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⚓️ the network effect
happy Thanksgiving y’all.
I’m taking the news reporting off today to spend the holiday with family, so I’ve decided to send everyone a think-piece instead.
don’t worry, it’s not too heady. I know that tryptophan is probably hitting by now and the last thing I want to do is put you to sleep reading what I’ve written.
times are tough. but one coin is being hit particularly hard with the FTX news and insolvency - Solana.
that’s because SBF had been an advocate of Solana and the co-founders of the coin may or may not have had an intimate relationship with FTX.
(though their invitation to the Bahamas orgies may have been lost in the mail)
so as FTX goes down, so does Solana. as I write this, its price has plummeted to $13 after highs of $200 at the start of the year. this has caused people to proclaim that ‘Solana is dead’.
what I’ll argue here is…what if it’s not?
what is the network effect?
there is this idea in economics called the ‘network effect’…and it’s one of the many reasons why the internet is one of the world’s most powerful innovations.
the network effect states that the more people that use a particular network, the more powerful that network becomes. that’s because its users scale exponentially. instead of connecting users one-to-one, relationships form an interconnective web.
(you can calculate the scale using Metcalfe’s Law)
so essentially the networks that allow you to connect with the most people have the largest user base.
if you take Twitter, for example, you will find that it’s stayed in business over the last decade 100% because of the network effect…and it’s why I’m confident that it will survive the Elon era too.
because Twitter’s core idea (tweets in 140 characters or less) was both simple and innovative at the time, it became one of the best social media platforms at connecting people and therefore gaining a lot of users.
better yet those users were connected and even carved out spaces within the space (i.e. fantasy football Twitter, crypto Twitter, film Twitter).
through all the turmoil Twitter has gone through no legitimate alternatives have ever caught on (not Parlor and not Hive) because no alternatives have been able to “network” better than Twitter.
simply put, if your network is large enough, you can make a *huge* moat around your business. does that mean your business is unsinkable? of course not. however, the power of the network effect puts you in an amazing spot to have a lasting effect on the culture.
so how does this relate to Solana?
I think that Solana (the coin) is certainly in trouble. at this stage, it has nothing that differentiates from any other crypto out there, except for one thing…NFTs.
the legwork that NFTs have done for Solana is incalculable. it has locked thousands into their ecosystem…as their Lizards, Foxes, and recently y00ts are *still* on Solana (despite their wallet’s disappointment).
and much like Twitter, that will be a hard thing to overcome for any competitors. outside of Ethereum NFTs, no chain has as much juice and culture attached to it as Solana.
so long as their NFT communities continue to thrive, Solana will continue to do the same. Solana is the currency of a culture…a culture formed by NFTs.
and if you’re paying attention, they are still diehards despite the fact that the price of Solana is in the toilet. and that means there might be some nice deals on MagicEden right now if you know where you’re looking.
where do you look?
Ethereum has it all, Tezos has the art, Polygon has the big partnerships…but what does Solana have?
well, Solana (as I’ve mentioned) has the culture. if you love yelling in Twitter Spaces, odds are you love Solana NFTs too. for that reason, when looking for what Solana NFTs to buy, look for *where* the conversation is happening.
who are the vocal founders and voices that stand out above the rest in the Solana community? what PFP do they have? what projects have they attached their online identity to? certainly, the people creating the culture of Solana NFTs will a good chance of surviving these bad times.
we’ve seen y00ts continue to pump despite horrid market conditions. they’re up almost 50% over the past 2 weeks and have even been outpacing a lot of Ethereum projects.
*Windhorst voice* and why is that? it’s certainly not the art…it’s also not the technology (you still can’t flex a hexagon with Solana NFTs on Twitter, for example).
it’s because having a y00t right now gets you something that’s hard to come by in a bear market…engagement.
it allows you to connect with others on the Bird App. it gets people replying to you. it gets eyeballs on your account. that’s *social currency*…something the network effect tells us is one of the most powerful scaling tools you can have.
so don’t bet against Solana just yet.