Executive summary: Blockchain Network Effects — the Next Bull Market Driver?
The network effects blockchains develop will make or break their long-term success. In this article, I look at case studies of Bitcoin and Ethereum network effects.
What you will learn:
- What network effects are and their impact on blockchains like Bitcoin and Ethereum.
Executive summary:
- Network effects mean the more people use a technology, the exponentially more useful it becomes.
- There are one-sided networks (telephones) and two-sided networks (marketplaces). There are also direct and indirect network effects (if one group benefits from the growth of another group).
- Bitcoin's network effects as a payment network and store of value are currently stalling.
- Bitcoin will need to separate its base layer use case (SoV) from its P2P payments use case (L2) to develop stronger network effects.
- Ethereum paradoxically suffers from negative network effects because more demand for blockspace results in higher gas fees and slows down the network.
- Successful scaling and increased composability would yield direct positive effects.
- Ethereum will need to define its value pitch better to develop stronger network effects.
Full article:
Blockchain Network Effects — the Next Bull Market Driver? | CoinMarketCap
Blockchain network effects — you’ve probably never heard of them, and yet they’re super important for mooning or nuking your coins.
CoinMarketCap