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KIN · 31w

Revisiting Metacalf

I've had a few people ask me what my take is on Metacalf - which has been floated in the telegram for sometime. I figured I'd break it down easily for us all to see below. Simply stated, Metacalf theorized that the value of a network is proportional to the number of connected users in it. So more users, means more value. Metacalf put it mathematically as follows: NV ~ n.n The Network Value (NV) is proportional to the number of users (n) squared. (n.n) Or as an equality NV=k.n.n k is a constant that holds a bunch of hidden variables, and changes over time. For example, doubling the size of a network of 100 users, will not have the same effect as doubling the size of a network of 50,000 users. Also, doubling the size of the Bitcoin network, will not increase its value in the same way as doubling the size of the Ethereum network. Also, doubling the number of Kin users if it's only a sticker economy, is not the same as doubling the number of Kin users in a fully developed economy. k is what changes the equation, depending on which network you apply it to, and the maturity of that network. **So how do we figure out the value of k?** k is a funny constant that changes as the network grows, and needs to be evaluated regularly. But very simply put, you need to find two or three price points of the network. e.g. Network value with 1,000 users Network value with 5,000 users Network value with 10,000 users From that, you can use [this method]( to calculate k and project the network's value at 50,000 users. **A final note** Metacalf's original law made the assumption that every node is connected to every node in a network, and it tends to overestimate the value of the network looking forward. It has undergone several modifications, with a notable one done by Zipf that changes it from: NV=k.n.n to NV=k.n.ln(n) [further reading]( **A final final note** Meta...
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