Bitcoin's Network Effect From Facebook's Perspective

[lumierre]

"In economics and business, a network effect is the effect that one user of a good or service has on the value of that product to other people. When network effect is present, the value of a product or service is dependent on the number of others using it. The classic example is the telephone. The more people who own telephones, the more valuable the telephone is to each owner. This creates a positive externality because a user may purchase a telephone without intending to create value for other users, but does so in any case. Online social networks work in the same way, with sites like Twitter, Facebook, and Google+ becoming more useful as more users join."
http://en.wikipedia.org/wiki/Network_effect

There are rough estimates to the number of users which range from 300k to 2 million but it is definitely lesser than the number of addresses used (2.6 million):
https://bitcointalk.org/index.php?topic=316297.0
http://www.coindesk.com/bitcoin-2014-report/
http://bitinfocharts.com/top-100-richest-bitcoin-addresses.html


http://en.wikipedia.org/wiki/File:Facebook_popularity.PNG

It's hard to predict the price of bitcoin 10 years from now because 1 active user could buy more and more bitcoins than others therefore amplifying the already exponential growth of users.

[TERA]

I think socializing on the internet is a much more common trait among everyday people than the inclination to use an alt currency/commodity.

[madzooka]

I think socializing on the internet is a much more common trait among everyday people than the inclination to use an alt currency/commodity.

Totally agree with you. But still there is a link between social network user's growth and BTC growth

[pungopete468]

I think socializing on the internet is a much more common trait among everyday people than the inclination to use an alt currency/commodity.

What's true today might not be true 5 years from now.

[Peter R]

I think socializing on the internet is a much more common trait among everyday people than the inclination to use an alt currency/commodity.

15 years ago, socializing on the internet was not normal.  The better comparison: is socializing more common than using money?

[TERA]

Also, what if Bitcoin ends up like Myspace instead of Facebook. 

[Peter R]

Also, what if Bitcoin ends up like Myspace instead of Facebook.  

That's the fickleness-of-a-website-versus-the-robustness-of-a-protocol-backed-by-400 million-dollars-of-infrastructure-and-the-timelessness-of-a-mathematical-result debate that we've had too many times already.  

[podyx]

i'd say we are more in 2006

[Mythul]

I guess time will tell. Who knows how the world will look in 2018.

[Siegfried]

I think socializing on the internet is a much more common trait among everyday people than the inclination to use an alt currency/commodity.

True, but there is also a tendency for people to eventually adopt vastly superior technologies.

[lumierre]

i'd say we are more in 2006

If we are in 2006, then we should have 50 million users or close by next year which seems to be very unlikely.

[WompRat]

I struggle with the idea that bitcoin has any relevant network effect. There is nothing that I need bitcoin for - no services that I can't fund by other means. There is no Silk Road or equivalent anymore.  My friends are more likely to mock me for having bitcoins than to give me any recognition. I don't even need bitcoins to participate in this community.  In short holding bitcoins does nothing for me or my friends.

I am going to break a personal rule by mentioning another altcoin in a bitcoin discussion first, but in my humble opinion the only coin that actually has any network effect is dogecoin - simply because the only way to actively be part of that community is to have and tip dogecoins.  Your status is raised in that community by being somebody who tips and spends coins in a  social manner.  This is just not the case in bitcoin. Your status here is tied more closely to your ability to acquire and save coins.  Bitcoin isn't going to fade away, but it isn't going to see explosive growth either unless this pattern changes.