What is Network Effect?

A network effect occurs when a network grows from an initial small reach to having an extremely large network, thus increasing the utility of the goods and services it provides. The internet itself is probably the greatest example of a network effect. When the internet was first created it had very few users, but as it grew, its overall power and usefulness increased remarkably. In a blockchain context, blockchain protocols such as Bitcoin and Ethereum have the greatest network effect because of their size, trustworthiness, and the utility they provide to a very large number of users.