Its easy to underestimate the strategy that Michael Saylor has put in place. We have never seen it before. How do you value a firm that owns 1% of a new global paradigm? The best I can do is come up with an analogy.
How valuable is a firm that identifies the best 1% of the world’s farmland and buys it? How much better is that firm when it identifies the best 1% of the world’s art and buys it. What about 1% of trophy real estate and collectables and commodities and …. If Dan Moorehead is right and Bitcoin is the apex predator, then Bitcoin will dematerialize asset class after asset class and draw that value into Bitcoin. That is what makes MSTR so hard to value. No firm has ever held an 1% of the world’s supply of an asset that can accomplish this task.
Hold on, we are not done yet. Imagine that this hypothetical firm is an expert in developing enterprise software expertise. The firm focuses this expertise on improving the acceptance and usability of Bitcoin. It is also leveraging its salesforce to sell this software to the largest firms on the planet. They, in turn, use the software to benefit their global customers. What is the value of a firm that can both hold 1% of a new asset class and simultaneously use its software expertise to improve the value of that asset class?
What about metrics? Wall street’s metrics are optimized to value traditional firms in analog business. They are not designed to value a paradigm shift. Maybe there is only one metric that actually gauges the value of MSTR. That metric is sats/share. It makes sense given that MSTR has only two uses of funds; paying operating expenses and sweeping its excess cashflows into bitcoin. That appears to be the metric that Michael Saylor uses. That is the metric I use now.
Are there threats? I see only one. MSTR and the custodians that hold Bitcoin for the ETFs are honeypots. If the government faces a currency crisis, they may (will?) confiscate the hardest asset on the planet and use it to back their fiat currency. It happened with gold. It could happen with Bitcoin.
In summary, I have been in business a long time. I hold multiple degrees in management and in technology. I am humbled by Michael Saylor’s insights and his ability to execute them.
Bitcoin is addicting. There should be a 12 step program for us. It all starts with the first step:
1) We admitted that we are powerless over Bitcoin and that our lives have become unmanageable.
The purpose of this note is to conduct a thought experiment on Metcalfe’s law. The question I am struggling with is, “Can we make adjustments to Metcalfe’s law to better determine the value of a network in the Bitcoin protocol”?
In its simplest terms, the law states that the value of a telecommunications network is proportional to the square of the number of connected users of the system (n2) This law was used to describe the telecommunication’s technology of the late 1900’s. It served us well. However, this century’s technologies, such as Bitcoin may allow us to add value to Metcalfe’s insights. Let me be specific.
I own Bitcoin. So does Micheal Saylor. Using Metcalfe’s law, we are two nodes in the network. However, Micheal’s contribution to the network is orders of magnitude greater than mine along a number of dimensions. They include financial (he has far more bitcoin), social (he is extraordinarily active on social media), political (my guess is that he has access to politicians), corporate (he has access to other firms’ senior executives), technological (he is working on bringing the lightning network to business), value (each node can send sats to any other node).
Is it possible that Metcalfe’s law could better model the value of a network if each node was evaluated along these dimensions?
In summary, Metcalfe’s law served a wonderful purpose in the last century. It may need a refresh to help us better understand the value of a network in the current Bitcoin environment. My node and Micheal Saylor’s node do not contribute equal value to the network.
A key issue is metrics. How do you quantify the concept of value along each of these dimensions? And, how do you do it at an individual node level?
Comments are welcome.
The purpose of this note is to conduct a thought experiment on Metcalfe’s law. The question I am struggling with is, “Can we make adjustments to Metcalfe’s law to better determine the value of a network in the Bitcoin protocol”?
In its simplest terms, the law states that the value of a telecommunications network is proportional to the square of the number of connected users of the system (n2) This law was used to describe the telecommunication’s technology of the late 1900’s. It served us well. However, this century’s technologies, such as Bitcoin may allow us to add value to Metcalfe’s insights. Let me be specific.
I own Bitcoin. So does Micheal Saylor. Using Metcalfe’s law, we are two nodes in the network. However, Micheal’s contribution to the network is orders of magnitude greater than mine along a number of dimensions. They include financial (he has far more bitcoin), social (he is extraordinarily active on social media), political (my guess is that he has access to politicians), corporate (he has access to other firms’ senior executives), technological (he is working on bringing the lightning network to business), value (each node can send sats to any other node).
Is it possible that Metcalfe’s law could better model the value of a network if each node was evaluated along these dimensions?
In summary, Metcalfe’s law served a wonderful purpose in the last century. It may need a refresh to help us better understand the value of a network in the current Bitcoin environment. My node and Micheal Saylor’s node do not contribute equal value to the network.
A key issue is metrics. How do you quantify the concept of value along each of these dimensions? And, how do you do it at an individual node level?
Comments are welcome.
The purpose of this note is to suggest that the current government attack on digital assets (choke point 2.0) may be short lived. It believe it will be replaced by the government’s focus on AI.
AI has powerful and immediate implications for employment. That is particularly true for knowledge workers and anyone who makes their living through expertise. Examples abound. Financial analysts, radiologists, lawyers, accountants … all of these workers rely on expertise that can be accessed globally via AI.
The outcry from these workers will refocus political discourse away from digital assets and onto employment.
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I am new to Nostr and lightning invoices. I hope this works.
Here is my invoice
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This is my first test of a lightning wallet. Let’s see if I can send an invoice
Thanks for your support of NOSTR
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