However, this means different things for different projects. For Bitcoin, Litecoin, and similar “monetary projects,” that means being able to spend that crypto at Chipotle, with your grandma also knowing how to do so. In this case, the fact it can be used to buy / sell goods establishes and grows its value.

In the case of ICON, that isn’t the case. Could you buy something with ICX? Technically, yes. But the value of ICX could increase significantly without a single token ever being spent in a traditional transaction.

The long-term value of ICX will grow not through retail interest (or FOMO), but through the gradual onboarding of ICONLOOP enterprises (and other private enterprise blockchains) onto the ICON public chain.

When that happens, the “network effect” begins to take shape.

Last year, Min Kim gave an interview and pointed out that:

“Everyone uses WhatsApp and WeChat… The matter of fact is that you mainly use those apps because your friends are on it. That’s the power of the network. The value of blockchain is in the network itself. The network increases with the number of participants. The more participants you have… the more friends are on WeChat, the bigger the value it is for you.”

Here is one of the better definitions of the “network effect”

A product displays positive network effects when more usage of the product by any user increases the product’s value for other users (and sometimes all users).

If Company A, B, and C decide to become a part of the ICON Network, the network becomes more valuable to Companies X, Y, and Z.

Why is this important to ICX? Over the long-term, the more value the network has, the more usage it will attract — and usage of the network requires ICX.

That’s where the long-term value in ICON lies; it has taken the necessary steps — by lining up willing partners — to build the long-term network effects necessary to significantly increase demand for the ICON Network.

Here is Markus Jun building upon this idea:

At the end, Kim refers to adoption occurring with ‘the more participants you have.’ And this is precisely the approach that ICON is taking: enticing corporations to join ICON’s network. Because every time you see an announcement of an MOU between [ICONLOOP] and Company X, you are seeing a new addition to the ICON network. And every addition makes the network more valuable. The sum total of the network value will always be more valuable than any single company within. Even if Company X is Samsung.

Accordingly, I don’t believe we should necessarily focus on the size or notoriety of individual partnerships as much as focusing on the big picture of ensuring continued progress in securing additional agreements from multiple companies.

That’s why the names “Samsung” and “Line” on their own are less important and impactful than the fact that ICONLOOP has secured 100+ business partnerships. Samsung and Line alone are nice, but they don’t by themselves create the long-term network effect the ecosystem will need to maintain value; the many other partnerships — even if only a portion become participants on the public chain — will create the true underlying value, which will only further attract additional partners.

However, not only are their direct network effects — like what was described above — but indirect network effects as well.

Here is a description of indirect network effects:

In most platforms, there are two users groups: producers and consumers. The more consumers on the network, the more valuable that network is to producers, and vice versa.

This type of network effect is called an indirect network effect, also known as cross-side effects. With indirect network effects, the value of the service increases for one user group when a new user of a different user group joins the network. You must have two or more user groups to achieve indirect network effects.

Taking Uber as an example, as more riders (i.e. consumers) join the platform, the more useful and valuable it is to drivers (i.e. producers), because they have more business opportunities. The reverse is also true. As more drivers join the network, riders have shorter wait times and more locations available for their rides, thus the network is more valuable.

I believe this is why this section from Ricky Dodds’ AMA answer was particularly important:

This means we’ll continue to be working on developing all the tools and features for connecting private and public blockchains (and public to public), closely collaborating with the ICONLOOP team and consulting corporates, governments, and other institutions where appropriate, but in parallel, we’ll be working to broaden the scope of the project to include other facets of the space that the foundation finds interesting, such as the concept of DAOs, identity tools and team-based applications that Min has mentioned in recent posts/interviews/meet-ups, etc.

But why?

We want to be building for the vision we see. ICON Republic as a digital representation of a country with governance and economic policy programmed into its core, facilitating the growth and expansion of crypto native and/or new breeds of companies (such as DAOs) while also dedicating resources to the design and implementation of interchain. We believe this path of parallel activity increases the likelihood of the success of the project and frankly speaking, limits the reliance on 3rd parties for short and medium-term success.

By expanding the vision for the ICON network, it will no longer rely solely upon direct network effects, but indirect network effects as well.

With components such as DAO (decentralized autonomous organizations), DApps, identity tools, and other elements, the network will draw in more individual users; with more individual users on the network, there will be greater incentive to develop DAOs, DApps, and other tools.

On the one hand, the ICON network will benefit by onboarding ICONLOOP enterprise clients with the value created by growing direct network effects; at the same time, it will maximize indirect network effects by luring individual users and builders to participate in the network.

Remember what I said just above: “Over the long-term, the more value the network has, the more usage it will attract — and usage of the network requires ICX.”

That’s why, when I see a new partnership, or DApp concept, I don’t ask myself: “How will ICX be used in this partnership/DApp?” but rather “Does this increase the value of the ICON network?”

Most of the time, the answer is “yes.” And when that’s the case, I know it will increase the long-term demand for ICX, and the value of ICX itself.

In the next section, we’ll take a deep dive into all the potential participants and partners of the ICON network and how they’ll help build these network effects.