The Internet has changed the world around us more drastically than many of us thought possible. It’s transformed the foundation of our very lives. How we live has changed, how we socialize has changed, and how we do business has changed. The Internet has also demonstrated something quite amazing that had never been realized on a global scale before and that is the creation of the long tail. A phrase first coined by Chris Anderson in the early 2000’s, it looked at opportunities outside of the mainstream. He argued that a business focusing it’s efforts on so called “niche” industries would be far more successful and profitable in the long-run. Products with low demand and a lower sales volume would lead to a business gaining valuable market share. And he also argues that there’s never been a better generator of long-tail opportunities than the Internet.
The Long Tail in Dentistry
The Internet has allowed for something never before thought possible in the business world. It allowed for businesses to be created entirely focused on the long tail market. Instead of opening up a dentist business and offering general tooth cleaning service, people could instead open a dentist business focused on cavity fillings for young kids aged 14-18. Before the Internet, the market for kids aged 14-18 that needed cavity fillings probably wasn’t large enough to sustain the dentist business. They had to offer all tooth-related services out there in order to attract enough local business to sustain them. After the Internet, they gained access to a global audience. They could effectively hyper-focus their business model and offer their cavity-filling for young kids service to a larger, more global audience. What was once a niche area quickly grew in size with the creation of the Internet.
The Long Tail in Financial Consulting
Or maybe you look at something like investment consulting. Before the Internet, a financial consultant had to be an ‘expert’ in all possible investments. His total addressable market size was just the people living around his business or company. So he had to have a general knowledge about all investment avenues for his customers. Maybe this financial consultant had a particular interest and knowledge of small cap growth investments in emerging markets. Before the Internet, it never would’ve been possible to build a business hyper-focused on small-cap growth investments in emerging markets because the local market simply wasn’t big enough to sustain a viable business. The creation of the Internet drastically increased the size of their potential market. The scale of the Internet allowed this financial consultant to offer their expertise in small cap growth stocks in emerging markets to a global audience. The market was now big enough to run a sustainable business.
The Long Tail of Social Media
Or even look at something like social media. Before the Internet was there a market big enough to support a local business that showed it’s customers pictures of extravagant vacations or trips? Of course not! It probably doesn’t even sound like a viable business model to you, until you realize that Instagram and social media influencers are doing that very thing today. And being very well paid for it as well. Through the scale of the Internet and the network effects of social media, this sort of “niche” business idea has been made possible. Something that would’ve sounded ridiculous a mere 20 years ago is something we don’t even bat an eye for today. And through the Internet, that long tail is only getting longer.
The Long Tail of Crypto
Cryptocurrencies like Bitcoin gave birth into the long tail. Bitcoin started as the ultimate niche. The first people to use Bitcoin were very much ‘niche’ adopters. These people needed a digital currency to transact peer-to-peer online, in a free market without currency controls. Some of them were curious about the tech, some of them liked the idea of a currency outside of the control of governments and some liked the idea of a sort of ‘digital cash.’ And let’s be real, some liked the idea that you could now buy drugs online through sites like the Silk Road with this new digital cash. Regardless of what people originally bought and used Bitcoin for, it started out very niche with just a few people interested in it. The market wasn’t very big for a digitally native currency at the time. Bitcoin was living in the long tail.
As time went on, people began to recognize the merit of having a global, digital currency outside the manipulation and control of governments and leaders around the world. A way to safely store your wealth when you can’t trust your bank or government to store it for you. A way to transfer value, near instantaneously, to any corner of the world with an Internet connection. The Internet continued to more deeply integrate itself into our lives and people slowly started to realize the world-changing potential of Bitcoin. The Bitcoin movement continued to grow. What started out as a niche market in the long tail, quickly spiraled into a $100+ billion dollar industry with thousands of companies building on the protocol.
Bitcoin. Life in the Long Tail or Destined for Mainstream Adoption
Bitcoin definitely still lives in the long-tail, albeit a long ways from the tip of the tail in which it started. What was once worth a few cents has grown in value thousand times over, but it still has a long way to go to go mainstream. Perhaps it never will. Perhaps it will continue to live in the long-tail for it’s entire existence. Providing safe haven for people who can’t rely on their governments currencies as a safe store of value. As a currency for computer nerds and programmers to play around with. As a way to send money to more efficiently to your family back in your home country. As a plan b should all else fail. If the Internet has shown us anything it’s that there’s a lot of money to be made in the long tail. Whether Bitcoin remains in the long-tail or continues on it’s journey to go mainstream remains to be seen. But I certainly wouldn’t want to bet against it.