RE: Cryptocurrency: Quantifying Network Effects
(Edited)
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When it comes to guaging the correlation with market and network effect, I feel like the market doesn't always tell the full story. There are too many inconsistencies between valuation of projects and the reality.
When I think about Dogecoin that's only existing because of the Lindy effect and consistent hype, I can't help but feel like the crypto market is very immature and often just filled with knee jerk trades based on the rave of the moment.
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Markets are driven by the dual emotions of fear and greed. Those are always at play. That means there is no logic to them, they do their own thing. That is why trying to outsmart the market is impossible. It is nothing that sensibility can figure out. Yet, this is also what presents opportunity when people understand this.
Long term, many get crushed because they do not understand what is truly taking place. When price reflects what other metrics are saying, as in the example of Ethereum, then it makes sense. When it is the opposite, as with DOGE, then we see how insane things can be.
Of course, DOGE could instantly turn things around with a major use case or two. At this point, DOGE is a great example of Network Effect. It is attracting a lot of people which is key. The question is do they disappear when the mania ends?
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I've been asking myself this same question for a long time. I did some research into Doge and after weeks of study, I concluded that it doesn't make any sense.