Metcalfe Law and iEthereum's Network Value

How do we define the value of a blockchain cryptocurrency network?

Knive Spiel
April 14, 2023

How do we define the value of a blockchain cryptocurrency network? There are many analysts that provide their take on valuation. The most common being the last price a token was sold at multiplied by the number of circulating token supply gives you the listed total market capitalization. Market capitalization is used in daily conversation as a generality. However, market cap would not be useful in deciding whether a certain token is a fair market value at present. Market cap identifies the current asset price, the current asking market price. How do you decide whether that price is of a good value or bad deal.

Although long term value and the fundamental value of cryptocurrencies are still being determined; many have turned to using Metcalfe's Law in determining current value of a network.

Metcalfes Law states the financial value or impact of a telecommunications network is proportional to the square of the number of connected users of the system (n²). The law was proposed in 1980 by a guy named Robert Metcalfe who was seeking a formula for valuation of connected devices such as telephones and fax machines AND NOT the number of connected users. It wasn't until later with the advent of the internet and a growing number of personal devices; Metcalfes Law became associated with users on the Ethernet.

For fun, lets apply the formula for Metcalfes Law of Network Valuation to iEthereum. This valuation formula can be applied to any cryptocurrency or blockchain token. Since the number of network users is hard to determine, we will use the number of token holders represented by the number of wallet addresses.

Network Value (NV) = Wallets (W²)

At time of writing there are 4470 iEthereum wallet holders

(NV) = (4470²)

Network Valuation (NV) = $19,980,900

Current total iEthereum market capitalization is $1,273,357.

Using Metcalfes Law; the iEthereum market price is currently undervalued compared to its fundamental value. Not financial advice, but this would be considered a good buy.

To figure Metcalfes valuation per token, just divide the total (NV) of $19,980,900 by the total circulating supply. iEthereum has 18,000,000 circulating token supply.

$19,980,900 / 18,000,000 = $1.11

The current fundamental valuation per iEthereum token is $1.11 and you can buy yours today on Yobit or Uniswap for $0.03-$0.07.

We see value!

Metcalfe Law and iEthereum's Network Value

How do we define the value of a blockchain cryptocurrency network?

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