Source: Orange Book
Editor's note: This article has been deleted without changing the original intention of the author.
The author of this article is Dong Mo, the founder of Celer. He said that he was reading the "On Protracted War" recently, so he had this article.
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I am not a loyal reader of Mao Xuan, but a closer look at the historical situation at the time of writing On Protracted Warfare found that the current situation of the blockchain is somewhat similar. I ca n’t go into details here. Fortunately, that history is recorded in more detail. You can try to take the scene at that time to read "On Protracted War." It is easy to get what I mean.
Where should I fight in the next battle? how to spell? Hope to see more friends in the industry share this idea ~
Our business, starting from the consensus origin of cryptopunk, was inspired by the ideal of the blockchain application to enter millions of households, and has gone through many different "historical periods": Secondly, to the early attempts of payment applications, the words of "digital gold", the rise and fall of the original "altcoin" market bred by memes culture, and then to the magic box roller coaster of smart contracts.
I believe that the next growth point of the market and market value of the blockchain will come from two to three applications and market segments that have actually landed. In the next two years, there will be a blockchain industry that has the same historical status as Amazon, which sold books, and QQ, which chats with Mengmei, and the first wave can stand, survive, and can be from point to face. Application of continuously expanding market segments.
How to determine whether a landing site has such seed attributes for a platform is also a very critical issue in itself. This is not only related to the landing application itself, but also whether the platform that chooses this field can play its biggest advantage in this segmentation and how to prevent barriers. I think that the market segment as the tipping point of the blockchain landing needs about seven attributes, which is what this article mainly discusses.
1.High-growth, far-saturated market
First of all, the market segment we choose must not have been created out of thin air, or it must be too far ahead of widespread demand, such as the more sci-fi unclear demand such as blockchain + AI.
Second, such a segment must be an immature market that is developing at a very high speed, even without the blockchain as part of the solution.
The most typical market segment that does not meet this condition is mobile payment. The mobile payment market in developed markets is already quite saturated. Although mobile payments in developing markets (such as Nigeria) have core demand for safe-haven sovereign currencies, they will remain on the SMS platform for a long time due to restrictions on the popularity of smart devices. Above, there is no infrastructure condition for migrating to the blockchain.
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, it will also trigger problems that traditional solutions do not have due to the immaturity of technology and solutions. . Compensation for failures does not predominate in highly mature markets.
Therefore, the perspective of new technology entering the market must be a market with sufficient growth space. When the competing products are still in a similar early growth stage and have similar difficulties and problems, the cost that can be brought by blockchain technology Or differentiated advantages in terms of income, quickly occupying the blue ocean market. After surviving such a market, I went back to expand and eat the rice in the mature market.
In the payment market, blockchain technology not only eats, but also stutters, but the senior said that personal efforts are important, but history must also be considered.
2.A clear and sufficiently large profit model
Unlike current Internet products, blockchain, as a technology that has not been validated on a large scale, was originally based on a more complex and vague technology. If you want to achieve sustainable business development and a large-scale capital entry, you need Is a clear business and profit model.
Although many blockchain-driven business models will appear as Internet products, smart funds and large-scale capitals are not only focused on the properties and growth of Internet products driven by the blockchain (DAU / MAU , Retention, conversion, LTV) and so on. Because for the Internet products, the profit model is relatively mature. As long as its own growth attribute reaches a certain level, revenue growth is basically a natural thing.
For the blockchain, its own differentiated profitability has not been verified, so not only these growth indicators, but also three issues:
Why blockchain technology can bring new monetization models or higher gross profit or monetization efficiency
How big is the market income
Can the current user acquisition cost increase caused by the blockchain user barrier and the speed of future decline with the development of the industry reach a good balance?
Of these three points, the more positive examples are the cross-border transfers, and the more negative examples are the various blockchain privacy advertising solutions, such as the recently popular Brave browser.
When promoting the to C of CelerX, a mobile e-sports application based on Celer Network, we also looked for various channels in the blockchain community. Brave's inventory of advertising targets seems to be not a small one in the blockchain channel. But the effect is average.
In fact, if you think about it carefully, you will find that advertising sells an accurate data business, and the scale effect is obvious. "Protection of privacy", "Pushing based on single-point data", pure text advertising (because of the distribution Push, "without a centralized collective advertising scheduling, centralized video advertising push is inevitably impossible), which has not enhanced the appeal of the entire advertising platform to advertisers, reducing the slogan of Google, Facebook, etc. Under the scale effect of manufacturers' machine learning, the hope seems slim, and naturally there is no way to attract buyers.
Although the short-term business is actually a business with a special channel of the blockchain, the long-term expansion of this business is very weak. Similarly, various types of blockchain-based distributed (such as medical, geographic) data markets are also typical anti-methodological market segments.
3. The existing ecology is friendly to new entrants, or unable to hinder
This can be said to be the biggest systemic risk of most blockchain business models. Any application and business ecology are inherently alienated, and the emergence of new technologies, once they touch vested interests, will undoubtedly trigger the immune system's offensive in the existing ecology. This rejection is actually reflected in several aspects:
Exclusion and monopoly of business ecology
Political barriers such as legal compliance
There is no clear boundary between these several aspects, but continuous progress. A good landing market requires the greatest degree of estimation and careful avoidance of the hostility of the existing ecology.
The exclusion and monopoly of the business ecology is the most common, and it is also the first barrier for many applications. The ecology itself has many levels, and sometimes it is actually a supply chain or a subdivided field under a large ecology. For example, the largest umbrella ecosystem for mobile applications is actually the mobile application store of mobile phone manufacturers. There are advertising channels (Facebook, Ins, Google, headlines, etc.) below. If you are not doing pure blockchain endogenous applications, there are competing products. barrier.
Now that mobile devices have become the most important way for C-side application distribution, the application store is a barrier that cannot be bypassed. Recently, under the pressure of the Apple App Store, Coinbase Wallet is about to take down the distributed application browser (dApp Browser). Metamask has been taken down by Google Play, and its launch on the App Store is still far away.
This is also the point I feel the deepest. In fact, Apple ’s supervision of the dApp browser has overreacted in this matter. It has nothing to do with the blockchain, but the App Store does not want to give up the distribution rights of the application and the sharing of in-app purchases. It is a pure business. Consideration, not many people imagine rising to as serious as ideology. The previous WeChat Mini Program category page was canceled and now it becomes a simple search box. The same reason is true. For rules on dynamically loading applets inside the app, see App Store Review Guideline 4.7.
In addition, the business model of blockchain games, which has always been popular, selling NFT and collectible (collectible items) directly touches the inverse scale of mobile phone manufacturers to bypass in-app purchases (participating in the Apple App Store Listing Rule 3.1.1). After losing the mobile terminal distribution channel, simply relying on the web side of the C-side application has gradually faded out, and the difficulty has suddenly increased to almost insurmountable.
In addition, the reason why the app store distribution channel is a big systemic risk is that the entire rule is privately controlled, which is the so-called "this tree is planted by me, this road is opened by me". Even if the types of applications that can reasonably operate under the guidance framework today, tomorrow may become insurmountable mountains due to changing rules. Of course, everything has two sides. Such rapid changes can also change in a better direction.
In addition to mobile phone manufacturers, there are corresponding 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 the promotion and advertising of applications involving cryptocurrencies. Only after going through various background check procedures can an advertiser with a license be licensed. These are also a threshold that cannot be avoided by any cryptocurrency application.
As for competing products, after saying so much, it is actually the friendliest. As long as players who compete in the same field do not form a monopoly, they can always break through differentiation. Of course, if the ecology is still in its early development, it is even better.
If we can expect the friendliness of the business ecosystem to change relatively quickly over time, legal and political rejection will be much more stubborn and have a more lethal effect. Regardless of the application direction such as gambling with extremely heavy compliance burdens, or the recently popular DeFi, it is impossible to escape such legal and political ecological rejection.
Take DeFi, for example, the entire DeFi industry is facing a very dilemma: if it continues to maintain the self-sustaining development of the pure blockchain ecosystem, it will soon be limited by the ceiling of the cryptocurrency market and cannot become a real Meaningful money market; if you gradually abandon the mortgage, use some kind of credit-like model, or rely more on external information to intervene, and rely more on currency holders to vote as a means of monetary policy governance, you will encounter laws And the great rejection effect of politics. At that time, there may be a tragedy of SEC, FinCEN and FED. Private capital's dream of becoming a central bank and setting monetary policy is not easy, after all.
Finally, talk about the incompatibility of cultural ecology. Although culture sounds a bit vague, I think it is actually very important. The core of the blockchain is to replace a centralized trust with a consensus mechanism. Although the core of such philosophy is to reduce the cost of trust in essence, the first-generation applications developed in this way are mostly more than a dozen now. The user habits formed over the years are very different.
In order to be able to create a better user experience, many applications and projects have begun to bravely go on the road of "optimizing user experience." The ultimate experience. There is nothing wrong with a good user experience, but in the process of approaching the user experience of traditional Internet applications, if you lose the core of the blockchain, you also lose a core business model, so what is the difference between making a traditional Internet application How about it?
The simplest example, such as Bitcoin's Lightning Network, has been online for so long and finally went online. On the user side, most wallets are "generation hosting" wallets. In fact, it is a completely centralized wallet. For example, the lightning network torch relay activity that was very hot before was basically completed in a centralized wallet, and the database was changed.
As an early participant in the blockchain movement, I feel that to a large extent, the cryptocurrency community has gradually lost its core culture in the competition with the traditional application cultural ecology. I say this of course not to say that blockchain applications should be difficult to use, and there should be no good user experience. For example, using Celer's layer-2 technology can achieve the foundation of not losing the core value of the blockchain, and achieve the same user experience as Internet applications.
Even if you take a step back 10,000 steps, if you use some short-term compromises in exchange for rapid user growth, you will eventually return to the differentiation of the blockchain and the advantages of the business model, and the curve is completely feasible to save the country. But we can't help asking, can we really keep the original intention of "Today's stride back is to stride forward tomorrow"?
4.Traditional solutions and products have high trust costs
When paying attention to these issues, we still need to clearly realize that the core value of the blockchain is the reduction of trust costs. No matter what kind of business model, this kernel must be the core after pulling the silk, otherwise it cannot be said to be a differentiated business model based on the blockchain.
If you want to balance the barriers and frictions brought by the blockchain technology itself, you need to find an application scenario, and the cost of trust is extremely high. Such trust costs are often reflected in two aspects: the high complexity of the trust intermediary logic (such as when the mortgage mortgage valuation closes out) and the high cost of the payment itself (the ultra-high payment intermediary rate in high-risk industries).
Interestingly, this high level of trust barriers often means strong compliance and restrictions on application scenarios. For example, in gambling applications, the traditional funding channels are very limited, and the costs are prohibitively high (depending on the amount of funding, it may reach 15% -20%), especially in the adult industry.
In an industry with such a high cost of trust, blockchain can fundamentally reduce the cost that this traditional method cannot reduce, greatly increase the gross profit obtained, and thus generate the differentiated energy of dripping stones. Therefore, a good business model that meets this standard is best if the cost of trust is very high, similar to the high-risk payment industry, but at the same time, it is subject to weak supervision in terms of legal compliance worldwide. . If you think about it, you will find that the intersection of the two is actually very small.
5. Strong global attributes
Low-cost globalization is an important derivative value of the low trust cost of the blockchain, and it is also a good entry point for differentiation. Blockchain has smoothed the barriers between the state and the financial system. If a market's global attributes are very strong, then it must be limited by the fragmentation of the global value transfer system during the globalization process. As a natural global value flow platform, the blockchain is bound to be used. The application of the traditional value circulation system generates highly differentiated globalization costs. For example, micro-payment services based on resource fragment sharing are a good example of this.
6, can sustainably expand the developer ecosystem
From a larger perspective, the reason we are discussing suitable market segments and business models is not just for this single point business model. What's more important is to be able to use such a business model or market segment as a spark of fire that can ignite the original. While introducing the business model, it can continuously introduce new developers.
It is an indisputable fact that the blockchain developer community is difficult to do. why? In fact, six words can explain: developers do not make money. You said that Ethereum developers did it without making money? How does Consensys maintain a huge development team of 400 people during peak times if Ethereum does not increase by a factor of 1,000? If Parity is not a participant in the early Ethereum community, how can there be constant free updates of the Ethereum node software (now returned to the community because it does not make money).
Many public chain ecology exchange large-scale developers for a temporary developer community, but if they cannot be developed sustainably, the booster will become a blood transfusion tube, and it will be drained one day.
Therefore, although the correct segmentation of the market may be a small point, it can certainly enable some developers to realize cash first, and achieve one-time development and one cash-out, continuous development, and constant realization of sustainable development. And this part of the developers, it is best not to be "blockchain developers", but ordinary developers without any blockchain knowledge. With such a good foundation, we can launch it from this single point and finally realize the realization of large-scale and diversified developers.
7. Strong scalability, can be expanded from a single point to the product matrix with business growth
Similar to the thinking of the developers above, the same is true for users. Our ultimate goal is to benefit the blockchain, or smaller, blockchain communities and platforms such as Celer Network. So from the user's goal, it should be bigger. As long as you have a firm foothold in an application segment, if you can easily derive multiple application types and scenarios with similar patterns through such a base point application, and then form a true underlying platform through the unique propagation and network effects of the blockchain Large-scale use and diversification.
to sum up
The above are some of my relatively abstract methodologies on how to find and judge whether a segmented market is the tipping point of the blockchain landing. In fact, it can be seen that each methodology is not independent, and even restrains and balances each other. It is almost impossible to have a perfect satisfaction, but there must be a series of applications and subdivisions that can make a suitable compromise in these points.
At the end of this year and the beginning of the year, I want to summarize some of my methodology for finding such a market segment.
Because of the limited space and time, some examples are up to now, and the examples, whether they are positive or negative, are only talking about a certain point of the standard in question, and may not meet or not meet all the standards. In the next series of articles, I will do some in-depth analysis and interpretation of some of the market segments that I have done in-depth research and the industry that has received more attention based on this methodology, and I hope that everyone will give us more advice.