Dr Alliance on Nostr: The purpose of this note is to conduct a thought experiment on Metcalfe’s law. The ...
The purpose of this note is to conduct a thought experiment on Metcalfe’s law. The question I am struggling with is, “Can we make adjustments to Metcalfe’s law to better determine the value of a network in the Bitcoin protocol”?
In its simplest terms, the law states that the value of a telecommunications network is proportional to the square of the number of connected users of the system (n2) This law was used to describe the telecommunication’s technology of the late 1900’s. It served us well. However, this century’s technologies, such as Bitcoin may allow us to add value to Metcalfe’s insights. Let me be specific.
I own Bitcoin. So does Micheal Saylor. Using Metcalfe’s law, we are two nodes in the network. However, Micheal’s contribution to the network is orders of magnitude greater than mine along a number of dimensions. They include financial (he has far more bitcoin), social (he is extraordinarily active on social media), political (my guess is that he has access to politicians), corporate (he has access to other firms’ senior executives), technological (he is working on bringing the lightning network to business), value (each node can send sats to any other node).
Is it possible that Metcalfe’s law could better model the value of a network if each node was evaluated along these dimensions?
In summary, Metcalfe’s law served a wonderful purpose in the last century. It may need a refresh to help us better understand the value of a network in the current Bitcoin environment. My node and Micheal Saylor’s node do not contribute equal value to the network.
A key issue is metrics. How do you quantify the concept of value along each of these dimensions? And, how do you do it at an individual node level?
Comments are welcome.
In its simplest terms, the law states that the value of a telecommunications network is proportional to the square of the number of connected users of the system (n2) This law was used to describe the telecommunication’s technology of the late 1900’s. It served us well. However, this century’s technologies, such as Bitcoin may allow us to add value to Metcalfe’s insights. Let me be specific.
I own Bitcoin. So does Micheal Saylor. Using Metcalfe’s law, we are two nodes in the network. However, Micheal’s contribution to the network is orders of magnitude greater than mine along a number of dimensions. They include financial (he has far more bitcoin), social (he is extraordinarily active on social media), political (my guess is that he has access to politicians), corporate (he has access to other firms’ senior executives), technological (he is working on bringing the lightning network to business), value (each node can send sats to any other node).
Is it possible that Metcalfe’s law could better model the value of a network if each node was evaluated along these dimensions?
In summary, Metcalfe’s law served a wonderful purpose in the last century. It may need a refresh to help us better understand the value of a network in the current Bitcoin environment. My node and Micheal Saylor’s node do not contribute equal value to the network.
A key issue is metrics. How do you quantify the concept of value along each of these dimensions? And, how do you do it at an individual node level?
Comments are welcome.