Blockchain.info has now removed the "holes" from their charts, allowing me to update my Metcalfe Value plot. Although we don't have price data prior to the opening of MtGox mid 2010, I was able to use the Metcalfe model to extrapolate backwards to the genesis block. The extrapolated value of all bitcoins in circulation was approximately $10,000 in 2009, before beginning the now famous trajectory to the moon in 2010.
The constant of proportionality in Metcalfe's law (V ~ N2) was also quantified for each of the two proxies for N. For example, using the number of transactions per day excluding popular addresses for N, the model best fit the market cap data with a constant of proportionality equal to $1.50. In other words, the model predicts that the bitcoin market capitalization is approximately equal to $1.50 multiplied by the square of the number of TXs per day (excluding popular addresses).
I am still stunned that the Metcalfe model so accurately corresponds to the actual market cap over 4 years and over 1,000,000% growth in market cap. The plot confirms for me that the value of bitcoin comes from the network of people who use it. If we keep finding new ways to use bitcoin, the rest will take care of itself.
The constant of proportionality in Metcalfe's law (V ~ N2) was also quantified for each of the two proxies for N. For example, using the number of transactions per day excluding popular addresses for N, the model best fit the market cap data with a constant of proportionality equal to $1.50. In other words, the model predicts that the bitcoin market capitalization is approximately equal to $1.50 multiplied by the square of the number of TXs per day (excluding popular addresses).
I am still stunned that the Metcalfe model so accurately corresponds to the actual market cap over 4 years and over 1,000,000% growth in market cap. The plot confirms for me that the value of bitcoin comes from the network of people who use it. If we keep finding new ways to use bitcoin, the rest will take care of itself.