| From the Desk of Don Yocham: Fax machines and Facebook.
At first glance, they might seem to have nothing in common.
Heck, the former was a nearly-dead technology by the time the second one became a world-dominating force connecting 2 billion of the world's people.
But one underlying truth made them both incredibly powerful — the network effect.
The network effect is a phenomenon that happens when, as new users adopt a given technology, the technology's value to every user increases.
That academic explanation might sound confusing, so let's start with a real world example of a product that doesn't benefit from network effects.
Think of a pizza shop.
Whether that establishment sells 10 pizzas or 10,000 pizzas, the value to the customer is the same.
The pizza does not taste any better or worse — it neither gains nor loses usefulness — based on how many pizzas have been sold and eaten.
Now think about a product like the fax machine.
Back when the precursor to the modern fax machine was invented in the mid-1800's, it surely dropped some jaws. But because only a handful of people had one, it provided limited value.
At the time, you could send a fax to the only other person in the world with a fax machine — and that was it.
Limited usefulness.
It wouldn't be until nearly a century and a half later, when the "modern day" fax machine took the world by storm in the 1980's that it had its biggest impact.
Once the world at large adopted this disruptive technology, lawyers could fax contracts back and forth, an office manager could fax an order form to a vendor in minutes, and your doctor could fax a prescription to a pharmacy so it would be ready by the time you arrived.
As soon as the technology became ubiquitous, the "limitations" disappeared and the fax machine became a disruptive force with world-changing effects.
But it's not just fax machines.
Other products work in similar ways: the telephone, email, social media — heck, even the internet itself.
Each of these technologies represented a groundbreaking technological achievement when they first came out. But — just as with the fax machine — their biggest impact would be realized when they reached a critical mass of users.
A good rule of thumb is that any technology that exists to connect people can benefit from the network effect.
Enter Bitcoin.
When it started in 2009, the masses didn't even know Bitcoin existed. Even for the computer geeks and early adopters who were just dipping their toe into the possibilities, its true potential hadn't begun to sink in.
In fact, the first officially-recognized Bitcoin transaction with a real company took place in 2010 between a Florida man and Papa John's pizza, where the man reportedly spent 10,000 Bitcoins — worth $40 at the time — to buy two pizzas.
At today's valuation of roughly $40,000 per coin, those 10,000 Bitcoins would be worth over $400 million.
Such is the network effect: Back in 2010, with few users and even fewer "real" companies accepting Bitcoin, the technology had limited use and depressed value.
As more users — miners, investors, vendors — joined the "network", the value of Bitcoin has risen exponentially. In fact, in 2021, Bitcoin became the world's fastest asset to reach a $1 Trillion market cap.
The network effect at work.
But $1 Trillion dollars is not the end of the story. Not even close. In fact, it hasn't even scratched the surface.
Right now it's mostly tech bros and early adopters who are actively involved with Bitcoin.
That's why now is the time for the next wave of adoption for Bitcoin:
Tech CEOs like Elon Musk and Jack Dorsey have made large investments in Bitcoin through their companies (Tesla and Square, respectively).
Several Bitcoin ETFs have launched on Canadian exchanges after approvals from regulators there.
Major financial institutions like Visa and Mastercard have announced that they will make it easier to use cryptocurrencies.
And as I've covered before, there are companies working to make point-of-sale Bitcoin transactions a reality. So you'd be able to walk into a Target, pick out some clothes or a new TV and pay at the register in Bitcoin.
That's when you'll know — when everyone, including your grandmother is using Bitcoin, then we might say it's reached a saturation point.
(It still won't be the end of the story, but that will mark another turning point for the cryptocurrency.)
If you've watched Bitcoin rise and rise and rise over the years... And, like many people, think you're late to the party, I'm here to tell you that you're not.
Even with the space looking as crowded and mature as it looks right now, I'm telling you we're still in the early days.
I understand that it's tough to see the forest for the trees. Oftentimes, it's only in hindsight that we realize just how much opportunity there was at each step of the way.
If you're looking for clarity into the current state of Bitcoin and what the future holds for the cryptocurrency, join me and other disruptive tech investors over at the Prosperity Pub Telegram channel.
And while we're talking about The Network Effect, why not forward this email to a friend or two?
After all, disruptive ideas are best when they are shared, and our private Telegram Channel only increases in valuable when more people join and have a back and forth exchange of ideas about the potential of Bitcoin and other disruptive technologies. | 
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