The Long Tail Of Cryptocurrency

Most of us are aware that money is a tool for collaboration. It allows us to interact in ways that simply are not possible with a barter system.

Over the past centuries, the monetary system was controlled by governments and, of late, central banks. Our banking system is lined with mediators who are willing to facilitate transactions. They do this, of course, for a fee.

Cryptocurrency is starting to change that. It allows any group to get together and exchange value without the use of a third party. This is a revolutionary idea when compared to what we operated under for the past 100 years.

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In business, the "Long Tail" are those products that sell few in number. They fall outside the top ranks yet can be massive in numbers. This was an overlook concept for decades. Amazon was one company that came along and took advantage of it.

Ultimately, it is the long tail where we find the niches. Here we see small groups of people interested in something that few ever consider. They are loyal, passionate, and dedicated. Yet, because of the size, few are willing to cater to it.

Amazon started as an online bookstore. It was a major paradigm shift and one that instilled the long tail philosophy. Before that, bookstores chose titles based upon available space. A Barnes & Noble, as an example, could carry around 50,000 titles. This meant the titles selected needed to have as much appeal as possible.

The online world did not have any such constraints. Amazon could carry millions of titles since the marginal cost was almost zero. Once the title was placed there, there was no carrying cost. This provided Amazon a huge opportunity over the brick and mortar stores.

It also gave life to millions of authors who otherwise had few places to carry their books. So, while a niche topic such as pine cones of northern Maine was probably passed by the main bookstores, Amazon easily could pick it up.

The Internet provided many opportunities for long tail exploration. For example, YouTube offers a platform for previously overlooked works. While the monetization is difficult, it does allow for a reaching of a larger audience.

Here is a work that probably did not make it into the record stores when they were around. Mayan and Aztec music never made it into the top 40 but it can be found on YouTube.

The long tail concept has a great deal of utility. A company like Amazon quickly found out there was a lot of money to be made from this. Those works that were outside the upper portion provided large revenues with inflated profits. Since there was little competition as well as a dedicated market, the per unit price could exceed what was received on the popular items.

At the same time, companies quickly learned that, oftentimes, the collective revenue of the long tail exceeded the more popular products.

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This concept is applicable to cryptocurrency. In fact, we tend to be like the shoppers in a Barnes & Noble as opposed to Amazon.

Looking at the chart above, we can see how this concept works. Everyone is focused upon the left side, where the popular products are. After that, there is a fairly decent population in the middle section yet the right hand side is overlooked.

Applying this to crypto, we can put the top 100 tokens in the category on the left. These are the ones that are popular with people and get all the publicity.

After that, we see the second tier which have a moderate following yet are not newsworthy. Finally, we get the last batch which few are even aware of.

These last two categories are what most call "sh*tcoins".

That said, cryptocurrency has the opportunity to create the greatest "long tail" in the history of the Internet. It also has the ability to create a completely new distribution curve across the world.

Over time, it is likely we will see millions of cryptocurrencies. Most of these will not have the usage that the major ones such as Bitcoin have. Collectively, there will be huge wealth as measured by the transfer of goods and services within networks, free of intermediaries.

When we look at the totality of the market caps and velocity of money in the long tail, we can easily see how it will rival the top currencies. While no one or two will make much noise, the millions of tokens outside the Top 100 will handle trillions in transactions.

We already see something like this forming on Hive. While the Hive-Engine tokens do not rival the value of HIVE ($90 million), it is a significant number nevertheless. Doing a quick run through, excluding the first few listing that have no volume and were "painted" transactions, I come up with $6-$7 million in market cap.

This would land around number 300 on Coingecko if it were a single token.

It is a concept that is being duplicated on Ethereum, EOS, and a few other blockchains.

Now picture this idea multiplied by a few hundred thousand currencies. When we do that, we can see how the opportunity for wealth is available to anyone with an internet connection.

Down the road, billions might not be holding Bitcoin but they will be holding millions of different tokens, all which, collectively, have tremendous value.

That is how the long tail concept is going to apply to cryptocurrency.

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Posted Using LeoFinance