One Way Ratchet

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

Episode Summary

"Two ways," he said. "Gradually, then suddenly."

Episode Notes

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