Network Effects Drive Value – Just like in telecommunications or social networks, financial assets and investments that benefit from network effects (e.g., Bitcoin, stock exchanges, or fintech platforms) tend to grow exponentially in value as more participants join.

Compounding Returns – Investments in network-driven assets can create nonlinear growth rather than linear, meaning early adoption can yield outsized gains.

Application to Cryptocurrencies & Tech Stocks – This concept is often used to justify high valuations of cryptocurrencies (like Bitcoin and Ethereum) and social media companies (like Facebook/Meta or Twitter/X).

Risk of Overvaluation – While network effects can create exponential value, speculation can also lead to bubbles, as seen in dot-com stocks or crypto hype cycles.