Metcalfe's law


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Related to Metcalfe's law: Reed's law

Metcalfe's law

"The value of a network increases exponentially with the number of nodes," coined by Bob Metcalfe, founder of 3Com Corporation and major designer of Ethernet. A network becomes more useful as more users are connected. A primary example is the Internet. It fostered global e-mail, which became more valuable as more users adopted it. See laws.
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It also shows, however, that the betting exchange is very dependent on customers providing liquidity to succeed, since due to the effects of Metcalfe's Law a lack of liquidity will make it almost impossible for an exchange to attract new customers, and therefore to survive.
Metcalfe's Law indicates the network growth value will increase with service expansions from data, voice, and video users.
Moore's and Metcalfe's laws continue to apply in the development of complex enterprise networks, so it's essential to manage these risks from multiple sources.
The problem has been that, in order to understand today's network economics and the value of online communities and online exchanges, most analysts invoke Metcalfe's Law.
Translated into mathematical terms, Metcalfe's Law says that the value of a network with N users has a value that is roughly proportional to the number of possible conversations that potentially can take place.
Metcalfe's Law has worked pretty well for understanding the one-to-one, "transactional" networks for which the concept was developed.
In my view, Metcalfe's Law will set the standard for excellence in our industry and for our customers in the years to come" said Ruiz.
It's come to be called Metcalfe's Law, and it says that networks grow in value with the square of the number of connected nodes.
But, as Metcalfe's law predicted, increased connectivity created an environment in which previously inconceivable and impossible applications suddenly became both obvious and possible.
Reducing latency and increasing bandwidth is all well and good, but just counting on Moore's and Metcalfe's Laws doesn't cut it anymore.