Intro to blockchain and business
Blockchain technology came to enable new solutions to traditional business models in order for companies to operate more efficiently. According to Business Insider’s market research, the market for blockchain technology is estimated to grow at a CAGR of 53.2%, to reach USD 12.48 billion by 2025. Even though this technology is still immature, there are lots of businesses and labs testing it today. Still, USD 12.5 Billion is a lot of money injected, so we need to understand its potential.
- American Express is testing a way to use blockchain to give vendors more power over membership rewards.
- Tencent Holdings is working with the Shenzhen State Taxation Bureau to explore blockchain and taxes
- Metlife Inc. has partnered with IBM and insurance tech company Majesco, to build a blockchain platform for insurance.
- Amazon.com offers cloud integrations for a number of blockchains and recently partnered with ethereum startup ConsenSys.
These are just some examples of large public companies, but there are many more. This makes you hear the word blockchain a million times, in various ways, but you still don’t have a clear vision of how exactly you should apply it to your business, or even if there is a need for it.
It is important to test new ways to optimize and improve the way businesses operate and not rely on the traditional and (some pointless) middleman and central databases to generate revenue.
Blockchain is positioned in an early adopter stage, which is the second stage following the innovators. The early adopters can be the most influential people within the market space, as they will often have a degree of leadership among other potential adopters.
That said, now, early adopters do try to understand and learn everything there is to know about this technology, but maybe in a few years — when we reach the late majority stage — most people will be using the technology and won’t even need to know or understand the full details of its implementation. This is not something unusual. This happened to many earlier technologies that transformed the way we work today.
Transforming Business Models
What is at stake when you own a business is your business model and how you generate profit. It is important to test new ways to optimize and improve the way businesses operate and not rely on the traditional and (some pointless) middleman and central databases to generate revenue. There are a few examples where businesses choose to test and learn how the inception of blockchain will improve their way of competing as they will be the early adopters within the respective industries.
Catappult chose the AppCoins protocol and APPC cryptocurrency as their billing system to foster all IAP.
There are a lot of use cases to pick from. Blockchain for Data storage, for example, helps to create new, decentralized data storage networks, giving the opportunity to end-users to choose, and be rewarded, for sharing their data is only one of them. In the Healthcare sector, all the progress of medical research and medical data can be more efficient and secure with Blockchain technology. Blockchain and cryptocurrencies can be alternative ways for cross-border payments, or any payment — to credit cards, wire transfers or PayPal. There are already multiple tested blockchain payment projects in place with products in production, together with a variety of secure wallets. The example of micropayments and transactions flow in the Apps industry is a good example of how blockchain can bring improvements and Catappult’s integration with AppCoins is the chosen practical example.
Apps Business and Catappult’s case
As we expect more startups are providing payment alternatives with blockchain, with the focus on lowering both costs and transaction time. Let’s take a look at Catappult’s business offer for app distribution to app stores and app developers, and how the company is using the AppCoins open protocol as their billing system to scale the business model.
Catappult proposes real-time transactions, and payments, as well as lower transaction fees because it cuts all the payment gateway intermediaries.
Catappult’s major mission is to distribute apps and games in multiple app stores and leverage their user base and monetization in a one-stop-shop offer. App developer’s major revenue streams come from IAP (in-app purchases), and Catappult offers at least 81% of the payout rate (at least 20% more than centralized ecosystems).
Catappult chose the AppCoins protocol and APPC cryptocurrency as their billing system to foster all IAP. AppCoins is an open protocol (Ethereum based) and is governed by an App Store Foundation. The protocol has been adopted by the Aptoide App Store where it is being used as the primary billing system. Furthermore, it is also the major engine behind app developers monetization strategies and the reason why their apps are distributed in a transparent and trusted way among multiple app stores.
To be clearer let’s see how the proposed business model flow works and all the parties involved:
Following the flow above, first the app developer uploads the app to the Blockchain Distribution Services console (Catappult). Catappult services app stores and OEMs in the market, and distributes the apps to all those app stores and OEM stores that have integrated the AppCoins protocol (Aptoide, Multilaser, and Cherry Mobile for example). Finally, the app reaches the end-users’ hands when they browse through the device’s multiple marketplaces.
Catappult, and the adoption of the AppCoins Protocol by its industry members is an actual and concrete example of how blockchain technology is actively helping app stores and app developers achieve better performances.
Typically, when an end-user downloads an app and performs an IAP, the revenue goes to a centralized billing system, with high transaction fees and where the app developer is only reimbursed after 30–60 days. What Catappult proposes is real-time transactions, and payments, as well as lower transaction fees because it cuts all the payment gateway intermediaries.
In the sketch above, in red, we have a transaction flow from a traditional IAP, but enhanced by blockchain and AppCoins protocol to do three major improvements:
- Logistics and supply chain of the transaction: with the AppCoins protocol and blockchain technology, each IAP transaction is provided with secure and transparent monitoring. It is wallet-to-wallet (end-user to app developer), so it eliminates middleman (payment systems, credit cards) fees.
- Transaction settlement: Payment settlements and reconciliation across all parties are simpler and more efficient with the use of smart contracts in the AppCoins Protocol. Blockchain technology and the use of smart contracts allow businesses to achieve greater economies of scale by challenging existing revenue models and frameworks. Instead of app developers receiving their revenue-share in the typical 30 to 60 days, with Catappult they are receiving in real-time.
- Rewarding all parties in the app ecosystem: Smart contracts also provide the possibility to reward and compensate the distribution channel, the app stores/OEMs for distribution of apps and the end users with incentives for downloading apps and using the technology.
There are many more examples where blockchain can benefit this model, although these three factors touch upon where app businesses boost up their revenue streams and improve their business models to get an advantage in order to compete with traditional standards.
In summary, as the market becomes more competitive, Blockchain is going to have a significant impact on all industries — and the app industry is no different. Catappult, and the adoption of the AppCoins Protocol by its industry members is an actual and concrete example of how blockchain technology is actively helping app stores and app developers achieve better performances. Of course, the road is far longer, and this is just the beginning, but I am positive that all processes across the entire workflow will become more efficient and secure for more industries to embark into this digital age.
Written article by Carolina Marçalo, Executive Director of the App Store Foundation