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ailtrahq · 1 year ago

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The Crypto market has gained a lot over the recent years. The total market capitalization grew from just $10 billion in 2013 to over $1 trillion today. Yet the structure of the cryptocurrency market remains trending. It resembles perfect competition with minimal barriers to entry and many competing cryptocurrencies. Others claim it is shifting towards monopoly, with Bitcoin commanding an increasingly dominant position. Analyzing crypto through the lens of economic theory can provide insight into its evolving industry dynamics. Perfect Competition or Emerging Oligopoly? Perfect competition is characterized by many buyers and sellers. A homogeneous product, perfect information, low barriers to entry, and firms that are price takers. At first glance, aspects of the cryptocurrency market resemble perfect competition. There are thousands of cryptocurrencies. Bitcoin alone has hundreds of clones like Litecoin. Most cryptocurrencies are decentralized open-source protocols. It makes the underlying technology standardized. Imperfect information exists, but online communities facilitate information sharing. The open-source nature enables low-barrier entry for new coins. However, critics argue the crypto market diverges from perfect competition in key ways. Network effects and first-mover advantage have allowed Bitcoin to dominate pricing and set the technological standard. Informational asymmetries remain high regarding computer science aspects. Marketing and mindshare also differentiate currencies. Additionally, regulatory uncertainty raises barriers to entry. These limitations suggest oligopolistic tendencies rather than perfect competition. In an oligopoly, a few firms control the majority of market share. This concentration of power enables strategic decision-making by large players. Bitcoin holds over 40% market share in crypto. The top five cryptocurrencies account for over 80% of the overall market cap. This dominance gives leading protocols disproportionate influence over technology choices and price movements for the whole industry. Extreme oligopolies begin exhibiting monopoly characteristics. A single firm and lack of competition control monopolies. Network effects create natural monopolies, where one company can most efficiently serve the entire market. Bitcoin is the closest to a natural monopoly in crypto. It got the largest adoption and recognition. Its market cap is larger than all other cryptocurrencies combined. That’s how it got tremendous pricing power. Yet Bitcoin still falls short of a pure monopoly. Substitutes like Ethereum provide similar utility for decentralization and payments. Additionally, barriers to entry remain relatively low. Anyone can fork Bitcoin’s open-source code and launch a competing coin. Thus, the crypto market is best described as an oligopoly. It is moving towards monopolistic competition. The monopolistic competition contains elements of both monopoly and perfect competition. Future of the Cryptocurrency Market What does this market structure analysis reveal about the cryptocurrency industry? First, it suggests that dynamic change remains underway. The market is still maturing, and its ultimate structure is unclear. Continued evolution towards concentration and monopolization seems likely, given network effects. But upstart competitors could disrupt established leaders. Second, a massive first-mover advantage accrues to the top protocols. Bitcoin enjoys outstanding brand recognition and adoption. It will cement BTC’s position over time. Less-known cryptocurrencies will need help to gain mindshare. This implies long-term dominance by major players like Bitcoin and Ethereum. Finally, industry cooperation will be crucial going forward. For cryptocurrency to succeed, some standardization and convergence of standards are required. Yet cooperation must balance with healthy competition. Innovation could suffer if ecosystems coalesce too quickly around one protocol like Bitcoin. But fragmentation also hinders mainstream adoption.

Navigating these tradeoffs will shape the future structure of the rapidly changing cryptocurrency market. Analyzing Cryptocurrency Competition and Market Dynamics Examining the competitive dynamics between specific cryptocurrencies provides additional insight: Bitcoin and Ethereum: As the first mover, Bitcoin enjoys the most name recognition and network effects. However, Ethereum provides more advanced programmability and real-world functionality. Those traits offer Ethereum a strong value proposition as a dApp platform. Different use cases may allow both networks to thrive in a duopolistic fashion. Bitcoin and Litecoin: Litecoin aimed to improve Bitcoin’s technology. It came to reduce transaction times through faster block propagation. However, it has yet to gain meaningful market share from Bitcoin. This suggests the power of Bitcoin’s first-mover advantage. It highlights the challenges facing altcoins seeking to compete with dominant protocols directly. Bitcoin and Bitcoin Cash: Bitcoin Cash forked from Bitcoin to increase block sizes and lower transaction fees. However, its adoption needs to catch up. There are deficits in its network effects and development ecosystem. It shows the difficulty newer chains face trying to compete directly on Bitcoin’s value proposition. Ethereum and Cardano are competing head-on since they are both programmable blockchain systems. Cardano hasn’t been able to make a dent in Ethereum’s market dominance despite its technological boasts. Each side’s ability to implement planned enhancements and attract coders may decide the winner. Stablecoin and Centralized Payment Networks: Stablecoins like Tether and USD Coin aim to compete with traditional payment companies. They have advantages like faster settlement and low transaction costs. Adoption remains limited, but they offer one avenue to draw cryptocurrency technology into mainstream finance. These examples demonstrate the nuances of competitive dynamics even within the oligopolistic crypto sphere. They also highlight the ongoing tussle between decentralization and convenience Between maintaining Bitcoin’s niche and going mainstream. A solution will shape not just market concentration but the whole ideological direction of cryptocurrency. Conclusion Current signs indicate the cryptocurrency industry is moving towards an oligopoly. A few major protocols like Bitcoin and Ethereum are dominating the industry. The market structure may evolve in complex ways that defy singular characterizations. Opportunities remain for new technologies and entrants to disrupt the status quo. It will prevent ossification into centralized monopolies. So, how to strike the optimal balance between pragmatic standardization and cooperation needed for mainstream adoption? Remember, compromising permissionless innovation and decentralization isn’t an option. Those traits offer cryptocurrency its independence and original purpose. If cooperation descends into monopolistic concentration into the hands of a powerful few, the creative dynamism inherent to open cryptocurrency networks could suffer. However, excessive fragmentation also risks hindering adoption and stability. Source

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ali--javed · 6 years ago

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Philosophic Calculus

All my readings in different domains of study have led me to discover a very clear pattern of the design of the algorithm that powers our conscious thought process. Human consciousness has a definite algorithm. It represents the capability of classifying the experience into a broad but definite spectrum. What we call subjectivity in ideas is basically the position of information on a particular point of the spectrum of consciousness. If we consider the distinction in the ideas of Plato and Aristotle, we find the extremes of this spectrum. Plato’s idealism and Aristotle’s empiricism lie at the opposite ends of this spectrum. Same can be said of Berkeley and Locke. Immanuel Kant tried to dissolve this distinction or partition in the understanding of the reality through his ideas of ‘categorical imperative’, ‘analytic a-priori’ and ‘synthetic a-priori’.

This spectrum does not just exist in philosophy. A similar spectrum exists in economics. At one end is the selfish capitalism while on the other end of the spectrum is altruistic communism. In terms of social behaviour, at one end is individualism, while on the other hand is collectivism. In terms of governance, there is democracy and dictatorship at opposite ends. In terms of market, monopoly and perfect competition lie at the opposite ends of the spectrum. The spectrums therefore span from the purely idealistic realm of ideas to the purely empirical realm of experimental experience. Everything else lies in between these extremes on the spectrum. For example, Oligopoly and monopolistic competition lie in between the extremes of monopoly and perfect competition on the spectrum of market. Along with the horizontal spectrums, there are also vertical spectrums. For example, market is studied under economics, while economics is studied under social science. There may also exist cross relations between different spectrums. Therefore, a dynamic equilibrium between the positions on these spectrums may help in better predictions in a model.

If laws of physics have shown us anything, it is that the description of concepts that seem to be complex is almost always simple. If human thought process is a product of a reality that is physical, then the laws governing these processes must also be simple, or at the very least emerging from simple processes. Also, it is important that a theory that explains certain phenomenon must explain it in the widest possible instances, even those that are yet not known. Philosophy as a theory of knowledge has failed to achieve this more than any other field. The reason is that we don’t have any one framework of philosophy but many competing frameworks. If the inconsistencies between these frameworks are not resolved, then the problems of epistemic relativism will continue to negatively affect our understanding of human nature.

But why do relative interpretations of one reality exist at all or is the reality itself fundamentally relative? These are the questions that have plagued philosophers from the very early days of philosophy in almost all the traditions. But this distinction has lately become more prominent in the domain of human culture as is evident from the wildly different philosophical paradigms that have taken root in the common space occupied by different people. This has caused wide intellectual as well as social conflicts and divisions in schools of thoughts leading to different directions that development of knowledge has taken. The philosophically opposite positions of inequality being a characteristic of every system and that of inequality being unnatural and part of the power structures has led to many conflicts between humans on different sides of the ideological positions. This is not a small problem to any extent as it has been responsible for millions of deaths in the 20th century alone and continues to plague the world. The question then arises that how the problem of inequality can be solved under one epistemic framework rather than appealing to frameworks that are built on assumptions that are competing. The real question then is that what is the common framework for these assumptions themselves before they contribute to any philosophical and/or theoretical framework.

What we need to build now is the theory for relationship between most fundamental human concepts of which all the other concepts are a product. This is a Lockean distinction of difference between simple and complex ideas. If a complete set of simplest human concepts can be conceived and collected, then these concepts can act as elemental degrees of freedom in the human algorithm of thought. Ever elemental concept can be treated as a dimension. Another feature of these elemental concepts or degrees of freedom is that like any other human concept, they exist on a spectrum. For example, goodness. If goodness is taken on a single dimension, then the characteristic or the abstract concept of goodness can be conceived as to lie between absolute badness represented by negative infinity and absolute badness represented by positive infinity. If, similarly, other elemental concepts are treated as dimensions in human thought, then, the coordinates on each dimension and the multi-dimensional qualitative space occupied by these elemental concepts define the unique ideology of any individual or group. These ideological shapes on qualitative space are not point-like as every individual and group operate between a range on the elemental concepts and therefore the higher dimensional shape that is generated also occupies a larger area than a single point. Also, these shapes are dynamic and change as the individual or group whose ideology these shapes describe changes when subjected to new information and new knowledge. Therefore, by adding the element of time, philosophic calculus becomes path dependent and evolutionary.

Philosophic Calculus and Qualitative Space

Philosophic calculus is therefore the qualitative space-time of all the possible thought processes and ideologies that are possible within the framework of human thought. Now the relevant question is that whether each and every human being occupies or has the potential to occupy the complete set of all positions on the Philosophic Calculus. The answer to this question requires a bit of neuroscience. If the answer is to be given philosophically, then the answer is no. Although even through neuro-scientific evidence we reach the same conclusions, but, we focus first on the philosophic argument. Philosophically speaking, every individual is subject to three notions of space-time[1], one of which is purely objective, while the other two are subjective in nature. They are as follows

The qualitative space-time of inner thoughts of every individual (First-person perspective).The qualitative space-time of thoughts of humans as a collective (Second-person perspective).The objective space-time of which all the qualitative space-times are but incomplete products (Third-person perspective).

The size of complete sets of all the three space-time is not the same. This is due to the assumption of limits to human knowledge and ‘Gödel’s Incompleteness Theorems’. If the power set of objective space-time is represented by P(S_O) the power set of qualitative collective space-time of humans by P(S_C) and the power set of qualitative individual space-time by P(S_I), then the following relationship exists between the three.

P(S_O) ⊃ { (P(S_C) ⊇ (P(S_I) }

What this relationship implies is that the qualitative space-times are the subset of objective space-time. Philosophic Calculus takes into consideration the qualitative space-times because there is a possibility of certain knowledge in these categories. On the other hand, the knowledge of objective space-time is fundamentally uncertain as argued in the arguments for limits and limiters to human knowledge, the two fundamental limits that can never be transcended.

In the above equation a paradoxical condition arises if the concept of infinity is taken into consideration.

Let us suppose that infinity is not part of the objective space-time. If infinity is not objective, then infinity is purely subjective. If it is subjective, then, subjectivity must either only partially intersect with the objective set or objectivity is the subset of subjectivity itself. The relationship between the power sets then reverses.

(P(S_O) ⊃ { (P(S_C) ⊇ (P(S_I) }<</font>

If it is assumed that infinity is the property of objective universe itself, then the relationship changes as following.

(P(S_O) ⊃ { P(S_C) ⊇ P(S _I) }<</font>

Philosophic Calculus attempts to find the best possible theory to describe the data at hand, and because the elemental concepts exist on a spectrum, the ultimate theory should also account for these differences. Therefore, Philosophic Calculus is first and foremost a theory about the elemental concepts which I call the “First Principles of Philosophy’. The philosophic schools of thought that we are accustomed to accept as the basis for our philosophies are only special products of these first principles. I call these higher order philosophies, the “Secondary Principles of Philosophy”. These secondary principles are inconsistent with each other because they emerge from stronger assumptions regarding some elemental concept than are necessary. For example, perfect competition. It is a complex concept made of two elementary concepts, perfectness and competition. The dimension of perfectness can lie between complete imperfectness to complete perfectness. Any change in the coordinate of this dimension will change the entire theory altogether. This means that there are infinitely many theories possible even by changing positions on the spectrum of a single elementary concept. Similarly, we can choose to change the degree of competition from complete collusion to complete competition. This is how we come across one of the basic assumptions of capitalism, communism as well as other economic doctrines, i.e., that of the nature of competitions. All other assumptions are also a product of the elemental degrees of freedom and their combinations.

What we have achieved in laying out the theory of knowledge and its epistemic landscape is a foundation from which all of the existing school of thought can emerge as its special cases.

Philosophic Calculus and Contextualist View

The contextualist view that there can be no absolute truth in most situations is wrong when viewed in light of the theory of Philosophic Calculus. The contextual view arises because the subjective experiencer constructs a representation of reality for himself/herself that is dependent upon the information they have. As argued in the Philosophic Calculus, these points of view are second principles. The contextualists, therefore, are concerned with the second principles and, therefore, come to an unsettling conclusion that there is no absolute truth to most propositions. The propositions not only have subjective context attached to them but also have perspectivally blind context attached to them. The sum of subjective context and the perspectivally blind context make up the total context of the individual. This distinction between two kinds of contexts, one which the individual is aware of, and second, which he has the potential to be aware of, but has not construed in his representation of reality. Now it can be argued that there are local truths which are contextual in nature, but, according to the theory of Philosophic Calculus, a case for global truths can also be made. As such, a case against epistemological contextualism can be made.

Philosophic Calculus and Mathematics

It is a priori assumption in the traditional physical sciences that mathematics is the language of nature. Others argue that it is a special case of metaphysics applied to the concepts of numbers. Whatever be the case, mathematics has proven extremely useful in modelling theories into logically consistent frameworks. Only when the most fundamental assumptions of these frameworks are challenged do the systems break.

In my attempt to scale the elementary degrees of freedom of human concepts, I have proposed a framework in which all of human thought can be organised onto a familiar higher dimensional space-time, where all the laws of mathematics can be used to treat these concepts. As mentioned in the last section on qualitative space-time, the elementary degrees of freedom are treated as independent mathematical dimensions that provide a cartesian like intuition on human thought process.

Philosophic Calculus and Physics

It has been the case historically that physics has been the field that has utilized the complex of mathematics in describing its theoretical systems. There are two reasons for that. First, mathematical intuition was first developed to explain physical concepts. Secondly, it is easier to construct mathematical concepts around physical objects as they are comparatively easy to conceptualize as against highly subjective human phenomenon.

But as the academic world has been changing extensively from the past century and more to accommodate subjective factors, mathematics as a subject has evolved to model uncertainties and subjective behavior. The tools that were developed to describe physical nature came to be utilized in subjects related to human nature and the tools that were developed to model human decisions started being used in physical sciences.

The marginal revolution in economics came about as a utilization of rules of calculus to model human decisions. Similarly, probability theory started being utilized in the quantum mechanics to model uncertainties observed in physical phenomenon.

Its a work in progress for my research.

[1] For similar treatment of the first-person, second-person and third-person perspectives, see, Przyrembel, M., Smallwood, J., Pauen, M., & Singer, T. (2012). Illuminating the dark matter of social neuroscience: Considering the problem of social interaction from philosophical, psychological, and neuroscientific perspectives. Frontiers in Human Neuroscience, 6. https://doi.org/10.3389/fnhum.2012.00190

#philosophy #philosophy of mind #philosophy of science #epistemology

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glenmenlow · 4 years ago

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Market Segmentation Process And Impact

Market segmentation can trace its origins back to the 1930s when the prevailing theories of perfect competition and pure monopoly no longer seemed to fit the situation. A new monopolistic theory emerged based around the idea that every firm was in itself in some important way unique. Every business was in effect able to create its own local monopolistic position by offering a product different in some way from others. That differentiation could be based on certain product characteristics, packaging, distribution or the real or imagined value associated with, for example, a brand name.

Economists called this process “product differentiation” and concluded that it resulted in different demand curves for each group of different buyers. The term and concept of “market segmentation” have been attributed to Wendell R. Smith, a marketing consultant. His article “Product differentiation and market segmentation as alterative marketing strategies”, published in The Journal of Marketing, vol. 21, 1: pp. 3-8 on Jul 1st 1956, won the Alpha Kappa Psi Foundation award as the most significant marketing article of the year.

That customers have different needs means that we need to organize our marketing effort so as to address those individually. Customers and potential customers have to be organized into clusters or groups of ‘similar’ types. For example, a carpet/upholstery cleaning business can have private individuals and business clients as its clients. These two segments are fundamentally different, with one segment being more focused on cost and the other more concerned that the work is carried out with the least disruption to the business. Also, each of these customer groups is motivated to buy for different reasons, and the promotional message has to be modified accordingly.

Every business will have segmentation criteria unique to its industry and prevailing needs. These are some of the more ubiquitous ways by which markets can be segmented.

Psychographic Segmentation divides individual consumers into social groups such as ‘Yuppies’ (young, upwardly mobile professionals), ‘Bumps’ (borrowed-to-the-hilt, upwardly mobile, professional showoffs) and ‘Jollies’ (jet-setting oldies with lots of loot). A recent addition is Generation C born out of the Covid-19 pandemic, though unsurprisingly there is little firm agreement on their characteristics. These categories try to show how social behavior influences buyer behavior.

Forrester Research, claims when it comes to determining whether consumers will or will not go on the internet, how much they will spend and what they will buy, demographic factors such as age, race, and gender don’t matter anywhere near as much as the consumers’ attitudes towards technology. Forrester has used two categories: technology optimists and technology pessimists, and has used these alongside income and what it calls ‘primary motivation’ – career, family and entertainment – to divide up the whole market. Each segment is given a new name – ‘Techno-strivers’, ‘Digital Hopefuls’ and so forth.

Benefit Segmentation recognizes that different people can get different satisfaction from the same product or service. Lastminute.com claims two quite distinctive benefits for its users. First, it aims to offer people bargains that appeal because of price and value. Second, the company has recently been laying more emphasis on the benefit of immediacy. This idea is rather akin to the impulse-buy products placed at checkout tills, which you never thought of buying until you bumped into them on your way out. Whether 10 days on a beach in Goa or a trip to Istanbul are the types of things people ‘pop in their baskets’ before turning off their computers, time will tell.

Geographic Segmentation arises when different locations have different needs. For example, an inner-city location may be a heavy user of motorcycle dispatch services, but a light user of gardening products. However, locations can ‘consume’ both products if they are properly presented. An inner-city store might sell potatoes in 1 kg bags, recognizing that its customers are likely to be on foot. An out-of-town shopping center may sell the same product in 20 kg sacks, knowing its customers will have cars.

Multivariant Segmentation is where more than one variable is used. This can give a more precise picture of a market than using just one factor.

These are some useful rules to help decide whether a market segment is worth trying to sell into:

Measurability. Can you estimate how many customers are in the segment? Are there enough to make it worth offering something ‘different’?

Accessibility. Can you communicate with these customers, preferably in a way that reaches them on an individual basis? For example, you could reach the over-50s by advertising in a specialist ‘older people’s’ magazine with reasonable confidence that young people will not read it. So if you were trying to promote Scrabble with tiles 50 per cent larger, you might prefer that young people did not hear about it. If they did, it might give the product an old-fashioned image.

Open to profitable development. The customers must have money to spend on the benefits that you propose to offer.

Size. A segment has to be large enough to be worth your exploiting it, but perhaps not so large as to attract larger competitors.

Segmentation is an important marketing process, as it helps to bring customers more sharply into focus, and it classifies them into manageable groups. It has wide-ranging implications for other marketing decisions. For example, the same product can be priced differently according to the intensity of customers’ needs. The first- and second-class mail is a classic example. It is also a continuous process that needs to be carried out periodically, for example when strategies are being reviewed.

Contributed to Branding Strategy Insider by: Colin Barrow, Author of The 30 Day MBA In Marketing (Kogan Page)

The Blake Project Can Help: Contact us for more on our segmentation research expertise.

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joejstrickl · 4 years ago