<p>As far as I know, they don't have an explicit business model published anywhere. We do know that they are working on:</p>

<ul>
<li><a href="https://blockstream.com/sidechains.pdf" rel="nofollow">Side chains</a> - a two-way peg that has fixed transfers of value from bitcoin to a sidechain and back.</li>
<li><a href="https://lightning.network/lightning-network-paper.pdf" rel="nofollow">Lightning network</a> - a network of transactions that can be updated relatively quickly (seconds, theoretically) and provably given if the transaction is published on the blockchain.</li>
</ul>

<p>Both these things are innovations, but how they will make a profit off them is not clear. That said, both these innovations potentially could be more useful if transactions on bitcoin proper were more costly. For both, that would be because transactions on a side chain or lightning network can be potentially cheaper and thus more utilized. That is in theory. Neither of these things are public or even built. Most of the accusation is in theory. Only the Blockstream people know the business model and given that they're a startup with no profits, I wouldn't be surprised if they pivot a few times before they actually find a business model that works for them. This may or may not involve profiting from the innovations above.</p>

<p>Essentially, there is no clear revenue model so the statement about blockstream is mostly speculative.</p>

CC BY-SA 3.0
2016-01-19T16:31:06.100Z
`Essentially, there is no clear revenue model so the statement about
 blockstream is mostly speculative.` Couldn't agree more. Unfortunately we are going to have to wait a while to see exactly what comes of it.
Kristine Aurum
CC BY-SA 3.0
2016-01-21T13:54:25.787Z
Both Side chains and Lightning Network (they pay one of the developers, but there are many more) highly depend on Bitcoin succeeding. If Bitcoin fails, so will Side chains and LN. So incentives are actually well aligned there.
Jannes
CC BY-SA 3.0
2016-01-19T15:45:30.793Z
2016-01-19T16:04:46.833Z
2016-01-19T16:04:46.833Z
Jimmy Song
<p>It is unlikely that the Blockstream business model requires small blocks.  For Blockstream to succeed, Bitcoin will need to succeed independently or there will be limited demand and other devs will increase the block size and the model will fail anyway.</p>

CC BY-SA 3.0
2016-01-20T06:27:11.837Z
2016-01-20T06:27:11.837Z
bungo
<p>Blockstream's for-profit product is called "Liquid", for which its usefullness diminishes when on-chain transactions are cheap and fast to process. Blockstream proudly admits that the product is already being sold to large exchanges and perhaps even conventional banks.</p>

<p><a href="https://blockstream.com/liquid/" rel="nofollow noreferrer">https://blockstream.com/liquid/</a></p>

CC BY-SA 3.0
2018-01-26T03:18:20.197Z
2018-01-26T03:18:20.197Z
John Phu Nguyen
<p><strong>Anyone reading discussions in the Bitcoin scene these days probably has seen the following argument (or similar):</strong></p>

<blockquote>
  <p><strong><em>"Blockstream is preventing a blocksize increase because their products can only turn profit in a small block environment."</em></strong></p>
</blockquote>

<p><strong>What evidence is there to support or refute this statement?</strong></p>

<hr>

<p><strong>PSA (as per our rules):</strong>  </p>

<ul>
<li>Be <strong>open-minded</strong>. This question will likely generate diverse answers that may not align with your personal opinion.</li>
<li>When answering this question, <strong>back up</strong> all statements you make with appropriate references and evidence.</li>
<li>Answers will be edited/moderated for tone. Stay <strong>respectful and courteous</strong>.</li>
<li>Avoid statements solely based on your opinion.</li>
<li>Logical fallacies will be called out.</li>
</ul>

<block-size-increase><community><blockstream>
Does Blockstream have a revenue model that can only exist in a small block environment?
Murch
# Does Blockstream have a revenue model that can only exist in a small block environment?

(Asked by: username_0 on 2016-01-19)

**Anyone reading discussions in the Bitcoin scene these days probably has seen the following argument (or similar):**

> ***"Blockstream is preventing a blocksize increase because their products can only turn profit in a small block environment."***

**What evidence is there to support or refute this statement?**

---

**PSA (as per our rules):**

* Be **open-minded**. This question will likely generate diverse answers that may not align with your personal opinion.
* When answering this question, **back up** all statements you make with appropriate references and evidence.
* Answers will be edited/moderated for tone. Stay **respectful and courteous**.
* Avoid statements solely based on your opinion.
* Logical fallacies will be called out.

**Tags:** block-size-increase, community, blockstream


---

## 3 answers

### Answer by username_1 on 2016-01-19. Score: 3 | Accepted answer

As far as I know, they don't have an explicit business model published anywhere. We do know that they are working on:

* [Side chains](https://blockstream.com/sidechains.pdf) - a two-way peg that has fixed transfers of value from bitcoin to a sidechain and back.
* [Lightning network](https://lightning.network/lightning-network-paper.pdf) - a network of transactions that can be updated relatively quickly (seconds, theoretically) and provably given if the transaction is published on the blockchain.

Both these things are innovations, but how they will make a profit off them is not clear. That said, both these innovations potentially could be more useful if transactions on bitcoin proper were more costly. For both, that would be because transactions on a side chain or lightning network can be potentially cheaper and thus more utilized. That is in theory. Neither of these things are public or even built. Most of the accusation is in theory. Only the Blockstream people know the business model and given that they're a startup with no profits, I wouldn't be surprised if they pivot a few times before they actually find a business model that works for them. This may or may not involve profiting from the innovations above.

Essentially, there is no clear revenue model so the statement about blockstream is mostly speculative.

> **Comments:**
> **username_2**: `Essentially, there is no clear revenue model so the statement about  blockstream is mostly speculative.` Couldn't agree more. Unfortunately we are going to have to wait a while to see exactly what comes of it.  
> **username_3**: Both Side chains and Lightning Network (they pay one of the developers, but there are many more) highly depend on Bitcoin succeeding. If Bitcoin fails, so will Side chains and LN. So incentives are actually well aligned there.  

---

### Answer by username_4 on 2016-01-20. Score: 3

It is unlikely that the Blockstream business model requires small blocks. For Blockstream to succeed, Bitcoin will need to succeed independently or there will be limited demand and other devs will increase the block size and the model will fail anyway.


---

### Answer by username_5 on 2018-01-26. Score: 0

Blockstream's for-profit product is called "Liquid", for which its usefullness diminishes when on-chain transactions are cheap and fast to process. Blockstream proudly admits that the product is already being sold to large exchanges and perhaps even conventional banks.

<https://blockstream.com/liquid/>


---

