Most applications of Metcalfe's Law use a coefficient to determine the value of a network. From this Wikipedia page, we can see the coefficient for Facebook is 5.7 X 10 ^ -9 based on a monthly active user count. Your calculation is correct if we assume the coefficient is 1. Which is very optimistic.
But, let's say that we that bound the valuation of Steem to 10 cents per Steem with the current user base. This is a very pessimistic valuation btw. That makes the coefficient for Steem around .045. If we expand to 100,000 active users in the next year using Metcalfe's Law and add 9.5% inflation to your current Steem number, we get a lower bound for 2018 of $1.56. If we reach 200,000 users by this time next year, that number goes up to $6.34. And that is using Metcalfe's Law with a pessimistic lower bound. Things are bright if the network can stay healthy.
I was just writing about the coefficient. It was all good write-up until the assumption that 1 user = $1.
@greer184, why do you think 10cents per Steem is pessimistic?
Also, the trend for number of users doesn't seem great. Do we have an indication that the number of active users might reach really 100k?
I think 10 cents per Steem is pessimistic because I feel that the market demand would never let the value of Steem decline to that point (unless the site was dying). The trend for active users is not great, but that is most likely due to Steemit still being in beta and thus having no marketing presence and a lot of attention to Bitcoin's 2X drama.
If you look at sites like Twitter or Facebook, with an effective marketing campaign plus crypto becoming more mainstream gives me believe that the platform can get to 100,000 active users sometime in the next 18 months. I feel that Bitcoin is on the verge of becoming mainstream. Once Bitcoin pops, people will look for other opportunities naturally leading them to other cryptocurrencies with "network effect" potential.
sounds like a win-win situation
0.50 USD - 2.00 USD per Steem is realistic range, so 0.10 USD is indeed pretty pessimistic valuation. I set my sell limit to about 1.70 USD per Steem on HitBTC, because I think the value will reach that in decent time.
Great points and thanks for breaking that down like that. Yes, I used a very simplistic version. The point is the same though, we grow this place, we likely grow the value of our holdings! ;)
this is so informative ... thanks for sharing
What would you get if you tried to derive the value of a single user? I'd love to know the value of a Steem user versus a Facebook user. I'm guessing you wouldn't just divide the coefficients
Yeah, you wouldn't divide the coefficients. You could calculate the value added by the next active user added to the network at the network's current sizes. So, perform both calculations for n active users and n + 1 active users and subtract. Then divide the results for both Steemit and Facebook. You would also need to make sure you are measuring against the same time span. The coefficient they used for Facebook was for monthly active users, while I just borrowed the daily active users number above.
But the issue here is that Steemit is so new that we don't know if we have a reliable trend against Metcalfe's Law like Bitcoin or Facebook currently have. So the biggest question would be finding a good way to derive that coefficient. The estimate I did as a lower bound might still be too optimistic given the small user base that we currently have. Metcalfe's Law might not kick in until we reach a certain point.
You break down complicated data into understandable bits...you are a math Master! Thank you @greer184, I admire minds like yours.
Lets not forget that STEEM can and does apply to much more than just steemit.com.
anybody can do it now , must wait .....
Wow man, this is really useful math. I never thought about it this way. I mean, I knew Metcalfe's Law but I never thought of deriving a valuation based on it in this manner. Kudos!
Community Liaison, Steemit
Nice support.
it can be possible as steemit coomunity is growing @rapid speed
https://steemit.com/song/@bhagyashri/highly-viewed-popular-song-155m-views