize your website in the modern age. Answering only 6 questions will lead you to the business model(s) that suit(s) you best!
Do you need help transforming your business into a digital first company? Contact us! We have quite some experience 😉
Edit: Our slidedeck made it to the front page of SlideShare!
— SlideShare Today (@SlideShareToday) 8 juli 2015
We’ve analyzed tons of disruptive players when we were writing our book on Digital Transformation. We discovered 7 similarities and call them “The 7 Metaphors of Digital Disruption“. We saw that all the disruptors score high on these drivers of transformation while traditional players have trouble with these metaphors. The new players are attacking you on every level.
How can you defend your business from these new players in your market? You should learn how they operate and try to implement (elements of) the business models of disruptive companies.
We’ve made a presentation that guides you through ten business models of hyper disruptors that we found inspiring. We hope you do too.
Please let us know your thoughts about it!