*This article was additionally published by **Coinmotion**, the leading digital asset exchange in Nordics.*

Metcalfe’s Law was originally presented in 1980 by Robert Metcalfe, describing “compatible communicating devices”. The theory was later refined in 1993 by George Gilder, referring to Ethernet. In its basic form, **Metcalfe’s Law states that the value of a telecommunications network is proportional to the square of the number of connected users of the system (n²), or n(n − 1)/2, where n equals to number of nodes. **n(n − 1)/2 is proportional to n² asymptotically.

Metcalfe’s Law has been successfully used for evaluating valuations of FAANG technology-related stocks and internet usage in general. Metcalfe’s Law can be divided into original and generalized formulas:

**A. Original Metcalfe’s Law: NV ~ n².**

**B. Generalized Metcalfe’s Law: NV ~ n^1,5.**

# Metcalfe and UTXO

As mentioned above, Metcalfe’s Law states that the value of a network is proportional to the square of the number of participants in the network. The following chart exploits a variant of the law with **BTCUSD divided by n log n of**…