Fri. Dec 31st, 2021
    Metcalfe's law

    Metcalfe’s law states that the value of a network is directly proportional to the square of the number of its users. Due to the network effect, the more people actively use one or another digital money, the greater its value. At the same time, doubling the number of network users increases its value four times at once — the number grows in a quadratic relationship.

    Thus, the possibility of non-linear growth in the value of the network is extremely important in the fundamental evaluation of the value of crypto-assets.

    The law was formulated by engineer and inventor Robert Metcalfe, where such a concept as the network effect was described. Scope of application (besides cryptocurrencies) — marketing, social media, etc.