What is Metcalfe's Law?

Metcalfe's law is a law on the value of the network and the development of network technology. It was proposed by George Gilder in 1993, but it was pioneered by computer network and founder Robert Metter of 3Com. Kraft was named after his last name in recognition of his contribution to Ethernet. The content is: the value of a network is equal to the square of the number of nodes in the network, and the value of the network is proportional to the square of the number of users connected to the network.

Metcalfe's law is about

Metcalfe's Law is a law for the development of network technology. Metcalfe is the founder of 3Com Corporation and the pioneer of computer network Robert Metcalfe.

The theory behind Metcalfe's Law, also known as Network Externalty: The more users, the more the original users will not only have less effect than ordinary economic property (the more people share the less ), But its effectiveness will be greater. Generally speaking, Moore's Law and the phenomenon of industrial convergence form informatization everywhere. Metcalfe's Law then connects enterprises everywhere informatized with the multiplier effect of network externalities and finally creates a scale comparable to the physical world , Is full of countless business opportunities and amazing global growth e-commerce market. ^[1]

Some blog portals calculate its value according to this law, and use this as a basis for calculating the blog's participation in the portal to obtain equity.

Metcalfe's Law is a law about online resources. The law is determined by the speed at which new technologies are being promoted. Therefore, the more computers connected to the network, the greater the value of each computer. New technology will only become valuable if many people use it. The more people use the Internet, the more valuable these products become, and the more they can attract more people to use them, ultimately increasing the total value of the entire network. A telephone has no value, and the value of several telephones is also very limited. Only a communication network consisting of tens of thousands of telephones has maximized the value of communication technology. When a technology has established the necessary user scale, its value will explode. How fast a technology can reach the necessary user scale depends on the cost of users entering the network. The lower the cost, the faster the necessary user scale will be achieved. Interestingly, once the necessary user scale is formed, new technology developers can theoretically increase the price to users, because the application value of this technology has increased than before. It is further derived into the law that the value of a commercial product increases with the number of users.

The peculiar characteristic of information resources is not only that they can be consumed without loss. For example, an ancient book has been "consumed" from ancient times to the present, but it cannot be "consumed", and the information consumption process is likely to be the information production process at the same time. The knowledge or feelings it contains spawn more knowledge or feelings with consumers. The more people who consume it, the greater the total resources it contains. The power of the Internet is not only that it can maximize the number of consumers of information (all humans), but also that it is an interactive medium that disseminates and feedbacks at the same time (this is the least it has with newspapers, radios and televisions). The same place).

Therefore, Metcalfe concluded that with the increase in the number of Internet users, online resources will grow geometrically. ^[1]

Metcalfe's Law is based on the fact that every newly-connected user gets more information exchange opportunities because of other people's networking, pointing out that the network has a strong externality and positive feedback: the more users there are, the more valuable the network is. The larger the need for networking, the greater the need. In this way, we can see that Metcalfe's Law points out that there is an increasing utility in consumption in general, that is, demand creates new demand. ^[1]