Metcalfe’s Law

metcalfe network

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. First formulated in this form by George Gilder in 1993, and attributed to Robert Metcalfe in regard to Ethernet, Metcalfe’s law was originally presented, circa 1980, not in terms of users, but rather of ‘compatible communicating devices’ such as telephones.

Only more recently with the launch of the internet did this law carry over to users and networks, in line with its original intent. The law has often been illustrated using the example of fax machines: a single fax machine is useless, but the value of every fax machine increases with the total number of machines in the network, because the total number of people with whom each user may send and receive documents increases. Likewise, in social networks, the greater number of users with the service, the more valuable the service becomes to the community.

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