The Power of Network Effects.
An argument against Shitcoins 💩
What would it take for you to leave Facebook today?
Not just Facebook the platform, but all the entities it owns.
Instagram and WhatsApp too.
If you did, you would be cut off from a large part of your social interaction.
You could migrate to a different service, like Snapchat or iMessage,
But it would only make sense if your entire social group did the same.
Right there is the power of Network Effects.
They occur when an each additional network participant enhances the value of the network as a whole.
Let’s look at the world of Crypto through that same lens.
Every time an individual or institution buys Bitcoin, its’ use case as store of value and digital gold is further legitimised. Every time a new Miner is added to the Bitcoin network, security and liquidity of Bitcoin increases too.
For every new DAPP (Decentralised Application) built on top of the Ethereum, the network grows closer to its vision of morphing into Web 3.0. For every new person that buys ETH, the network has more potential users for its DAPP’s, from NFT marketplaces to DeFi Protocols. For every additional user that decides to stake their coins on the network, Ethereum gains more security and scalability.
Every time an individual or institution buys Bitcoin, its’ use case as store of value and digital gold is further legitimised. Every time a new Miner is added to the Bitcoin network, security and liquidity of Bitcoin increases too.
The marginal positive network effect for each additional network participant isn’t a linear progression. The network improves exponentially, corresponding to Metcalfe’s law.
‘The value of the network is proportional to the square of the number of participants.’
Leveraging Network Effects, the larger the project is, the more difficult it is for it too fail.
Today, ETH and BTC occupy more that 50% of the entire Crypto Market.
The power of Network Effects means that winner usually takes all.
When you think of E-Commerce, you think of Amazon.
When you think of Social Media, you think of Facebook.
The Crypto Revolution may be much the same.
Keep that in mind when you delve into the Black Hole of Shitcoins 💩.
