In 1998, George Gilder, writer of the technology newsletter The Gilder Technology Report, popularized Metcalfe’s law in his book Telecosm. The law is named after Bob Metcalfe, the inventor of Ethernet and co-founder of 3Com.

The basic premise of Metcalfe’s law is that the value of a network is proportional to the square of the number of nodes or devices connected to it. In other words, the more devices that are connected to a network, the more valuable that network becomes.

There are a few important things to note about Metcalfe’s law. First, it only applies to networks where there is some kind of interaction or communication between nodes.

Second, the value of a network is not just a function of the number of nodes, but also how those nodes are interconnected.

Third, Metcalfe’s law only applies in certain circumstances. For example, it does not apply to television networks, because there is no interaction between viewers and broadcasters.

It also does not apply to one-way communication networks like radio or newspapers.

Fourth, the law is not a perfect predictor of value. In some cases, the value of a network might not increase proportionally with the number of nodes.

For example, if there are too many nodes in a network, it might become congested and less valuable.

Despite these caveats, Metcalfe’s law is still a useful way to think about the value of networks. It can help us understand why some networks are more valuable than others and how the value of a network can change over time.

Ethereum is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of fraud or third party interference.
Ether is the fuel for running these smart contracts on Ethereum’s platform.

Metcalfe’s Law states that “the value or utility of a network is proportional to the square of its users” which in Ethereum’s case would be Ether holders and miners since they are needed to process transactions on Ethereum’s decentralized application platform. Applying Metcalfe’s Law to Ethereum would give us a current valuation around $15B which falls in line with Ethereum’s current market capitalization around $13B taking into account 24hr trading volume as well. .

To sum it up, Metcalfe’s Law explains why Ethereum has such high potential and why it is currently one of the most valuable cryptocurrencies in existence.