This study offers a detailed analysis of the strategic value and future development of the consumer cryptocurrency market.

Originally presented by 1kx Network to its limited partners, this report provides a comprehensive look at the importance of the consumer cryptocurrency market, with insights into the latest market trends and observations.

The Evolution of New Platforms

In the history of technological advancements, whenever a new platform emerges, it usually brings new market leaders. The previous market leaders often lose their position due to poor judgment of new opportunities, slow reactions, or ineffective execution. The core reason for this is that new technological paradigms require completely new ways of thinking and business strategies. This pattern has been clearly demonstrated in the gaming and video industries over the past decade.

Disruption in the Mobile Gaming Market

In the early 2000s, the gaming market was largely driven by hardcore gamers who wanted high-quality graphics and immersive experiences. At that time, mobile devices, which had small screens, limited performance, and lacked good content, didn’t meet the needs of mainstream gamers. As a result, traditional gamers showed little interest in mobile gaming, and mainstream publishers largely ignored this emerging market.

However, mobile gaming’s potential was clear. It eventually made the dream of letting users connect and play with people around the world anytime, anywhere a reality, and created the mobile free-to-play game genre. This not only created a new market of casual gamers but also led to the rise of new gaming companies. These companies focused on game types that were very different from traditional games and attracted a completely different audience who didn’t even see themselves as traditional gamers.

Despite the industry’s belief at the time that “these aren’t real games and these aren’t real gamers,” mobile gaming eventually outperformed traditional gaming, generating revenues more than twice as large as those of traditional games.

Transformation of the Video Industry

The online video industry followed a similar path of disruption. In the era when television networks dominated media consumption globally, the limitations of the traditional model became increasingly clear: high entry barriers, high production costs, and distribution that was mostly limited to local or regional markets. Despite this, traditional media executives didn’t foresee the potential of online video.

But visionary observers quickly identified the revolutionary traits of online video platforms: decentralization, low entry barriers, and global reach. These characteristics completely transformed content creation and distribution.

As a result, the traditional entertainment industry was reshaped, and new media companies emerged. Just like in mobile gaming, the content on these new platforms was very different from what traditional platforms offered. New-age stars and brands (like Mr. Beast and Bella Poarch) emerged quickly, while innovative business models based on online video distribution channels (like Shein) took shape. Eventually, online video surpassed traditional television and has continued to grow.

Blockchain: The Next Generation of Consumer Platforms

Blockchain technology is setting up a new model for consumer platforms. It allows developers to create application ecosystems from the ground up in a decentralized, global environment, featuring digital ownership and programmable incentives.

Market analysis shows that this innovation will revolutionize industries like gaming, social media, and the creator economy, giving rise to entirely new market structures. Similar to the trajectories seen in mobile gaming and online video, this shift will occur through content forms that are fundamentally different from traditional platforms, opening up new user bases and markets.

The Advantage of Vertical Integration

Market leaders in the consumer cryptocurrency space will see unmatched growth potential, driven by the unique advantage of vertical integration in a decentralized ecosystem. In traditional markets, the most successful companies often achieve vertical integration. A prime example is Amazon: although it started as an e-commerce platform, its cloud services division (AWS) now contributes 70-80% of the company’s operating profit, despite making up just 15-17% of its total revenue.

In traditional consumer sectors, companies often pursue vertical integration but face challenges due to high technology costs. The open-source nature of the Web3 ecosystem, however, allows companies to achieve vertical integration naturally as their businesses grow. This gives them better control over the value chain, helps them achieve economies of scale, and enables flexible business monetization. As a result, leading players in the consumer cryptocurrency field can grow faster and on a larger scale than their Web2 counterparts.

Real-World Examples of Vertical Integration

The success of this vertical integration strategy has been proven through several cases:

• Coinbase started with a centralized exchange business but later launched the Base blockchain network.
• Axie Infinity built the Ronin Network based on its large user base.
• Pudgy Penguins created the Abstract Chain by leveraging its existing distribution channels.
• LINE and Kakao launched the Kaia Chain, tapping into their extensive user base.

Consumer-grade crypto technology is increasingly seen as the ultimate evolution of the consumer internet. As blockchain and crypto technologies continue to advance, their application in consumer markets is growing more and more significant. This could fundamentally change how consumers interact with the internet and become a powerful force driving the digital economy in the future.

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1. This article is reprinted from [Odaily]. All copyrights belong to the original author [Peter Yuan Pan]. If there are objections to this reprint, please contact the Gate Learn team, and they will handle it promptly.
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