At Suredbits, we believe the future of crypto is closely aligned with the future of data. Not just in how we store data but how it is shared, distributed, consumed, and paid for. Many of the fundamental models of how APIs serve business purposes will remain. After all, at the end of the day real economic value must be created or no technology can sustain itself.
But what might the future of API monetization look like when we look at the evolving world of Bitcoin, the Lightning Network, and cryptodata?
For some background, there are a number of models for API monetization. But generally it is one of or some combination of the following:
Direct pay — purchase or subscription:
Pretty much what it says. You purchase either a monthly or yearly or reoccurring subscription to access some set of data. This often includes some kind of overage charge in case of spike in demand. For example, $29.99 per month with an added $4.99 for any spike in use.
As a premium feature — the upsell:
A company offers access to valuable data as way of incentivizing an upsell from free tier to paid — paid to premium, etc. For example, many data providers provide limited access to a data set as a free tier with a limited set of features and support. If a customer upgrades to a paid subscription, they get a broader data set, more in-depth data, 24/7 support, etc.
Indirect revenue generation:
This is where a company uses their API as way to support some other product or service monetization. For example, Facebook opens up their APIs to developers to increase user acquisition and their own data exhaust. They then package up that customer attention into their own advertising platform to companies.
Open or extend distribution channels:
Similar to indirect revenue. An example of this would be a large companies that may offer tiers of access to their data. For instance, a company may have Platinum, Gold and Silver type of tiers where the more important you are to their business goals, the higher level of access. Each tier is predicated on satisfying a specific business goal: creating data feedback loops, extending their brand, customer acquisition, and of course, revenue.
When we bring cryptocurrency (i.e. blockchains) into the picture, a couple fundamental properties stand out that shift these models in potentially exciting ways.
First, there is no account creation.
None. This changes less about the actual monetization option and more about the process. There are no sign-up forms. There are no lengthy account creation processes. There is no sharing of personal information.
There are also no credit cards involved.
That means no entering of credit information and no credit card fees. Which, also means, no security risk of that information being compromised. Crypto is trustless and private by its nature. So its simply not required. For the Lightning Network, all you have to do is connect node-to-node. In fact, in order to route actual payment, you just have to have connection to some node that is connected to ultimate payment destination.
Interestingly, this presents a direct challenge in how we deliver financial data via APIs. Currently, federal rules require extensive documentation and reporting on how financial exchange data is used and by whom. And exchanges have a lengthy partnership contracting process. This is intended for their own protection but also for consumer protection as well. Unfortunately, this can make it expensive to distribute market data more widely to a broader audience. The typical pricing model when working directly with an exchange shows the challenges as there are the API subscription fees, database connection fees, fees per user, fees per device, and so forth.
None of this is necessarily required with cryptocurrency. However, some of those factors could be priced into the transaction. They would just have to be part of the transactional fee on the blockchain and not necessarily predetermined by contract. The lightning network wouldn’t — or doesn’t — need to know or care about the number of devices or your intended use. It simply receives a request and assuming there are funds in a person’s cryptowallet, the transaction is confirmed and the data returned simultaneously.
Microdata and monetization
We have written previously about micro-transactions with cryptocurrency. In traditional API models, you pay for access to a data feed with or as part of a package of data, typically with a pre-determined time period — weekly, monthly, yearly, etc. This could still be possible with crytpocurrency but what is more interesting is a user could pay in discrete, pay-as-you-go amounts where you pay for what you consume. This is where we believe cryptodata really gets exciting and opens up new models for developers and businesses— people can, if they choose, to consumer and pay for microdata such as single fields or access to single pieces of data.
To illustrate, rather than paying for a package of streaming financial market data for all tickers from the New York Stock Exchange, a person could instead hand-pick just a few, or even just a single stock they are interested in and get that data from any exchange they wish and pay only for what they use. Under existing models, this would be difficult as they would have to buy more than what they really want or need from a ticker feed or order book. Cryptodata is well-suited and built for this type of micro-transaction.
We are excited by the new models crypto opens up for sharing and creating value with APIs. There are no definitive answers right now on how crypto will change the world of the data service industry but we know it will. The fundamental values of cryptodata and blockchain — trustless, private, secure, micro — will require new models for how we think about getting customers, keeping customers and growing customers for API services. But there is an increasing number of companies, including Suredbits, actively experimenting, exploring and testing the new models of this developing cryptodata ecosystem.
We would love to hear from you. Feel free to connect with us on Twitter @Suredbits or join our Suredbits Slack community.