What You Need To Know Before Starting A Cryptocurrency Business
By Tyler Gallagher, CEO and Founder of Regal Assets, an international alternative assets firm with offices in Beverly Hills, Toronto, London and Dubai.
Starting a business is never an easy feat, especially so when it’s a cryptocurrency venture. Cryptos still occupy a new space in the market that’s still impacted by financial and regulatory risk. Yet stories of fame, fortune and get-rich-quick IPOs tempt many an entrepreneur to the cryptocurrency sector — and too often for the wrong reasons.
Cryptocurrency holds the potential to democratize finance and create a true peer-to-peer medium of exchange that’s free from government seizure. Bitcoin is a liberating technology that can do incredible things for the world. If you’re on board with that message and truly believe it, then I’d say you have the right intentions to start a career in cryptocurrency.
As an alternative investment professional, I’ve spent the better part of a decade working with cryptocurrencies. In this article, I’ve shared a few key things you’ve got to prepare for if you want to get started as a cryptocurrency entrepreneur and help push the state of alternative finance forward.
Don’t Neglect Tech Skills
If you want to launch a crypto company, you or your co-founders need to be tech-savvy. It doesn’t matter if you want to be a developer, broker or marketer; every crypto company needs tech chops to fully and deeply understand the underlying blockchain systems.
Know how distributed ledgers work (without the buzzwords!).
• Comprehend smart contracts and the Ethereum protocol.
• Have an understanding of technical and fundamental analysis of financial markets.
Even if you have no interest in starting a business as a developer, you’re probably going to have to make technical claims as a bitcoin entrepreneur or crypto founder. To back it up, you’re going to want some technical know-how.
Know How To Attract VCs
It doesn’t need to be repeated that cryptocurrencies are volatile and present a huge financial risk not only to you but also to your early investors. Despite the risk involved, you’re going to have to be able to approach and persuade venture capital (VC) firms to invest in your project.
Equity financing isn’t for you? There’s always the initial coin offering (ICO) route if you’re specifically interested in creating your own token. However, this comes with its own share of serious financial risks and legal liabilities that you have to be mindful of.
The bottom line is that you’re going to need people skills. Practicing public speaking and presentation skills will serve you greatly in your crypto entrepreneurship, as there are several blockchain-based VCs willing to lend their ear to your project.
Be Open To Innovation And Adaptation
In such a fast-moving industry, there are no skills more important than the ability to innovate and adapt. When I first got involved in the crypto space, the No. 2 most valuable blockchain technology by market cap, Ethereum (ETH), hadn’t even been conceived yet. Today, it represents a large portion of the crypto side of my business.
When the market changes — which it can do seemingly overnight — you have to move with it, and quickly. Otherwise, your competitors will, and you’ll bleed market share. During particularly chaotic periods in the industry, you can expect to put in endless days of work developing the technical side of your operation to keep pace with the changing environment.
Likewise, blockchain and innovation are virtually synonymous terms. You need to be willing to experiment with new revenue streams and offer products and incentives that your competitors won’t if you want to stay afloat in this highly competitive market.
Develop Risk Tolerance
Blockchain is a high-risk, high-reward industry that’s not for the faint of heart. As a nascent technology, blockchain is subject to speculation and vulnerable to swings in investor sentiment. If the price of Bitcoin crashes like it did in January 2018 (-65%) or April 2013 (-71%), your business might need years to recover.
One of the best things you can do as an entrepreneur in the crypto space is to diversify your offerings so you aren’t overexposed to crypto. For example, I’m involved in the alternative assets space, which also encompasses precious metals and other asset classes that aren’t correlated to Bitcoin. Risk-conscious entrepreneurs would be wise to diversify their revenue streams as I have so they can outlast downturns in the market.
Remember: We’re All Just Getting Started
A recent research study forecasted that the global blockchain market size will be worth upward of $60 billion in 2025, representing a 69.4% compound annual growth rate. By most accounts, blockchain and cryptocurrencies are still in their infancy. Therefore, the market can and will inevitably change with time.
What’s true today for cryptocurrency entrepreneurs might not be tomorrow. The advice I’ve laid out above may not even be applicable a few years or even months down the road. I think this speaks to something essential about crypto entrepreneurship that every hopeful business owner in the space should know: You need to be able to accept risk and always be willing to adapt to a changing market if you want to succeed in this industry.