New Fundamental Law of Network Economics 106
intersys writes "A new fundamental law of economics has been formulated by Rod Beckstrom, former Director of the National Cyber Security Center. In Words: The value of a network equals the net value added to each user's transactions (PDF) conducted through that network, valued from the perspective of each user, and summed for all. It answers the decades-old question of 'how valuable is a network.' It is granular and transactions-based, and can be used to value any network: social, electronic, support groups, and even the Internet as a whole. This new model or law values the network by looking from the edge of the network at all of the transactions conducted and the value added to each. One way to contemplate the value the network adds to each transaction is to imagine the network being shut off and what the additional transactions' costs or loss would be. Beckstrom's Law replaces Metcalfe's law, Reed's law, and other concepts which proposed that the value of a network was based purely on the size of the network (and in the case of Metcalfe's law, one other variable)."
Re:For us Layer 1 guys: Ohm's Law (Score:3, Informative)
My bad.
You're right. Need more coffee....
This *is* metcalfe's law. (Score:5, Informative)
And surely Beckstrom must've realised this, since its trivial to get to Metcalfe's law from his equations.
Beckstrom:
Vj = Sum(i=1..n, V[i,j]) = Sum(i=1..n, Sum(k=1..n, B(i,k)) - Sum(l=1..n, C(i, l)))
= Sum(i=1..n,Sum(k=1..n, B(i, k) - C(i, k))).
= Sum(i=1..n,Sum(k=1..n, Sum(z=1..n, B(i, k) - C(i, k))/n ))
Let A(i) = Sum(z=1..n, B(i, k) - C(i, k))/n , the average benefit to user i of the network. Then:
Vj = Sum(i=1..n, Sum(z=1..n, Ai))
= Sum(i=1..n, n*Ai)
= n* Sum(i=1..n, Ai)
I'm sure you can see where I'm going with this now...
Let A = Sum(i=1..n, A(i))/n , the average benefit to any user of the network.
Vj = n^2 * A. Oh wait - that's Metcalfe's law. All Beckstrom's done here is give an expansion of the average benefit per user.
Re:Duh (Score:3, Informative)
Steve Nash is a point guard for the Phoenix Suns
John Nash is the Nobel laureate.