Network Effect On Coinbase
Throughout this course, we have been learning about the idea of network effects. The cascading effect describes the way information spreads through a network of people. When many people are connected in a network, they can influence each others’ decisions and behaviors. More recently, we have learned about the power law and how very few entities have the power to influence large groups of people. For example, we discussed the “rich get richer” concept in which very popular influencers become even more powerful and wealthy as people continue to stream the most popular content.
This article discusses the success of the venture capital fund from Coinbase. Soon after being launched, the investments backing this crypto fund have exponentially increased. As stated in the article, “The biggest companies in the world are large internet tech companies powered by network effects.” This article made me realize how prevalent network effects are in my daily life. Whether it be popular Youtube videos, trendy products, or cryptocurrencies, there seems to be this ripple effect in products/services that the general public finds appealing. In specific to this article, the network effects of the preferences of today’s consumers seem to be working in the favor of organizations such as Coinbase.
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