CFA Level I · CFA Level I Exam · Introduction to Digital Assets
An analyst uses a network-based valuation for a cryptocurrency, in which value is related to the number of users and Metcalfe's law. If the number of active users rises from 2 million to 6 million, the network value implied by Metcalfe's law is most likely to rise by a factor closest to:
The implied network value rises by a factor of about 9. Metcalfe's law makes value proportional to the square of users, and users triple from 2 million to 6 million, so value rises by three squared, or nine times.
- A3
- B6
- C9Correct
Explanation
Metcalfe's law says network value is proportional to the square of the number of users. Users triple (6/2 = 3), so value rises by 3^2 = 9. Choosing 3 wrongly assumes linear scaling.
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