The post Debunking the Metcalfe Value Indicator appeared on BitcoinEthereumNews.com.

Willy Woo has downplayed the significance of the Metcalfe Value indicator. The indicator claimed Bitcoin’s network growth has stagnated since May 2021. Metcalfe Value indicator assumes all Bitcoin network’s newcomers to be equal. Bitcoin analyst Willy Woo has challenged the significance of the Metcalfe Value in assessing Bitcoin’s growth. In an X post responding to Alex, head of financial assets at SFO, Woo explained why relying on Metcalfe Value to track Bitcoin’s growth may be misleading. IMO Metcalfe value is broken in 2 ways… (1) broken thesis, plus (2) a broken way to measure that broken thesis. 1) It assumes the value of the network grows exponentially per person that joins. Metcalfe was intended to model the value of a communication network, where this… — Willy Woo (@woonomic) July 2, 2024 Alex’s initial post revealed that Bitcoin’s Metcalfe Value currently sits around $28,000, mirroring the level seen in May 2021. This similarity suggested a lack of progress in Bitcoin’s network adoption over three years. Refuting this idea, Woo argued that the Metcalfe Value metric is flawed in two ways: “a broken thesis, and a broken way to measure the broken thesis.” Woo explained that the Metcalfe Value presumes exponential network growth with each new user. He noted that developers modeled the metric after communication networks, where this thesis generally holds true. However, Bitcoin functions as a store of value network, where the amount of value entering the network is more significant and not evenly distributed. Woo emphasized that Metcalfe Value users should recognize the difference between users joining with $1 and those joining with $1 billion. He added that even if this argument doesn’t invalidate the indicator’s theory, all Metcalfe models of BTC he has seen use simplistic on-chain address metrics as a proxy for individual entities. Woo further highlighted…

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Filed under: News - @ July 3, 2024 3:22 am