Yves Benchimol, WeWard‘s founding engineer and a blockchain investor, and Maître Caprioli, a lawyer specializing in new technologies, Vice-President of the FNTC (Federation of Trusted Third Parties) and member of the blockchain working group, shared their prerequisites for investing in blockchain startups.
1. What is the purpose of blockchain in the project?
A blockchain company must integrate this technology into the heart of its project. The type of use is crucial. If the blockchain is only a gadget, it will not bring any value.
One of the best ways to ensure that the technology is useful is to check whether the service would work just as well without it. Time stamping or the “security” benefit are not sufficient arguments.
2. Check which type of blockchain you are going to invest in
The public blockchain is totally decentralized and it is the most risky.
The hybrid blockchain, or consortium blockchain, associates partners. The chain is then governed by a control center.
Finally, the private blockchain is at the service of a particular actor.
In any case, be aware that the technology is limited in the number of operations it can offer. We usually talk about 20 transactions per second. Where the Visa and Mastercard systems increase to 15,000 transactions per second.
3. How profitable will the blockchain be?
The more frequently the digital asset is used, the more valuable it is.
To estimate the return on investment, analyze the cost of the service before and after the blockchain over several years.
4. What are the profiles on the team?
Check for the presence of blockchain engineers, who are still rare talents. And also, by whom and how the questions of proof, or even personal data, are treated. The way in which the startup approaches the legal aspects of the services provided with the blockchain is crucial.
5. Be prepared with the fluctuation of the token exchange rate
If you buy cryptocurrencies, the value of the token will not guarantee your earnings. Note that the latter can show spectacular differences from one day to the next…for better or for worse.