How Technological Diffusion and Democratization of Access Are Transforming Crypto Markets

In college economics classes, students are taught about the diffusion of technology and democratization of access—how innovations that start out small spread beyond elite users to create a seismic shift in demand. This is the philosophy that is allowing a toolset that used to be only available to professional traders and hedge funds available to the every man in the crypto market.

Advanced analytics such as volatility surface modelling, liquidation maps and order book depth have been been out of reach for the average trader for many years; available only to institutions as the tool was expensive historically. Nowadays, services such as CoinGlass, TensorCharts, or TradingView have placed these indicators into the hands of retail traders for as low as $20 per month—some for free. With these sophisticated tools, it’s possible to do different things, from seeing Bitcoin price live to trading advanced crypto futures with detail-market metrics, which until recently, were only available to institutional desks.

A host of economic forces are behind this transformation. First, declining technology costs are removing barriers to entry. The combination of cloud computing, open-source software, and explosion of Application Programming Interfaces (APIs), has made it drastically cheaper to collect, process, and visualize huge amounts of crypto market data. What once required expensive, proprietary systems, can now be done by small startups or even individuals, vastly increasing access.

The second reason is that market competition among platforms drives democratization. With the crypto trading space exploding—the global market cap of cryptocurrencies surpassed $2.4 trillion in April 2024—platforms are in fierce competition for users. Providing institutional-level analytics to retail traders has emerged as a key differentiator. This competitive force speeds up the technology diffusion, which is good for the end users.

Third, with rising retail participation on crypto markets, there is also demand for better tools. As of 2023 per a report from Crypto.com, there are now more than 425 million cryptocurrency owners around the world, a 39% rise compared with a year earlier. Retail traders, long dismissed as a sideshow, now have the power to move markets. And as their level of sophistication increases, so too does their demand for professional-level, real-time analysis.

The implications of this democratization are, of course, enormous. On the positive side, it is one more step toward so-called strong-form market efficiency, in which all available information is rapidly and accurately impounded in asset prices. Retail traders today can trade using liquidity heatmaps, order flow, and volatility probabilities that are not that different from professional trading firms. This levels the playing field, so that there’s more competition and less opportunity for the pure informational arbitrage.

However, there are downsides. It’s almost as if we’re surrounded by better tools and not enough literacy and experience. Behavioral economics teaches that cognitive biases—for example, overconfidence—can result in riskier behavior if people believe that they can outsmart the market simply because they possess powerful tools. There are numerous traders who with their professional dashboards will try to trade the leveraged positions in the crypto futures without knowing how much risk they’re getting into, which is the primary reason for a high volatility and market wipe out from time to time.

Plus, democratization can dull the advantage that early adopters once enjoyed. In the past you could just be a generalist with access to liquidation data or sophisticated "orderbook visualization" and you would be making lots of profits. But the tools are now in everyone’s hands, so profit margins have been compressed. Alpha is getting more difficult to produce, and the competition is stiff.

This trend is illustrated in some real-world examples. CoinGlass, a futures liquidation data platform, increased its user base by more than 150% from 2022 to 2024, attracting thousands of retail users, not just hedge funds. Similarly, TradingView, which initially focused on stock charts, today says over 35% of its global chart usage is for crypto mostly retail users who are keeping an eye on Bitcoin, Ethereum, and altcoin markets.

In short, the diffusion and democratization of access to crypto analytics software has transformed how trading is done. The same tools that used to give the big players a head start are now in the hands of small traders who check the Bitcoin price live on their phones. This not only makes for a more level playing field and a potentially fair one, but also demands more discipline and ultimately adds to the volatility for traders. With the improvement of technology, the line between institutional and retail trading will soon start to blur, and it will radically transform the nature of our world’s markets.