Bitcoin And The Downslope Of Network Effects

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Bitcoin’s price and ecosystem benefit from network effects.

As more users join, demand pressure increases the price of bitcoin, which in turn attracts more buyers in a self-reinforcing cycle. Similarly, user growth creates a larger market with more liquidity, incentivizing businesses to provide more services, integrations and security, which then encourages new users to join the more robust ecosystem.

Understanding this network effect is important when considering Bitcoin’s place within the greater financial world.



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