Start from these seven attributes to find the tipping point of the block chain landing

Title of original text: "for the market segment suitable for blockchain, it should have these seven attributes"
Source: Orange Book by dong mo

This article was written by Celer founder mo dong. He said he had recently read "on protracted war" and felt inspired by it.

I'm not a big fan of MAO's selections, but a closer look at the historical situation in which "on protracted war" was written reveals something similar about the current blockchain situation. I can't go into the details here, but fortunately the history is quite well documented, so you can try to bring it in and read on the protracted war, it's easy to get my point.

Where does the fight go next? How to play? I hope to see more friends in the industry to share their ideas

Let's this line, from the consensus of encryption punk origin, is the block chain applications into ideal drive forward, has experienced a lot of different historical periods: from the initial attention to pure technology development and the values of two, to try to early payment applications, "gold" word, memes culture gave birth to the early generation of "counterfeit currency" market ups and downs, to the intelligent contract's box roller coaster.

I believe that the next block chain market and market value growth will come from two or three real applications and market segments. In the next two years, blockchain will see the first wave of applications in the same historical position as Amazon, which sold books, and QQ, which chatted with cute girls. The first wave of applications in the blockchain market can stand up, survive and expand continuously from point to point.

How to judge whether a landing site has such seed property for a platform is also a key problem. This is not only related to the landing application itself, but also related to the corresponding choice of the platform in this field can play their greatest advantages in such segmentation and how to prevent barriers. In my opinion, the market segment that serves as the tipping point of block chain landing needs to have about seven attributes, which is also the main thing to be discussed in this paper.

1. Fast-growing, far from saturated market

First of all, the market segments we choose must not be created out of thin air, or too far ahead of the broad demand, such as block chain +AI, which is more science fiction unclear demand.

Second, such segmentation must be in immature markets that are growing at an extremely high rate, even without blockchain as part of the solution.

The most typical market segment that does not meet such criteria is mobile payment. In developed markets, the mobile payment market is already quite saturated. In developing markets (such as Nigeria), although mobile payment has the core demand of safe-haven sovereign currency, it will stay on the SMS platform for a long time due to the restriction of the popularity of smart devices, without the infrastructure conditions to migrate to the block chain.

This is not to say that blockchain cannot be a mature financial market such as payment, but just like any new technology and model, while bringing benefits, the immature technology and solutions will trigger some problems that the traditional solutions do not have. In a highly mature market, the balance is not dominant.

Therefore, the entry Angle of new technologies into the market must be a market with sufficient growth space. When competing products themselves are still in similar early growth stage and have similar difficulty and problems in using, they can quickly occupy the blue ocean market through the differentiation advantage of the block chain technology in terms of cost or benefit. After surviving such a market, go back and expand and eat the mature market.

Payment market this bowl of rice, block chain technology not only to eat, but also will eat, but senior said that individual efforts are very important, but also to consider the course of history.

2. Clear and large enough profit model

Different from current Internet products, block chain, as a technology that has not been verified on a large scale, is complicated and vague in terms of technology. If you want to achieve sustainable business development and capital investment on a large enough scale, what you need most is a clear business and profit model.

While many blockchain-driven business models will emerge in the form of Internet products, smart money and massive capital will focus on more than just the attributes and growth of the Internet products themselves (DAU/MAU, retention, conversion, LTV) driven by blockchain. For Internet products, the profit model is relatively mature. As long as the growth attribute reaches a certain level, the revenue growth is basically a natural outcome.

As for the block chain, its differentiated profit attribute has not been verified, so it not only has these growth indicators, but also pays attention to the following three issues:

Why can block chain technology bring new realization mode or higher gross profit or realization efficiency

How big the market is

Can we strike a good balance between the current increase in user acquisition costs due to blockchain user barriers and the future decrease in speed with the development of the industry

Of these three, the more positive example is cross-border money transfer, while the more negative example is various blockchain privacy advertising solutions, such as Brave browser, which caught fire recently.

When promoting to C of CelerX, a mobile e-sports app developed on the basis of Celer Network, we also looked for various channels in the blockchain community. Brave's advertising target inventory seemed to be a large part of the blockchain channel, but the effect was actually mediocre.

Actually think carefully you will find that advertising business selling is an accurate data, and many a mickle makes a muckle scale effect is very obvious, "privacy", "push" based on the single point data, a simple text ads (because of the distributed push, "there is no collective advertising a centralized scheduling", concentrated video advertising push is necessarily impossible), it does not increase the overall advertising platform for advertisers appeal, reduce the cost of slogans in Google, Facebook and other manufacturers of machine learning under the scale effect seems hopeless, naturally there would be no way to attract buyers.

Although what we do in the short term is actually a blockchain specific channel business, the expansion of this business is very weak in the long term. Similarly, various types of distributed (e.g., medical, geographic) data markets based on blockchain are also typical anti-methodology market segments.

3. The existing ecology is friendly to new entrants or powerless to hinder them

This is arguably the biggest systemic risk to most blockchain business models. Any application or business ecosystem is inherently repelled, and the emergence of new technologies, once they touch vested interests, will undoubtedly trigger the existing ecosystem's immune attack. Such rejection is reflected in several aspects:

The exclusion and monopoly of commercial ecology

Legal compliance and other political barriers

The incompatibility of cultural values

There is no clear interface between these aspects, but is progressive. A good landing market segment, the existing ecological hostility needs to have the greatest degree of estimation and careful calculation of the avoidance.

The exclusion and monopoly of commercial ecology is the most common and the first hurdle of many practical applications. Ecology itself has many layers. Sometimes it is actually a supply chain or a subdivision of a large ecology. For example, the biggest ecosystem of mobile apps is actually the mobile app store of mobile phone manufacturers, which has advertising channels (Facebook, instagram, Google, headlines, etc.). If the app is not a pure endogenous block chain, there are also competitive product barriers.

At a time when mobile devices have become the primary means of distributing c-terminal applications, the app store is a barrier to be avoided. Recently, under the pressure of Apple App Store, Coinbase Wallet is going to remove dApp Browser, and Metamask is going to be removed by Google Play. However, it is still far from being released on the App Store.

This is also the point that I feel the most. In fact, everyone overreacted to Apple's regulation of dApp browser, which has nothing to do with block chain to a large extent, but the App Store does not want to give up the distribution right of apps and the share of in-app purchase. It is a purely commercial consideration, which is not as serious as many people imagine. The previous WeChat widget category page was removed and now it's just a search box for the same reason. See app Store Review Guideline 4.7 for rules for dynamically loading small programs within an app.

In addition, the commercial model of block chain games, which has been popular, and the sales of NFT and collectible (collectible) directly touch the adverse scale of mobile phone manufacturers' bypass of in-app purchase (participating in apple app store listing rule 3.1.1). After losing the distribution approach of mobile terminal, the difficulty of simply relying on the web terminal, which has gradually faded out from c-terminal applications, has suddenly increased to almost insurmountable.

In addition, the app store distribution channel is a big systemic risk because the whole rule is privately held, which is "I planted the tree, I opened the road". Even the types of applications that can be properly run within the guidance framework today may become insurmountable tomorrow because of rule changes. Of course, there are always two sides to everything, and such rapid changes can also change for the better.

In addition to mobile phone manufacturers, there are also sensitive areas for traffic acquisition. Regardless of the cost of user education, traditional systemic UA channels, such as facebook, instagram, and Google's ads mobile, are extremely cautious about promoting and advertising applications involving cryptocurrencies. Licensed advertisers can only be licensed after various background checks. These are also barriers that any cryptocurrency application can't get around.

As for competing products, after all this, it is actually the most friendly. As long as the players in the same game do not form a monopoly, always through differentiation to break the game. Of course, if the ecology itself is still in early development, so much the better.

If we can expect the friendliness of the business ecosystem to change relatively quickly over time, legal and political rejection is far more stubborn and deadly. Neither gaming, an application with a heavy compliance burden, nor DeFi, which has recently become popular, can escape such legal and political objections.

Take DeFi as an example. Now the entire DeFi industry is faced with a dilemma: if the pure blockchain ecosystem with mortgages continues to develop internally, it will soon be limited by the ceiling of the cryptocurrency market and cannot become a truly meaningful currency market. If we gradually abandon the mortgage, adopt a model similar to credit, or rely more on the intervention of external information, and more heavily on the vote of monetarist as the means of monetary policy governance, we will encounter a huge rejection effect of law and politics. There could be a three-pronged disaster by the SEC, FinCEN and the FED. The dream of private capital acting as a central bank and setting monetary policy is not an easy one.

Finally, the incompatibility of cultural ecology. Although culture may sound a little hollow, I think it is actually very important. The core of block chain is to replace a centralized trust body with a consensus mechanism. Although such a philosophical core is to reduce the cost of trust in essence, the first generation of applications developed with this idea are largely different from the user habits formed over the past decade.

In order to create a better user experience, many applications and projects start to forge ahead on the path of "user experience optimization", and even enter the black bean land of "abandoning block chain without trust" intentionally or unintentionally to pursue the ultimate user experience. There is nothing wrong with a good user experience, but in the process of getting close to the user experience of traditional Internet applications, if you lose the core of the block chain, you also lose a core business model, then what's the difference between doing a traditional Internet application?

The simplest example is the bitcoin lightning network, which took so long to come online, that on the user side, most wallets are "hosted" wallets, which are, to put it bluntly, completely centralized. Another example is the lightning network torch relay activity, which is very popular before, is basically completed in the centralized wallet, which has changed the database.

As an early participant in the blockchain movement, I think to a large extent, the cryptocurrency community has gradually lost its core culture in the competition with the traditional application culture. I'm not saying that blockchain apps should be hard to use or have a good user experience. For example, Celer's layer-2 technology can achieve the same user experience as Internet applications without losing the core value of the block chain.

At the very least, it is perfectly feasible to exchange some short-term tradeoffs for rapid user growth and eventually return to blockchain differentiation and business model advantages to save the country by curve. But we can not help but ask, we really can keep "today's big step backward is to tomorrow's big step forward" the original intention?

4. Traditional solutions and products have high trust costs

While paying attention to the above issues, we should clearly realize that the core value of blockchain is the reduction of the cost of trust. No matter what kind of business model, it must be the kernel after stripping off, otherwise it cannot be said to be a differentiated business model based on block chain.

If we want to balance the barriers and frictions caused by blockchain technology itself, we need to find an application scenario, which has a very high cost of trust. Such a cost of trust is often reflected in two aspects: the high complexity of the logic of trust intermediation (such as when a mortgage valuation is closed) and the high cost of paying itself (the high payment intermediation rates in high-risk industries).

Interestingly, this high level of trust barrier itself often means strong compliance and application scenario limitations. In gaming, for example, traditional sources of gold are themselves very limited and the cost is prohibitively high (15-20 per cent depending on the amount), especially in the adult sector.

In such an industry with a very high cost of trust, blockchain can fundamentally reduce the cost that cannot be reduced in the traditional way, so as to greatly increase the gross profit, thus generating differentiated energy. So a good business model to meet this standard, the best is the high cost of trust, similar to the high-risk payment industry, but at the same time in the worldwide legal compliance regulation is weak. If you think about it, the intersection of the two is very small.

5. Strong global attribute

Low-cost globalization is an important derivative value of the low trust cost of blockchain, and also a good differentiation entrance. Blockchains smooth the barriers between countries and the financial system. If a global properties of the market itself is very strong, so it must be in the process of globalization, the global value transfer system fragmentation limit, then block flow of value chain as inherently global platform, is bound to be and use the application of traditional value circulation system have a high differential cost of globalization. A good example of this is a micropayment service based on resource fragmentation.

6. Sustainable development of developer ecology

In a larger sense, we are talking about the right market segments and business models, not just for the sake of the single point business model. What's more important is to be able to take such a business model or market segment, as a spark that can start a fire, and introduce new developers sustainably while introducing a business model.

It is an indisputable fact that blockchain developer community is difficult to do. Why is that? In six words, developers don't make money. You said ethereum developers did it without making money? How can Consensys maintain a large development team of 400 people at its peak without seeing ethereum grow 1,000 times? What if Parity hadn't been an early participant in the Ethereum community, then the Ethereum node software would have continued to be updated for free (and would now have to be returned to the community as it doesn't make any money).

Many public link ecology, through large subsidies, in return for a temporary developer community, but if not sustainable development, the booster will become a blood transfusion tube, will be drained one day.

Therefore, the correct market segment, although it may be a small point, can make a part of the developers to realize the first, and achieve the development of a realization, development, and realization of sustainable development. And these developers, it is better not to be "blockchain developers", but ordinary developers without any knowledge of blockchain. With such a good foundation, and then from this single point to push to finally achieve a large number of diversified developers together to cash.

7, strong expansion, can expand from a single point with business growth to product matrix

Similar to the developer's thinking above, the same is true for users. Our ultimate goal is to benefit blockchain, or, to a lesser extent, blockchain communities and platforms like Celer Network. So in terms of the user's goal, it has to be bigger. As long as you have a firm foothold in an application segmentation, if you can easily derive multiple application types and scenarios with similar patterns through such a base point application, and then through the unique spread and network effect of the block chain, a real large-scale use and diversified landing of the underlying platform can be formed.

conclusion

These are some of my relatively abstract methodologies on how to find and judge whether a market segment is the tipping point of block chain landing. In fact, it can be seen that each methodology is not independent, and even contains and balances each other. It is almost impossible to meet all the requirements perfectly, but there must be a series of applications and subdivisions that can achieve a suitable compromise in these points.

At the end of the year, Celer Network wanted to summarize some of its own methodologies for finding such a market segment, which is the fundamental reason why, after extensive evaluation, Celer Network is developing CelerX as a "real money arena" segment.

Due to the limited space and time, some examples have been pointed out, and both positive and negative examples are only discussed in terms of a certain standard, which may or may not meet all the standards. In the next series of articles, I will analyze and explain as deeply as possible some of my own in-depth research and some of the more concerned market segments in the industry based on this methodology. I hope you can give me more advice.

Source:mp.weixin.qq.com

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