- Willy Woo downplayed the significance of the Metcalfe Worth indicator.
- The indicator claimed that the expansion of the Bitcoin community has stagnated since Might 2021.
- The Metcalfe Worth indicator assumes that each one newcomers to the Bitcoin community are equal.
Bitcoin analyst Willy Woo questioned the significance of Metcalfe Worth in assessing Bitcoin's progress.
In X's put up in response to Alex, Head of Monetary Property at SFO, Woo defined why counting on the Metcalfe Worth to trace Bitcoin's progress may be deceptive.
Alex's preliminary put up revealed that Metcalfe's Bitcoin worth is at the moment round $28,000, reflecting the Might 2021 stage. This similarity suggests an absence of progress in Bitcoin community adoption over three years.
Woo refuted this concept, arguing that the Metcalfe Worth metric is flawed in two methods: “a damaged thesis and a damaged means of measuring a damaged thesis”.
Woo defined that Metcalfe Worth assumes the community will develop exponentially with every new consumer. He famous that builders have modeled the metric after communication networks, the place this thesis usually holds. Nevertheless, Bitcoin acts as a retailer of worth community the place the quantity of worth coming into the community is extra important and never evenly distributed.
Woo emphasised that Metcalfe Worth customers ought to acknowledge the distinction between customers who be a part of with $1 and people who be a part of with $1 billion. He added that whereas this argument doesn’t disprove the indicator principle, all Metcalfe BTC fashions he has seen use simplistic metrics of on-chain addresses as proxies for particular person entities.
Woo additional highlighted the mannequin's incapability to precisely account for HD addresses or circumstances the place people use a number of wallets. He concluded that till the indicator can forensically group addresses to find out the precise variety of customers connecting to the community, it’s going to solely seize a small fraction of bitcoin customers, since most bitcoin holders are offline.
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