Growing the Hut; Entropy tokens and Metcalfe’s Law
At the Hut34 Project we’re obviously pretty excited about chatbots and the growth in the chatbot market.
And we’re not alone. Accenture, for example, forecasts that the chatbot market will be worth US$1.86 billion by 2020 and US$5.6 billion by 2027.
These are big numbers. But where do they come from? Why do people in the know think the market value is going to explode in this way?
To understand, it’s worth looking back at the history of the internet.
Metcalfe’s Law
Back in the early 1980s, Bob Metcalfe, the inventor of Ethernet, proposed what’s become known as Metcalfe’s Law.
It states that the value of a network is proportional to the square of the number of users of the network. If the network doubles in size, its value quadruples.
At first, this was just a marketing tool to promote Ethernet.
But a 2015 study in the Journal of Computer Science and Technology showed that revenue for Facebook and its Chinese counterpart Tencent increased according to Metcalfe’s Law.
Earlier this year, a study in the journal Electronic Commerce Research and Applications found that the values of Bitcoin and Etherium are also following this pattern. This is why people who bought early have seen such a huge return!
Understanding Metcalfe’s Law
Metcalfe’s reasoning was pretty straightforward. He argued that the value of a network depends on the number of connections in the network, and the number of possible connections is approximately the square of the number of users of the network.
Users could be people or bots, or in the original example, fax machines (remember them?). But the maths is the same. If you have 100 bots they can each connect to 99 other bots. Multiply those together and you have 9900 connections.
With a million bots, that’s 999,999 million possible connections.
Getting value out of bots
We know that the number of bots is growing rapidly, Morgan Stanley predict that by 2020 75 billion devices will be connected to the Internet of Things. Gartner predicts that by 2020 chatbots will be responsible for 85% of all customer service interactions.
But Metcalfe’s Law only applies if the bots are actually connected, and this is where Hut34 comes in!
Hut34 allows bots to talk to each other. If you ask a chatbot a question and it doesn’t know the answer, it can connect to any other bot in the network.
Entropy Tokens
Hut34 monetizes the bot network. Bots trade information, making micropayments to one another using Entropy Tokens or ENTs, the native currency of Hut34.
This incentivizes bot owners, rewarding bots that supply useful information. There is a fixed supply of ENTRPs — 100 million to be exact. So each ENTRP is worth 100 millionth of the entire Hut34 economy.
Whatever the economy is worth, the ENTRP holder will own that portion of it.
Metcalfe’s Law is only an approximation. But it gives an idea of how the value of the Hut34 economy might change as more bots join the network.
Entropy Token
More information on how to purchase ENTRP tokens and partcipate in the Hut34 Network and ecosystem can be found here.
Onwards and Hutwards!
