Cryptogram is my personal journal of thoughts about cryptocurrencies and related topics. I am posting them on Steemit as a means of keeping a record of them. At the bottom of each post is brief summary of the general layout of this, and future posts. Thanks for reading. (Also to find other posts, search "cryptogram")
Yesterday I had a moment of clarity in regards to network effects and cryptocurrency.
When a product displays positive network effects when more usage of the product by any user increases the product’s value for other users (and sometimes all users).
from when wikipedia:
An increase in usage leads to a direct increase in value for other users.
Increases in usage of one product or network spawn increases in the value of a complementary product or network, which can in turn increase the value of the original. This is also called a cross-side network effect. Most two-sided markets (or platform-mediated markets) are characterized by indirect network effects.
First, I already held this opinion, but I wasn't connecting the dots like I did yesterday.
This lead me into the following line of thoughts.
Trayce Mayer identifies 7 different networks effects achieved in bitcoin. Here is the link:
These are all interesting, and I recommend reading about them in the link above. After some thought, here are the blockchains that i think that best take advantage of these effects and a brief description, as i consider these to all be accessing unique sets of network effects:
These all have competitors that operate along their same ideals. Here are what I consider the primary competitors:
There is one other group that is really what I am looking at for investment. These are coins or tokens that take advantage of direct networks effects in ways that current coins do not. Currently the best example i have of this is 0x (ZRX)
Zrx is at its core, pooled liquidity for exchange. Buying zrx is a direct purchase of a potential network effect:
More relayers = more liquidity = more trades = more zrx fees = more value for zrx
This kind of direct access to a network effect seems hard to find. there are a couple other coins that i think may create a similar effect. these are:
Raiden Network: Payment channels
LoopRing: Pooled Liquidty (Much like zrx)
Melon Protocol: (they havent been very specific on the token use case, but it seem very possible that decentralized financial infrastructure could certainly build on itself.)
I am continuing to look for tokens like these and trying to decide which ones will access networks in the strongest way. I may do a more thorough post about network effect later.
Thanks for reading,
-libertyhound
Currently in the crypto space it can be difficult to remember what you have discussed or been thinking from one week to the next. The rapid development of, and many changes in the space keep everyone on their toes. Now that I have been financially involved in the space for roughly a year, I realize that I would love to have my thoughts from 2017 written down somewhere. I believe having this information will help me stay focused, avoid repeating past mistakes, and hopefully help some other people, (anyone who decides to read this,) from making those same mistakes.
