The Network Effects of Bitcoin

Today, we’re sharing our perspective on the real meaning of Bitcoin, and then unpacking from first principles the various network effects and influences on Bitcoin that will help you predict its future.

Crypto is here to stay. The reinvention of money is underway. Bitcoin will continue to be a big part of that story. Bitcoin created, and is now embedded into, the crypto ecosystem and the world’s consciousness.

[MuaathAlkhattab]

This is fantastic! I just watched the 2-3 videos about network effects and this one is basically the one I was looking for. Thanks!

[diopmakhtar]

well-produced and designed video explainer with a very clear and simple explanation of crypto. Can we have the same for web3 and DAO?

[Pravin_Yeshua_BTC]

Happy to be here. We’re still so early. ⚡️

[MegaRc]

Well, it's not super decentralized without a strongman at the top. Arguably, for Ethereum, it's Vitalik at the top. Sure there is no hard authority but Vitalik has strong influence over the direction of the protocol.

When something is nascent, influence is the way to govern. Once any group reaches a certain size, governing by authority seems to be the way to go just by looking at historical examples.

What does decentralization mean when there are only a few thousand servers running as Ethereum node? The premise of web3 is just a database based on blockchain. There are still tons of centralizations such as how you interact with API layer etc.

Furthermore, the open ledger only stores where to find the underlying data as opposed to storing the data itself. What if I change the underlying data?

[yurijmikhassiak]

NFX your vision is too narrow here. Not everything is based on the network effect. Bitcoin is not a marketplace or platform but it's connected to the core of crypto exchanges and platforms. It's not currency. It's a speculative virtual asset like NFT. Please do not call "currency" things that have nothing to do with the most features of currency in the economy. You lose trust. Yes, virtual assets have to have trust and infrastructure for trading. That is all about NFX there. The main driver is people's willingness to take risks and gamble to become rich. So a video about bitcoin should be called Network Gambling Effect. Can you predict when it will fail to provide its gambling value and fall?

[driz]

BTC is not money. It's a massively front-loaded derivative security. The definition of money is that which is based on the full faith and credit of the /real/ network --- the nation (the people, collectively) that issues the fiat. A currency's "full faith and credit" is not (as the video implies) backed by a "central strong man." That's silly. The full faith and credit of fiat currency is backed by the network -- the people of the nation --- and the GDP stability that they, the nation (the true network), have built up collectively over time. Yes, eventually most national currencies will be digitized. And this isn't to say tons of U.S. dollars can't be made trading BTC (etc). More power to the traders. But such derivative investing is ephemeral. When the next big financial melt-down occurs, crypto bits will be reduced to near-worthless, while real assets (industrial metals, commodities, real estate, IP, nation-backed cash, etc.) will be the only safe havens .... as they always are, historically.