With Bitcoin reaching all-time highs this week, more and more people question bitcoin’s valuation. However, iIf you understand a simple formula, you can simply ignore those questions and watch your wealth grow.
Robert Metcalfe is an electrical engineer who is credited with co-inventing Ethernet computer networking technologies and Metcalfe's law. Without getting into the math and differing models involved in Metcalfe’s Law, the basic principal is that value of any network is related to number of its users. Specifically, as more people join and use a network, the more valuable the network becomes.
Social networking site Facebook is a prime example of Metcalfe’s Law and explains its tremendous growth in value over the years. As more and more people joined Facebook, the value grew in relation to its new users.
This same network effect applies to Bitcoin, Ethereum, and sites such as Steemit; all of which now have this working in their favor. People who don’t understand this network effect will continue to question the valuation of bitcoin and all of the other projects in this space, just like they’ve done with Facebook.
Therefore, as long as you continue to invest in the projects that have growth in people joining, Metcalfe’s Law and this network effect will propel your investment returns!!
