When I read into metcalfe law it states
"Metcalfe's law states that the value of a telecommunications network is proportional to the square of the number of connected users of the system"
You were modelling with number of transaction previously , and have decided now to model with the market cap since you say
"market cap takes into account the supply of bitcoin that meets the demand of the marginal new adopter".
Buy my basic question here is if every new user who is running a wallet represent the nodes in the network, then is not the number of users a better variable to run the model than no.of transactions or market cap? and this model fits with metcalfe law better than no.of transactions or market cap right!
It would be really difficult to accurately predict the number of users across globe using bitcoin but am I right in what I say?
So why not have a model like this?
Personally, I have not sync'd a Bitcoin wallet in probably 6 months. Nor have I upgraded the client. If I had the ability to be rewarded by the network for participating, I'd be happy to keep my bitcoin client online but there is simply no reward that comes directly to me for accepting the very small risk of keeping my client connected.
There needs to be some sort of proof of stake because altruistic node hosting simply isn't cutting it.
Perhaps someone could eventually figure out what a typical consumer wallet looks like.
Pay a power bill, buy 15 gallons of gasoline, buy groceries - yep, you look exactly like a consumer by your spending habits so you get a satoshi for keeping your wallet in sync with the blockchain.
Otherwise I'm just going to use a centralized wallet host and that's going to reduce the number of participants in the network. So I find it interesting that POW is having a negative effect on the growth of participation in the network.
Theoretically, even without forcing Proof of Stake upon anyone, the more bitcoins a person holds, the more incentive that there will be for them to want to hold their bitcoins on a well secured network, and therefore they will be incentivized to "give back" by way of mining.
Tangentially related to this, the more that someone holds, the more that they will also want to maintain their bitcoins in a completely trustless manner by way of downloading the entire blockchain.
This being said, as far as the necessity of mining is concerned, the fact that a said behavior is proportionally in a person's best interest does not always directly lead to a person choosing to follow through on their best interests. Exhibit A: people's diets and the widespread nature of obesity.
As the saying goes, a fool and their money are soon parted. I would think that those who have been rewarded with the most bitcoins by others over time would likely be smart enough to act in their best interests, as they would have the most to lose if the system failed.
A practical example: Consider the LeBron James' of the world (the rich people out there without any supposed technical savvy, that might not directly act in their best interests, due to their sheer ignorance of the matters at hand). They would not directly know the technical reasons as to why the network needs to be secured, but they would still know, at a basic level, that they need to secure their money somehow, and will thus trust others to secure their money by keeping money it in a bank, referring their questions to financial advisers who ARE in the know.
The banks and financial advisers of the bitcoin world will undoubtedly arise over time, then, and they will be directly responsible for the health of the network. They will stay apprised of the situation and how much of an overall hashrate is necessary, and they will, undoubtedly charge the nontechnical rich for their mining services.
