The

Social Scalability Problem and the Otcrit Solution

After a bullish 2017, many believe cryptocurrencies are entering a bear market. Almost all
projects have lost more than 50% of their value from their respective all time highs. Some crucial
factors to the situation are a fear of regulation, and more pressingly, questions about the
technical scalability of these projects. The SEC recently banned unregistered exchanges in the
United Statesi. Likewise, many in the cryptocurrency community have grown weary of the
technical limitations that affect platforms like Ethereum. As a strong second to Bitcoin, the
platform undergirds 90% of the tokens on the marketii, but is still unable to run at-scale until
proposed solutions like proof-of-stake and sharding are implemented.

A third, less notorious stumbling block in the cryptocurrency market is its recent hurdles in social
scalability. The term, coined by pioneer Nick Szabo, refers to “institutional and technological
improvements… lowering cognitive costs while increasing the value of information flowing
between minds… and discovering new and mutually beneficial participants.”iii Simply put, the
easier a technology makes it for users to share valuable information without having to resort to
extra operations, the more valuable its role to society.

The opposite has become true of cryptocurrency exchanges, although the technology they are
predicated on is socially scalable at its core. Current market saturation created an environment
where it’s hard to find the signal in the noise. Useful information about prospects is usually
drowned in a sea of marketing schemes, to the detriment of both startups and investors alike.
This is not a technical problem. It can’t be solved through code; it has to be solved by the
community.

This is where new exchanges may play a key role in a next bull market, and a project that
addresses these issues is flying under the radar. Otcrit is one such exchange that aims to create
a more ethical, and informed trade environment. It’s developed by a team that is profoundly
cognizant the social scalability problem and is building a sensible solution.

Basically, Otcrit improves on the current trend towards decentralized exchanges by integrating a
system that separates wheat from chaff. Only expert-approved projects will be allowed to
participate in its marketplace, and built-in incentives will guarantee competent research done by
users. Otcrit may well do away with the concept of greedy listing fees by replacing it with proper
vetting, thus promoting a healthier investment environment that values function over fuss.

Although the need to tokenize such an exchange does seem contradictory in principle, this is not
the case. Proper vetting that is already in place by initiatives like Naval Ravikant’s CoinList,
focuses on filtering cryptocurrency startups for established venture capital firms. However, these
services are not destined for the general public. There are no options for proper vetting available
to retail investors or the cryptocurrency community in general. This is where Otcrit can establish
a niche, and its token structure is a fundamental motivation for users to improve the information
that is shared with peers.


Otcrit is a step in the right direction towards socially scalable cyrptocurrency exchanges.

— @cryptohashbrown


i
https://hackernoon.com/the-sec-kills-crypto-exchanges-3dc9e3e87651

ii
https://www.trustnodes.com/2018/01/13/ethereum-tokens-now-account-90-market-share-
70-billion

iii
http://unenumerated.blogspot.com/2017/02/money-blockchains-and-social-scalability.html