Many are completely unaware of the change that is about to sweep across the blockchain space. We can compare this major change to events present in the early days of the internet itself. Something that lies at the very center of the technology and with it the enablement for the full and optimal use of the technology we are holding. The change entails two key ideals known as “the network effect” and “metacalfe’s law” ,the following may change the understanding you currently have on the value of your crypto investments.
If we take an out of the box perspective and look at todays blockchains from an analogous perspective relating each blockchain as if it were one of the early BBs ; what many people consider as a precursor to the internet.BBs buliten board systems became wildly popular and by the 1980s users had created over 8k of these online “ bulletin-boards’. These bulletin boards were not networks however , they were more like standalone “silos” of information, users created bbs about everything from travel to politics , programming etc.. The problem of interoperability between bbs is why they were inherently lacking in value.
For example if a user was on a bulletin board in Chicago he was not able to send a message to his friend on a separate bulletin board in New York. If you were to imagine 8k people in one room who all speak different languages , that is what the early buliten boards were like. there was no tech at the time to link these bbs’ and therefore they had little commercial value. Although quite popular, BBs lacked the quintessential asset that would later disrupt current technologies and create new opportunities once unthought of.
Jump forward to 1984 and developers had at this point invented a “language” for cross device communication. These protocols are the standard TCP/IP protocols we still use today. The major problem that still existed was that there was no hardware device that could enforce these protocols, If computers did not follow them , they would not be able to connect to different networks. What was needed was a device that acted as an administrator of traffic that could organize , sort and direct all machine to machine communication. This is where we see the importance and weight of the invention of the router in relation to the internet. Routers are at the heart of what makes the internet work, they are like the “rails” that unite and connect the worlds data.
A small company started by the inventors of the first router named Stacey Lerner and Len Bosack was Cisco Systems . Cisco launched its first successful enterprise router (7000 series) in 1993.
Upon launch of the 7000 series website growth absolutely exploded. The number of websites spiked from just 250 in 1993 to 30,000,000 in 2000. The overall value of the the internet sector went from $800 billion in 1993 to the peak value of $5 trillion in 2000 - a %525 increase. At the same time Ciscos sales went from $650 million in 1993 to $18.9 billion in 2000. Cisco grew its overall value from its ipomoea evaluation of $224 million in 1990 to its peak value of $515 billion in 2000. That figure represented more than %10 of the entire internet eco system at the time.
The reason the router was such a valuable success was due to something called Metcalfe’s law. The law states that the value of a network is the square of the number of users. Hence as more people join a network the more valuable the network becomes.
The network effect and Metcalfe’s Law are the very principles that dictate the true value of a network. Metcalfes law is a theory of network effects, by definition the law suggests that a network is equal to the number of its users squared. It states that the bigger the network of users , the greater the value of the network. For example mobile phones , if just one person has a mobile phone it is essentially useless and worthless , but if a million people have a mobile phone then they have much more value. As we now have a network of users that can communicate with each other via the mobile phone.
A network tends to be a self fulfilling prophecy , the more people use them , the more users that they attract. Facebook is a perfect example , ten years ago a 75 years old would have called facebook a silly waste of time , but today he uses facebook himself because all of his friends are on facebook.
Just as many cast negative views and sentiment towards investing in a stock such as google or Alibaba in the early days , the same can be seen for the crypto-markets . We can witness these same naysayers and their various negative statements spreading in the crypto investment space as we did in the internet investment space years ago. The same one's who missed out on amazing investment opportunities during the Dotcom boom are the same who have already and will continue to miss out on fabulous investments in cryptocurrency , the reason they miss out is because they are unable to understand the "Network Effect" and its true definitions.
If you were to invest just $500 in each during the initial public offerings of Facebook , Google and Alibaba you would be sitting on $341,274 today. This is a obvious example of Metacalfe's law and the Network Effect.
On Dec 5th crypto kitties created so much traffic that it brought the eta network too a standstill , transaction fees ballooned by %500 . Projects had to postpone their icos because fo this. This is not a huge problem yet , as most projects are still in startup mode , outside of speculation the tokens are used for little else. The big question. Is , what happens when a project lofficially aunches in production. Mode and it requires scale and speed?
The project will need to leave Ethereum and move to a different blockchain with faster confirmation times and lower costs. Many projects have already started to make this move.
The problem we are facing today is the problem of "interoperability" , the Ethereum network cannot distinguish a transaction on the NEO blockchain and visa-versa. As it stands certain blockchains may perform certain tasks better than others and "multi-chain" use of future projects could very well be realistic as opposed to the current one project one chain model.
A project who has set out to make this interoperability between blockchains a reality is Aion . The Aion protocol enables the development of a federated blockchain network, making it possible to seamlessly integrate dissimilar blockchain systems in a multi-tier hub-and-spoke model, similar to the internet.
Aion facilitates inter-blockchain communication via a high-performance bridging mechanism. Multiple bridges between pairs of chains allow both data and value to transfer between chains.
Aion addresses the issues of scalability and performance by introducing a new high-performance virtual machine, and by enabling applications to operate across multiple chains.
Aion allows custom blockchain design, including different consensus algorithms and virtual machines, without sacrificing interoperability with other blockchains.
With a solid team behind the project and a very feasible use case Aion is worth looking into as a potential addition to your long term portfolio. Definitely check out the projects white paper and other resources presented on their website www.aion.network.