Explaining Bitcoin as a non-sovereign, permissionless, hard-capped supply, global, immutable, decentralized, digital store of value can go way over peoples heads. It takes time learning about Bitcoin to understand why these characteristics matter.
That’s why I’ve adopted a new approach to explaining Bitcoin when newbies ask me about it. I got this concept from Raoul Pal and it made complete sense to me straight away.
Facebook, Twitter, Instagram, and all other social networks follow one main theory; Metcalfe’s Law. Metcalfe’s Law states, “that the value of a telecommunications network is proportional to the square of the number of connected users of the system (n2).” Essentially this means that as more people are in the network, the more it grows.
Think of Facebook as an example. When Facebook launched it was broadcasted to college students. As one college student joined, they told their friends to join so they could be Facebook friends. Then those friends told their friends, and so on. Fast forward to today and Facebook has 2.7 billion users all over the world. Family members and friends that haven’t seen each other in years have been able to connect. New relationships have been formed. People have discovered new interests and movements, whether it be for the good or bad. Facebook has changed the world and paved the way for many new social platforms that have also used Metcalfe’s Law to grow.
The image above is known as the S-Curve. This is how all start-ups grow (or die), and Bitcoin is no different. The product is launched, it grows, then grows faster, starts to level off and it either plateaus or improves further.
Bitcoin is experiencing the exact same growth cycle.
The above charts is the number of addresses on the network, which can be compared to numbers of users in a social platform. Looking at that line, where do you think we are in the lifecycle of a start-up? Looking at the steepness of the curve, it appears we have just entered the rapid growth phase with still the whole upside and steeper curve to come.
Like Facebooks network grows as more people become connected through social profiles, Bitcoins network grows as more people are connected through a settlement/payment network that includes characteristics no centralized settlement/payment network has.
Bitcoin is a high growth tech network, just like Facebook was when it started to gain traction. Facebook gave people around the world access to information and connections, Bitcoin is giving people around the world access to a non-sovereign, permissionless, hard-capped supply, global, immutable, decentralized, digital store of value or money. Bitcoin is banking the unbanked. Bitcoin has given anyone the opportunity to invest at the seed stage in any value amount. Most of all, it has given the Internet a currency. Isn’t that something you would want to invest in?
I’d urge everyone to please read this thread to get a deeper viewpoint into why Bitcoin is needed in todays economic landscape…
In the news…
If you’re interested to learn more about crypto trading, macro analysis, and on-chain metrics, you can get a free intro course and access to a crypto chatroom run by my friends at Bulls on Wall Street.
Resources I Use
I use Glassnode for all the metrics I track on the Bitcoin network. Their platform is extremely user friendly and fun to use.
Binance is the main exchange to trade the crypto markets.
Coinsquare offers Bitcoin trading in Canadian dollars and is one of the top exchanges in Canada.
I use Tradingview daily to analyze trading charts and find areas of support and resistance.
I use TokenTax to calculate my crypto taxes at the end of the year. They plug in directly to the exchange you use through an API. After you get the full report you can send it to your accountant or have their accountants finalize everything.
Nothing in this article is investment advice. I’m not a financial advisor. Do not make investment decisions based on what is in this article or any other article written by BTC News or Blockedia.