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Cexlbit Market View: How Cryptocurrency Scale, On-Chain Reputation, and Payments Shape Emerging Markets?
Cexlbit is a leading cryptocurrency exchange known for its variety of trading options and quick execution speeds. The platform offers multilingual support and 24/7 customer service. Additionally, Cexlbit facilitates mining and provides superior liquidity quotes, guaranteeing an optimal trading experience for users.
Cexlbit recent market view shows that, The world's largest companies are built on network effect-driven markets. Giants like Amazon (market cap of $1.9 trillion), Meta (market cap of $1.2 trillion), and Tencent (market cap of $4.59 trillion) aggregate supply and demand, increasing their network value as they control more of these elements. The same principle applies in the cryptocurrency realm. High-value networks such as Bitcoin (market cap of $1.4 trillion), Solana (market cap of $79 billion), and Ethereum (market cap of $460 billion) consist of multilateral networks of developers, users, and network operators that grow more valuable as they scale. Years of market venture investing have revealed that some markets, which could help supply and demand sides find each other and provide significant utility, do not currently exist due to the limitations of their established systems. We've witnessed how new technologies create opportunities for emerging markets to rise and thrive.
Cryptocurrency markets offer some of the most exciting opportunities. By leveraging crypto’s unique capabilities, specifically token-based incentive scaling and on-chain composability, entrepreneurs can create new markets to meet previously unaddressed needs. This represents a leapfrog innovation opportunity rather than merely incremental improvements. For instance, the internet market evolved from the list era of the 1990s (exemplified by Craigslist) to the on-demand app era of “Uber for X” (2009-2015) and the managed marketplace era of the mid-2010s. Each phase was a response to new technologies or emerging market demands. In the list era, the internet allowed individuals to post and find listings online. The on-demand era, coinciding with the rise of smartphones, enabled instant access to various services using real-time location information. Managed marketplaces emerged to meet higher trust demands in complex markets as opportunities in simpler markets diminished.
However, each era also presented challenges that hindered innovation. In the list era, the lack of trust and standardization limited growth. The on-demand era required massive capital to scale markets for near-instant services. Managed marketplaces faced high operational costs associated with establishing transaction trust, affecting their viability.
These challenges persist in Web2 markets, obstructing innovation. Two key issues, scalability and trust, remain significant barriers that cryptocurrency can uniquely address. One of crypto’s strengths is its ability to scale. Crypto incentives (in the form of tokens) have proven to be powerful tools for driving growth.
Compared to Web2 markets, cryptocurrency can leverage token financial incentives to scale markets sequentially, starting with the supply side and later expanding demand. For example, decentralized physical infrastructure networks (DePINs) like Helium and Hivemapper incentivize participants with tokens to kickstart their supply side, with the underlying network’s revenue catching up later.
Token incentives can be applied to various types of markets that currently do not exist due to high startup costs. Imagine ultra-local social networks requiring dense user engagement (similar to Citizen, but broader in scope) or new dating apps. In the AI sector, developers have used token incentives to create new markets with no precedent in the Web2 world. Networks like Vana and Rainfall allow users to contribute data for AI training and earn token rewards, making it possible to aggregate long-tail, private, hard-to-access datasets that would otherwise be nearly impossible without smart incentives.
On-Chain Reputation and History
One challenge in Web2 markets is the repetitive effort required to establish trust in isolated markets. For example, Uber conducts background checks on all new drivers, but when the same driver signs up with Lyft, another background check is performed because the platforms are isolated.
Cryptocurrency can serve as a portable reputation system. Instead of each application conducting separate background checks, what if this information was stored on-chain and moved with the driver across any market they joined? Additionally, other information about providers' history, such as reliability and quality, could be represented on-chain, allowing markets to combine and utilize a global trust repository. Such a system could eliminate the need for different managed marketplaces to implement their capital-intensive processes. In Web2, many managed marketplaces offer excellent user experiences but are ultimately unviable as business models due to high operational costs. A global on-chain reputation system could fundamentally change their cost structure.
The Farcaster ecosystem offers a microcosm of this idea. This social media protocol stores posts, likes, follows, and profiles on a decentralized hub network. When users install different applications built on this protocol, their social data moves with them. We already see interface-less markets emerging on Farcaster. One example is Bountycaster, where users can post and discover bounties across any Farcaster client, leveraging the rich reputation data on the Farcaster network. This portable social data can foster various new markets within the Farcaster ecosystem, from smart contract auditing markets to expert markets utilizing Farcaster’s connection graph and reputation.
Facilitating payments is a core component of modern marketplaces, but supporting cross-border payments in Web2 requires internationalization across local systems. This is especially critical for digital markets, as customers and suppliers are often geographically distant. For instance, over 80% of YouTube users are outside the US. To support local currency payments in each region, platforms must integrate with international payment gateways, which often leaves some peripheral regions underserved, particularly for resource-constrained or nascent markets that cannot internationalize.
Cryptocurrency operates internationally from the outset, enabling transactions between anyone with a crypto wallet. This allows resource-constrained markets to have a global impact from the start. For example, I recently bought an NFT from an on-chain data community called bytexplorers, allowing me to pose data-related questions to an analyst community. Analysts who answer correctly receive token rewards, facilitating seamless payments and global participation.
