The Network Effect and Why it is Vital to Blockchain Ecosystems

5 min readJul 1, 2021


The network effect can be termed the rationale of a commodity’s increasing value due to its wider usage among people. This means that the demand for a specific entity/service is greatly dependent on the interest that it’s able to generate to determine the overall utility and success of the product. Blockchain technology and cryptocurrencies, both still in their infancy, are strongly influenced by the network effect to determine the value and overall potential of an organization that has significant aims of long-term success. It’s just not blockchain where the increase in users results in the improvement of a value of a good or service, the network effect phenomenon also applies to widely-used industries such as social media and credit cards.

YouTube and the power of network effect

YouTube, with its ever-expanding economy, is a prime example of a beneficiary of network effects. The platform is increasingly becoming a source of income for many young minds, and many companies benefit from this newfound market. For example, YouTube is a staple revenue earner for vloggers who generate millions of dollars daily through their entertainment videos. YouTube measures the value of a channel by the number of subscribers and viewers visiting the channel to watch every video uploaded. With over a billion users, YouTube is a monopoly in its position as an internet video-sharing platform. This results in significant benefits of the network effect since anyone intending to watch a video over the internet will think of YouTube as their default medium whose primary purpose is to offer a video search engine. Thus, the more people sign up, view, like, and share, the more users uploaded videos, a virtuous cycle of the network effect.

To monetize the views and users, YouTube shows ads in its videos. This was key in introducing YouTube to an entirely new section of smart social media savvy marketers- the more videos and users YouTube was achieving, the more the advertisers wanted a part. This has resulted in an ecosystem of success and network effect where YouTube, by capturing the value created by its users, has achieved positive cash flow, which it then shares with its content creators, and the whole cycle continues.

VISA and MasterCard create crucial value

Another excellent example of the significance of network effect is the credit card industry, specifically VISA and MasterCard. These two credit card companies share almost entirely the market share for credit cards. They are responsible for the most crucial aspects of payment transactions: authorization, clearing, and prevention of fraud, all completed via a secure method. Both create value by ensuring a worldwide and reliable processing infrastructure to enable safe and efficient transactions for account holders and merchants. The strong network effects are that as more merchants accept VISA and MasterCard, more account holders will use both companies and vice-versa.

Blockchain ecosystems can enjoy similar network effect benefits

The blockchain ecosystem closely mirrors this analogy especially given that the attributes that make a company a market leader are not as straightforward as analysts make us believe. It is argued that innovation is the driver of success within blockchain; however, there are many factors at play, especially in problem-solving in the long run. Timing is a crucial factor that would drive the network effect on a cryptocurrency project. This would be determined by how much an innovative project is received as a good market fit at its introduction. More so, it’s been witnessed that some projects which were initially technologically inferior enjoyed great success for the simple reason that they were available at the right time. This could be termed as an impact of the network effect.

The PAID Network ecosystem is gaining massive traction due to the network effect

Our team at the PAID Network invests heavily in building an ecosystem that will offer solutions to several existing problems in the market, especially by leveraging blockchain technology to deliver DeFi powered SMART agreements that seek to drive efficiency in any business. We are adamant in our strategy to offer long-term solutions by creating a decentralized world within the PAID ecosystem and beyond. This is especially relevant to markets that require a decentralized monetary system. Master Ventures, as a blockchain-focused enterprise, are stringently focused on gearing the next generation infrastructure of companies that will drive the adoption of blockchain technologies through heavily banking on both direct and indirect network effects and via its incubation entities such as PAID Network. This also means that PAID Network enjoys direct and indirect collateral benefits from Master Venture’s strategy, driving their scalability to highly desirable levels.

Our $PAID token is the focal point of our entire ecosystem and a significant part of our sustained success. PAID Network is expanding the technological and human resources required to exponentially grow the $PAID ecosystem which directly translates to increased popularity and usage. So by establishing and consolidating our position through creating value via the services and products we offer- this correlates to an increased number of users on the PAID platform, which then results in further improvement of the value offered by the PAID ecosystem- a perfect network effect cycle.

$PAID is the fuel of the PAID Network platform

PAID Network has employed the thesis of the long-term objective of becoming a major influencer in adopting blockchain technology and the decentralization of monetary systems across the globe. We have the umbrella strategy of emphasizing solutions to most of the challenges startup companies face, especially in the penetration of blockchain markets through our PAID Ignition platform. This allows us to implement our strategy of meeting the market’s current needs by helping a network of projects enjoy the strongest initial foundation while also ensuring the $PAID token remains at the forefront for operations. This provides the network effect of a continually significant and relevant $PAID token.

To further cement the benefits of PAID’s network effects, our ecosystem has inherent architectural features to reflect the new post-COIVID era we now live in. They are simple in their iterations with unique propositions such as:

  • SMART agreements
  • Insurance pooling and escrow
  • The upcoming launch of our PAID V2 DApp
  • Reputation scoring
  • An ignition crowdfunding platform that offers both private and public auction services

All while making sure $PAID is the only fuel that allows for these services.

To summarize, PAID Network enables the network effect we have generated to create and expand our ecosystem to maintain and further a reputable driving force in decentralized blockchain technology. We robustly meet market demands by ensuring users and businesses #GetPAID wherever they are in the world.

About PAID Network

PAID Network seeks to redefine the current business contract, litigation, and settlement processes by providing a simple, attorney-free, and cost-friendly DApp for users and businesses to ensure they #GetPAID wherever they are in the world.

PAID technology leverages Plasm to operate on both Ethereum and Polkadot ecosystems. PAID makes businesses exponentially more efficient by building SMART Agreements through smart contracts to execute DeFi transactions and business agreements seamlessly.

PAID streamlines backend legal operations with SMART Agreements so that projects can focus on making their brand bigger and better.

For any questions for the PAID network, please feel free to reach out to us on: