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Perhaps you don't understand network effect? It absolutely applies to Bitcoin, and gold too, but even more so to Bitcoin.
Since I'm lazy, but not rude enough to ask you to do it yourself 😅, below is the output from an AI tool from a prompt what is network effect and how it applies to Bitcoin:
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In simple terms, a network effect occurs when a product or service becomes more valuable to its existing users as more people start using it. For Bitcoin, this isn't just about a rising price; it's about the strengthening of the entire ecosystem across several distinct layers.
Here is how the network effect functions within the Bitcoin protocol:
1. The Liquidity & Exchange Network
This is the most visible layer. As more individuals and institutions buy Bitcoin, the market becomes deeper.
* Ease of Entry: With more users, there are more "on-ramps" (exchanges, ATMs, P2P desks).
* Stability: Higher liquidity generally leads to lower volatility over the long term, making it more attractive for large-scale treasury management.
* Medium of Exchange: As more merchants and services accept it, its utility as a "currency" increases, which in turn attracts more merchants.
2. The Security (Miner) Network
Bitcoin relies on Proof-of-Work. This creates a powerful feedback loop:
* As the price increases (due to more users), mining becomes more profitable.
* More miners join the network, increasing the total Hash Rate.
* A higher Hash Rate makes the network more resistant to attacks, increasing trust.
* Increased trust attracts more high-value users, restarting the cycle.
3. The Developer & Infrastructure Network
Because Bitcoin has the largest user base, it attracts the most talent.
* Tooling: Developers build wallets, Layer 2 solutions (like the Lightning Network), and analytical tools specifically for Bitcoin because that is where the users are.
* Lindy Effect: The longer Bitcoin survives and remains the "standard," the more it is perceived as the safest bet for future development. This makes it the "base layer" for the entire crypto industry.
4. The Belief (Social) Network
Money is essentially a social construct. Bitcoin’s strongest network effect is its brand recognition.
* The "Gold" Standard: Most people think of "Bitcoin" when they hear "cryptocurrency."
* Interoperability: Because it is the largest, most financial products (ETFs, futures, custodial services) are built for Bitcoin first. This institutional "lock-in" makes it very difficult for a technically superior competitor to unseat it.
Comparison: Metcalfe’s Law
Financial analysts often use Metcalfe’s Law to value Bitcoin. It suggests that the value of a network is proportional to the square of the number of its connected users (V \propto n^2). While not a perfect fit, it explains why Bitcoin's value grows exponentially rather than linearly as the user base expands.
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