Hive; The Ultimate Network Effect

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By now most of us are familiar with the Network Effect and how it affects digital systems.

For those who do now know about this, a quick overview. Basically this extends back to communication systems from the telephone days. The basic idea was to try and determine the value of the network based upon the number of users. Without going into the different theories, it basically was concluded that the value is not linear to the growth. Thus, each new node increases the value of the entire system by more than 1.


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Over the years, this was studied as it pertains to the likes of Facebook and other social media platforms. This led to the conclusion that the math is applicable here also.

Of course, as time went on, the key for the social media companies was to monetize their platforms. Since they were free, other methods of turning the user base into a monetary unit were required.

Enter data.

These entities realized their they were amassing enormous amounts of data. Everything people were doing was being tracked. This allowed for them to create even more data by analyzing what people were doing. More importantly, it enabled them to generate data that had greater value since they could sell it to advertisers.

Hence we saw the formation of what is now termed "surveillance capitalism".

The selling of data is nothing new. In fact, during the Cold War we heard reports of officials on both sides turning and selling data to the enemy. It might be in the form of plans for a new fighter jet or the names of undercover operatives.

What is key here is whatever the data was, a buyer was required. Without that buyer, it was basically useless to the one who stole it. In other words, the value is not there.

In cryptocurrency, things are much different. We are dealing with a revolutionary concept. The data, itself, that we are engaging with has value. It is fully monetized by its very nature. We can send one unit to another that has a value based upon market pricing. Since this extends to the base unit, everything built upon it carries the same principle.

For example, at any moment we know exactly what one Satoshi is worth. Anything that interacts with Bitcoin extends from this core basis and ties back to it.

Obviously, the price will fluctuate based upon market forces. However, over time, the baseline value will grow in tandem with the number of users. As more activity takes place, the greater the value.

This holds for all cryptocurrency.

Hence, when we look at a system like Hive, we can see how this is applicable. Since Hive, and any other token tied to it, is already monetized, each additional node has an impact on the value by a factor greater than 1.


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We already know this to be the case from years of social media study. Hive is no different in this regard than Facebook or Twitter. Each additional node will increase the value of the network in an exponential way. These systems do not adhere to a linear track.

Ultimately, since the data, at least at the core, is already monetized, from a value perspective, we can see how it can grow rapidly. The ability to convert that into other assets, either on or off chain, provides another advantage. When something is liquid, it is easier to transact in. Data about a new military jet is not very liquid, hence is difficult to convert into currency.

None of this exists with most cryptocurrencies. Through exchanges, core data can be converted into whatever currencies is desired.

Crypto systems have an advantage over all other networks that we see our there. Here we removed the need to monetize the system. It already was that way. Thus, we only need to kick off the Network Effect the increase the value of readily traded assets.

This is where the enormous financial potential lies with cryptocurrency. At this point, estimates are that we have 100 million people using this technology. There are more than 4.5 billion people on the Internet. Simple math tells us that we have barely scratched the surface.

What happens when there are 1 billion people involved? The tendency is to 10x everything. This would take crypto, using the market cap using Coingecko, from $1.5 to $15 trillion.

That is incredible growth. It is also inaccurate.

Remember, that each new user is considered greater than 1. Thus, a 10x in the user base will have a much greater impact than 10x the total value. To calculate what that would be depends upon what one believes to be true. Metcalfe's and Reed's Laws are two well known approaches to the valuing of networks.

The main difference between the two is that Reed value each additional node was worth more because of what he termed "sub-groups". We can see this idea in operating when we think about each person's ability to be involved in multi-communities.

Which is obviously describing the situation on Hive.

There is great debate about the accuracy of both Metcalfe's and Reed's models. Nevertheless, it is agreed that the concept of each new node adding a value of greater than 1 is embraced.


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When we combine this idea with already monetized data, we can see how it will have an impact. If the true numerical impact is 1.20 instead of one, then each new user adds a 20% premium to the value (token) due to the Network Effect as compared to if it was linear (this is not saying that each new user adds 20% value to the token, only that the is a premium over what they would have done on a linear scale).

Hive has roughly 10,000 daily accounts active. Again, this is a very small number in the crypto world. What happens when that number if 5x to 50K? What does the Network Effect do to the total value then?

If we want to have a lot more fun, extend this out to 100K. Or 500K. Both those numbers are minor when we look at the user base of the Internet.

It is estimated that social media has 3.8 billion users. Basically, we tend to be social beings. This is obviously translated into the digital realm.

Hopefully everyone can see how we are sitting upon an absolute gold mine. As a platform developing social media applications, the ability to generate the Network Effect is greatly increased. Here is where the Internet resides. Since we have a system that is already monetized, we can see how it equates into massive growth in value.

Simply put, it is the gateway to the ultimate Network Effect.


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44 comments
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good day!
I think there are many of us who are aware of the value of our data, each like, hours of viewing have fed the artificial intelligence of the platforms.
In hive I have found more value because there is a variety of topics, but there is an effort of people to create good content and, most importantly, give a point of view.
How many have stopped entering Facebook or another traditional social network for reading, writing, playing, etc. in hive.

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How many have stopped entering Facebook or another traditional social network for reading, writing, playing, etc. in hive.

I am going to say not too many at this point but that doesnt mean it wont change in the future.

We are adding to what is on here weekly so things are growing. The key is to get more users. I really think that the new Leofinance application will assist greatly with that.

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pixresteemer_incognito_angel_mini.png
Bang, I did it again... I just rehived your post!
Week 47 of my contest just started...you can now check the winners of the previous week!
!BEER
3

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It is nice to know that home phones still work although, they are not used much anymore, everyone uses mobile applications for their communication every day.
As someone said you work for social media companies by sharing your content in those places like facebook twitter or insta, the important thing is that you do not earn a penny for your informatión, and on the contrary, you lose and waste your invaluable time, while they become millionaires using and seller your data and informatión.
Our chain or network is something intangible that is monetized very well, and it is within everyone's reach, not like trying to sell an informatión about a plane or the secret plans, that there would be, you needed to hide them very well, so as not to be detected on the road as before, it seems to die trying as a traitor.
Well every day a number of users come here slowly but are coming, Those are big numbers 10k daily users, in my case it is a quite frustrated because i am not doing very well my homework hard enough, so hopefully when I advertise in some places phisical like street and cross of people, we will have good results soon.

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(Edited)

Great post! Network effect is actually one of my research area. Can't wait to see how the value grows exponentially!

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Most of the general crypto market is missing this concept as it pertains to Hive. The network effect is very real and will translate into huge gains for this system. Ultimately though price per token will play a role in adoption. People want dollars. And the higher the pay the better quality of content Hive will receive. :)

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I agree with your assessment.

The social media aspect of Hive is really going to provide a terrific feeder system. This will be enhanced by the release of projectblank.

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(Edited)

Something as doable as 20x–30x (not at all crazy in the crypto space) could represent life-changing wealth for thousands of people on Hive.

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That is the truth. We will see a lot of people get life changing money.

What you describe is commonplace in crypto.

Nobody is really amazed by a 20x.

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I see where you are going
with Hive. Potential is there
we just need to fill each spot.
At the same time they need to be solid
in all corners to advance accordingly

!BEER

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Ya The Most Important Point is that data has value
and that is what we are looking for
Also the blockchain make data available and visible for everyone and this prevent Misinformation and Manipulation

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This is even more screaming for a professional marketing campaign- not for HIVE as the baselayer; but for communities that have done their Onboarding homework. People that are not involved in marketing are regularly shocked by the prices, but in a competitive market these prices are justified by the results. If Hive as a community is not able or willing to support marketing, another way would be to onboard marketing people...

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The problem with marketing of Hive, what do you market?

What is the USP? What is the target market?

Outside of developers, the best marketing is at the second layer.

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Yes the network effort is amazing. All it took was one popular friend to promote something and you had multiple people hop on to the new system. It's also why people keep going back to Youtube, Twitter and etc. It is just easier as there are more people there.

As for data, I was watching a podcast yesterday and heard that with enough data, any person's behavior can be predicted. This is why Amazon and other tech companies want your data. If they can predict your actions and keep you coming back, they have won.

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This is why Amazon and other tech companies want your data. If they can predict your actions and keep you coming back, they have won.

That's why Jack Ma is under enormous pressure from the Chinese government. Alipay knows all its customers behavior, what they like, what they buy and that's a powerful weapon. Alipay and WeChat are both threats for the Chinese government. They are rolling out the digital yuan shortly and want control, control they don't have now as these two giants are controlling most of the financial market.

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True but I think the easiest solution for them is force these applications to use and pay with the Digital Yuan. Any other currency is directly converted into the digital yuan and you pay the premiums to convert back to other currency. If they do so, they force the applications to go through banks for currency exchange. However, that economical system is pretty deadly and I would not want to live in that society.

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AS I know the Chinese, they will do everything to get what they want, no matter the costs. I would not want to live there either, trust me. I know first hand how it is to live in communism.

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As for data, I was watching a podcast yesterday and heard that with enough data, any person's behavior can be predicted.

This appears to be true. We are going to see AI eating that up and it could be helpful if we all get personal AI assistants. Of course, I dont want that to be run by Zuckerberg or Amazon.

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Unfortunately I think it's likely to happen since they are the at the forefront of the technology and they are also spending the most money on it. I hope people opensource AI assistants and disrupt the market by making things free. Then we could pick people we trust to create the AIs.

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Yeah there is a lot that needs to be done to counter what is taking place within those companies you mentioned. Since they have all the power, and money coming out their ears, they have a big head start.

The one thing on our side is numbers, there are a lot of us. If we can get the development going that doesnt fall under the control of mega tech, we have a chance.

That is why I keep pounding away at the keyboard each day. It all adds to the amount of data out there but it is not on Facebook or Twittter.

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(Edited)

the baseline value will grow in tandem with the number of users.

Agree , cryptocurrency is based on community. The bigger the community members the higher the value of coins. Pump and dump coins have no real community. Speculators make the dump and pump coin rise the price but the value is not real. While coin with real community will always have sustainable value.

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Hopefully everyone can see how we are sitting upon an absolute gold mine.

We know that, that's why we are here. Others don't know that yet and are about to find out. Our job is to help them find out about out goldmine. However, I think it's still early for mass adoption, we need more development first.

We're on the right track, Leofinance is doing a great job, with the new features we already have more to offer. Dlux again will launch soon and will attract a lot of users. Just to name a few.

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However, I think it's still early for mass adoption, we need more development first.

Yes we are still early. Crypto, and Hive especially, is still very complicated. Mass adoption will not occur when things are complex to use.

Dlux again will launch soon and will attract a lot of users.

What do you mean about DLUX?

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I wonder at what numbers would the blockchain hit capacity ?

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Considering that each time they have a developer call, it seems that Blocktrades is always talking about how they are trying to optimize more of the ecosystem.

So I would presume that with each one they do, the capacity increases.

He claimed we 10x from where we were at the fork. The question is what the top capacity was at that time.

I never saw numbers of stress tests done in that area.

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it sounds like a pretty high number from the little that we know

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Doing a million transactions a day didnt even have the blockchain breathing hard so it was a lot higher than that before the optimization.

I think we can easily handle 100 million transactions.

Of course, if things get overloaded, the servers can always be upgraded.

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(Edited)

I think that translates to a minimum of a 1 million active daily users ( 100 transactions per user is lot) which is pretty wow. Maybe blocktrades can confirm our suppositions

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Nice post. For once I don't have much more to say than that. I just wanted to let you know that I appreciate you :)

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I suppose that is what is meant when you here maturity levels as it takes time for this to take affect. Hopefully everything being added will multiply things that much quicker. Gold mine is an understatement.

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Network effect is quite impressive and especially wild nowadays. The furute is gonna be jaw-dropping.

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I had never stopped to look at the magnitude of those numbers. Even if we could only get 1% of that potential, that's still a LOT of users.

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What you said here

In cryptocurrency, things are much different. We are dealing with a revolutionary concept. The data, itself, that we are engaging with has value. It is fully monetized by its very nature.

better explained crypto for me. After all this time of using it. I always thought of crypto as the product of reward mechanisms. You produce a block, you get rewarded. You write a post and get upvoted, you get rewarded. You curate, you get rewarded. Etc. You've just turned this concept around and said it differently, although basically the meaning is the same.

But this is the revolution:

The data, itself, that we are engaging with has value.

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Yes, once there are more ways for people to "easily" onboard, this platform and it's network should experience tremendous growth. In the meantime, it's nice that the infrastructure is being built up in the tribes while things are relatively quiet so it can be stress tested on people not likely to get jittery if there are a few bugs that need to be worked out. The sky will be the limit but we've got to make sure the launching pad is solid first.

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