Post
Topic
Board Altcoin Discussion
Re: rpietila Altcoin Observer
by
SlipperySlope
on 29/05/2014, 03:03:55 UTC
The "network effect" argument for Bitcoin... is almost always made in a vacuum, disingenuously.

Bitcoin is a microscopic part of, in order:

(1) the internet

(2) PC/cellphone industry

(3) commodities

(4) commodity/securities exchanges

(5) banking and financial services

GLOBALLY, none of these economic sectors has a strong "network effect"... except for unusual outliers.

I suggest the opposite of what you say is true.

Wikipedia . . .

Quote
In economics and business, a network effect (also called network externality or demand-side economies of scale) is the effect that one user of a good or service has on the value of that product to other people. When network effect is present, the value of a product or service is dependent on the number of others using it

(1) The Internet began as ARPANET which was a method to interconnect numerous incompatible networks - none of which survive today because users were drawn to the largest compatible network.

(2) mobile phones, I suggest that Android is move valuable than Windows phone for developers because more people use Android.

(3) commodities, I suggest that sugar is more valuable than stevia for bakers because more people use the former.

(4) commodity/securities exchanges, I suggest that the NYSE was more valuable than the Philadelphia Stock Exchange for traders when the latter was still independent becuase the NYSE had more traders using it.

(5) I suggest that JP Morgan Chase Bank is more valuable than the local bank down my street for customers, because more people and businesses bank at Chase.