Too Long; Didn't Read
Cryptocurrencies are often valued in terms of <a href="https://hackernoon.com/tagged/network" target="_blank">network</a> effects. Network effects are emergent properties that occur when the value of a network increases with the number of its nodes. Thus, some <a href="http://uk.businessinsider.com/bitcoin-price-movement-explained-by-one-equation-fundstrat-tom-lee-metcalf-law-network-effect-2017-10" target="_blank">bitcoin valuations</a> have been based on the bitcoin network and its users. <a href="https://en.wikipedia.org/wiki/Metcalfe%27s_law" target="_blank">Metcalfe’s law</a> — which holds that the value of a network is proportional to the square of the number of nodes — has increasingly been used to model <a href="https://hackernoon.com/are-bitcoin-bubbles-predictable-6aa5b830f41a" target="_blank">Bitcoin’s value</a>.* Some advocates of bitcoin — so-called bitcoin maximalists — even claim that bitcoin’s strong network effects will ultimately lead to <a href="https://nakamotoinstitute.org/mempool/hyperbitcoinization/" target="_blank">hyperbitcoinization</a> — a bitcoin-induced demonetization of fiat currencies. Now, setting aside whether bitcoin will win, or an altcoin will takeover, it is essential to recognize that different protocols will generate different network effects.