As the new year approaches, many aspiring entrepreneurs may consider taking a leap into the world of Bitcoin, blockchains and distributed ledger technologies. Allow this to serve as a note of caution and advice.

Most important: This technology is growing up. (Not-so)-crazy ideas have become tangible proof-of-concepts with major institutions across a variety of industries. Some of these have shaped into live trials and, at the very end of the spectrum, are becoming full-blown product offerings. An example of this evolution was recently demonstrated by Visa and Chain’s B2B Connect keynote announcement at Money20/20 in November.

As a consequence of such developments in this nascent industry, entrepreneurs seeking to be taken seriously and raise money are now being held to a much higher standard than they were, say, two or three years ago, when the venture capital investment cycle began in earnest. There is a much greater comprehension of businesses that work and those that don’t. As a general rule of thumb, attempting to build wallet software or a digital currency exchange would be misguided. First, wallets, of which there are already many, generally don’t make money. And, while exchanges may be a lucrative business, it is important not to underestimate the power of incumbency.

Although the history of financed distributed ledger–related companies is only a few years old, anyone who has been around that long will agree that four years in “blockchain time” is the equivalent of decades in many other industries. Entrepreneurs who believe they can usurp Coinbase or Blockchain.info due to having “better technology” will be forced to confront the reality of this business faster than they can say “disintermediation” (whether or not their tech is, in fact, superior).

To create a viable startup in this fast-moving, exhilarating industry, differentiation is key. Blockchain technology has moved far beyond the initial hype of bitcoin, payments and financial infrastructure. New enterprises abound in sectors ranging from real estate to healthcare, to entertainment and energy. As more large institutions, think tanks and consultancies contemplate the ramifications of distributed ledgers, smart contracts and beyond, use cases will continue to emerge out of the woodwork. Decentralization, however, has its limitations. The first wave of entrepreneurs in the Bitcoin space shouting “decentralize all the things” came to recognize this quite quickly. Decentralization should always be a means to an end, not the end itself.

But even for the most viable, brilliant business ideas, the standard for investment is a high threshold to meet. Today, the teams receiving investments have pedigrees eons beyond what many early entrepreneurs in the ecosystem could ever have boasted of, for better or for worse. With Wall Street veterans piling into the industry’s top financial firms (see Digital Asset Holdings or Ripple), creating viable competition can be near impossible. Elsewhere, most new startups are led by experienced executives in the respective fields they seek to disrupt (see Stem, Wave, or Abra). While that is not to say scrappy young entrepreneurs and hackers can’t build viable enterprises — it’s just all the harder to do so. Teaming up with expert co-founders, advisors and investors becomes increasingly more essential as this industry matures. Finding a strong niche and testing business hypotheses with such knowledgeable individuals are key to successful financings and businesses.

At the moment, macroeconomic factors, both in this industry and the global economy at large, bode well for entrepreneurs. However, winds can shift at a moment’s notice, and general venture capital sentiment is far from its bullish peak in 2015 (regarding any industry, save for maybe artificial intelligence). Those who successfully raise a seed round will indubitably experience the Series A crunch that will be both corrective for misaligned startups in the industry and extraordinarily painful for many. Beyond the first couple of stages of financing, it appears companies such as Ripple, Gem or Coinbase, as examples, are faring quite well and finding their mojo. But only time will determine their fates. It is important to note that there has yet to be a single venture-backed exit with meaningful (i.e., more than 1.5x) returns in this industry.

Hopefully, this does not discourage aspiring entrepreneurs from diving deep into blockchain tech. Rather, it should serve as a stern note of caution to those seeking to build a company around or upon this exciting new technological marvel. “Blockchain” may be a sexy buzzword, but it is a fundamentally unsexy technology — it is merely a distributed database. Keep that in mind before throwing it into a pitch deck, as investors are wary of the hype cycle.

And, to those who turn to token sales, or the cringe-inducing “ICO,” as a means to raise capital: such financing methods are nothing short of regulatory Russian Roulette. Just because regulatory action has not yet been taken doesn’t mean it won’t be. Be diligent and follow best practices. This financing method shouldn’t be forsaken, but it should be approached with the utmost caution (that I will dive into in a later op-ed). Notably, all advice and warnings laid out above still apply to ICOs.

This op-ed is a guest post by Jeremy Gardner. The views expressed are his own and do not necessarily represent those of Bitcoin Magazine.