One Way Ratchet

10 Things You Need To Know About Bitcoin #9: Network Effects | 027


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Dan and Trent discuss the nature of digital networks and human nature.

Episode #9: Network Effects

  • Metcalf’s Law: the value of digital networks equal to the square of number of users.  It is an exponential function
  • Technology adoption curves.  Start slow then once they gain critical mass they grow rapidly.  Nature of S-curves
  • Gradually, then suddenly.   Perfectly describe network effects.  Thankfully we are in the gradually phase of Bitcoin adoption
  • Pace of technology adoption has accelerated in the digital age
  • Crossing the chasm.  Moving beyond the initial 10% from early innovators to mass adoption.  Social layer.  Humans have a herd mentality
  • Bitcoin is money and money is simply a shared idea that something has value
  • Bitcoin is the ultimate network effect.  We are only at ~1% real adoption globally
  • And unlike all other technologies, you received no economic benefit by being an early adopter. 
    • But Bitcoin incentives early adoption with massive returns to the people who join sooner that others
    • Its pure economic incentives
  • When Bitcoin becomes used more and more as a medium of exchange the network effects go parabolic
  • Bitcoin being purely digital and built on backs of internet, cellular and social media can scale infinitely to the world
  • Today’s song: Crossing the Rubicon by Bob Dylan
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