What is First-Mover Advantage (FMA)?
Let's find out First-Mover Advantage (FMA) meaning, definition in crypto, what is First-Mover Advantage (FMA), and all other detailed facts.
First-Mover Advantage (FMA) refers to an organization or business that introduces a game-changing service or product to the market in order to gain an advantage over its competitors. The FMA is about creating brand recognition and customer loyalty by being the first to enter the market with a specific product or service before your competitors do. However, even though first movers receive brand leadership and recognition, they need to continue improving to avoid being overshadowed by their competitors.
The crypto world continues to be a hotspot of innovation and technological advancements. It is a huge benefit that blockchain projects or crypto exchanges have a limited market and customer base. Since the success of first movers is primarily dependent on their reputation and recognition, making the first move in the market is their greatest hope.
As an example, many people mistakenly believe that all cryptocurrencies are Bitcoin (BTC). With its first-mover advantage, Bitcoin established a product that is now understood as the industry standard. However, even though Bitcoin was the first to create blockchain technology and cryptocurrency, the term "Bitcoin" is not equal to the term "cryptocurrency".
Keep in mind that when the company is not a first mover, it’s definitely harder to build a client base. Switching from one cryptocurrency network to another comes with transaction fees and dangers. This could be one of the numerous reasons why customers are hesitant to switch from their current provider to a new one. This means that a newcomer will have to put in a lot of effort and time to convince clients to switch from some other crypto exchange platform to their platform.
There are three leading methods that newcomers should use to convince the clients to turn to them:
- Gain a technological advantage over their competitors.
- Prevent future visitors from having access to valuable resources (such as creating unique digital assets for blockchain, recruiting efficient workers, and obtaining crucial suppliers).
- Build a client base and make sure that in the future they wouldn’t switch to the services of the competitors because it would be expensive or inconvenient.
In order to reach the status of FMA, a company should aim for developing brand awareness and loyalty by reaching out to customers and leaving a good first impression. Besides that, they should manage their resources by finding a strategic location, establishing premium contracts with key suppliers, or hiring experienced staff.
However, besides having plenty of pros, FMA also has some cons. For example, it’s not always an advantage to release the first product or service in the industry because a company might need to spend a lot of money to persuade customers to try a new product they’ve never heard of.
That’s great for competitors because educated buyers will be beneficial for them in the sense that they won’t need to invest as much in product promotion. Besides, newcomers can learn from the mistakes of the first movers. They can observe what doesn’t work with, for example, product promotion, and avoid repeating the same mistakes.
Nevertheless, being an FMA is excellent in growing areas such as blockchain, where there is still plenty of space for progress to be made.