Posted 6 months ago | by Catoshi Nakamoto

Satoshi Nakamoto published his legendary Bitcoin Whitepaper in November 2008. 13 years later, Bitcoin has a trillion dollar market cap and is well on it’s way to overtaking gold as the greatest and most valuable asset on earth.

Crypto is the fastest growing asset class the world has ever seen, and the most exciting part is how early we still are. I know, I know – it sounds crazy. But the truth is we’re only now beginning to truly understand its full potential. Let alone unleashing it. In this video, we’ll be diving into two key concepts: network effects and Metcalfe’s law, which can give us some super important clues about where this space is headed. I should warn you though: it’s mind bending stuff. let’s get it.

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Metcalfe’s Law, Ethereum and the Future of Solana

Raoul Pal isn’t just a 2 to 1 favourite to be the next James Bond, he’s also one the most interesting thinkers in all of crypto. Why? Because when he’s not sipping rum cocktails and beating up bad guys, the Real Vision CEO and former hedge fund manager is busy thinking about the bigger picture. The global macro environment. And the narratives most likely to drive the next era of financial markets and digital culture.

If you’ve subscribed to his free crypto channel on Real Vision, which I highly recommend you do, chances are you might have heard him talk about something called Metcalfe’s Law. But what is it? Well it’s named after this guy, Robert Metcalfe, an engineer and entrepreneur who co-invented the network protocol called “Ethernet”. The law states that the value of a network is proportional to the square of how many nodes it has. Why? Because value is based on the number of possible connections. In simple terms, it all comes down to how many users or devices participate in any given network, and how many connections are created between them. Take Facebook as an example, or should I say, Feta, which rapidly became one of the most valuable companies on the planet thanks to a network of almost 3 billion people. The same goes for Amazon and Google, companies that were able to become global supervillians thanks to Metcalfe’s Law, their network effect, and the unprecedented growth of their adoption.

So how does this relate to crypto? Well, in a recent interview for Real Vision, Raoul reminds us that crypto and blockchain is the fastest adoption of any technology in all recorded history. I’ll say that again: the fastest adoption of any technology in all recorded history. As you let that sink in, take a look at this logarithmic chart he made comparing the rise of crypto with the rise of the internet. Back in 1997 the internet had 150 million users and was growing at 63% a year. Today, crypto also has 150 million users, only this time it’s growing at 113% a year.

That’s not just crazy growth – that’s exponential. And since us humans tend to think in linear terms, it’s practically impossible for us to wrap our lizard brains around the scale of it. The internet itself is the ultimate carrier of network effect because it can facilitate scaling like we’ve never seen before. I made a video where I take a deep dive in to the internet and a threat to it’s very existence and you can see it by clicking here. Back to the growth of the internet; to put it into numbers: if we continue this rate of adoption, and there’s no reason to think we won’t, crypto will have a billion plus users by 2024, and within a decade, crypto assets will have a market cap of over 200 trillion dollars. That’s an insane 75x from where we’re at today.

History doesn’t repeat itself, but it often rhymes’. And this is where things get even cooler: because the same goes for adoption effects. In fact, it’s actually kind of spooky. It seems to be sort of human behaviour thing, and as Raoul says in that sexy accent of his, it’s… ‘bloody weird’.

He’s been sharing some of these fractal log charts on Twitter and you’ve gotta admit, the similarity is way too obvious to write-off. Just check out this one plotting the current Bitcoin price 2021 with 2013. And while I don’t personally think we’re gonna follow this all the way up to 250k in this cycle … though believe me I wont be complaining if I’m proven wrong on that; it’s clearly followed a similar trajectory so far.

Raoul’s no Bitcoin Maxi though. He’s actually the opposite: a full on degen – and he’s way more bullish on Ethereum’s potential ROI this cycle than almost anyone in the space. And since he’s so bullish on the network effect of the whole asset class, he’s also started looking at Ethereum and other Layer 1’s from the specific angle of Metcalfe’s Law.

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Here we can see a chart mapping Ethereum in this cycle to Bitcoin in 2017. And again, it might not be perfect, but it’s accurate enough to pay serious attention to. I mean… wow, a BitBoy can certainly dream.

Even more accurate is this comparison between Solana today and Ethereum’s last cycle.

I mean seriously: that’s about as freaky as seeing Gary Gensler outside your window at night. (01:19 – 01:24).

Look, I don’t know if we’ll see these fractals play out for much longer – they’re bound to break at some point. But they illustrate an important point. That network effects are the name of the game. Mind you, as Raoul said when I interviewed him on here on BitBoy Crypto, Solana is the Ethereum of 2021. Only unlike Eth back in 2017, it actually has an insane amount of stuff being built on it, not to mention the backing of the financial cartel. So I wouldn’t be surprised to see it go on another crazy run just as the fractal suggests: I mean, Solana is 100% the chosen layer one of this cycle; just check out this top secret footage leaked from the recent conference in Lisbon. (3:43, with Simba as Solana logo)

The point is that when network protocols get adoption, when they start to gain network effect, they tend to move in much the same way. LUNA is another great example: like Solana it’s following an almost identical trajectory to Ethereum back in 2017. It doesn’t make sense, but it’s exactly what seems to be happening.

So what does all this mean? And what does it mean for you and your portfolios?

Well, one of the thing Raoul’s so good at is seeing the bigger picture. And while I know you all want short term price predictions, sometimes the best and most important thing to do is zoom out. Why? Because once you know where this thing is going, you develop the kind of conviction you need to succeed in the space. To put it into context: the crypto asset class is growing at twice the speed as the fastest adopted technology in human history. The internet. Everyone and their dog is coming for crypto. Institutions. Wealth funds. Retail investors. Nation states. Our job is to front run them. Just think about it: people here today are participating in an asset class that’s worth 2.8 trillion dollars. Meanwhile pretty much all other major asset classes – real estate, bonds, and equities – are sitting around 2 to 3 hundred trillion. This has so much more room to grow it’s hard to even compute. But does that mean you should just buy and hold? No. You want to realize your profits and reinvest them back into the bear market, into protocols and projects that either have network effect, or which you believe have the potential to achieve it. That is how you win the game of crypto folks.

And that’s all I got. Be Blessed. BitBoy Out.


About Catoshi Nakamoto

c6ea0c3794492f30883e516d39b2597a?s=90&d=blank&r=g Metcalfe's Law, Ethereum and the Future of SolanaActivist/Journalist, former writer - We Are Change, The Mind Unleashed, Coinivore, others. Currently writing for - Activist Post and Bitboy Crypto. Not Right or Left Apolitical. I Care About Truths (CATS.) Cryptocurrency enthusiast, I mined and lost 100+ BTC in 2010-2011. I work with - Bitboy, SoMee, CEEK, Presearch, and W3BT aka FMW Media Group. Friend of mostly everyone who isn't a dick. Just A Cool Cat.