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Former Goldman Sachs VP: Bitcoin’s Network Effect is Key For Long-Term Growth

Link: https://btcmanager.com/former-goldman-sachs-vp-bitcoins-network-effect-key-long-term-growth/

Since the launch of Bitcoin, it has been gaining in population and suppressed competitors like Ethereum by a landslide. This long term success can accounted to its network effect. Goetz, creator of BlockTower, compares to Bitcoin to Facebook. Those there are many features in the world that can challenge Facebook, but they fail at replacing Facebook because Facebook’s network effects are too strong. Like Facebook, Bitcoin is still growing at a stable rate. Some characteristics of Bitcoin that have made it so successful are it immutability and decentralized nature. Because of this, demand for bitcoin is still increasing to a point in which some investment banks have started to consider providing liquidity for their clients. But this most likely will not happen as “at the end of the day, it is still software”.

Bitcoin and its stableness and increased popularity over the years is a key example of network effects occurring in the real world. Competitors of Bitcoin are not able to kick Bitcoin out nor does small problems ruin Bitcoin because most likely Bitcoin is past the tipping point. Bitcoin is most likely at the point where there is an upward pressure on the consumption of the product. There will be some people who would like to use Bitcoin and aren’t already, driving demand up. Therefore, Bitcoin will become more popular over time until a certain percentage of the population is using the product.

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