December 21, 2020

How AuBit’s network effects offer better total returns with no additional risk

If you’d like to understand more about AuBit’s network effects and how they work, you’re in the right place.

In this article, you’ll discover what network effects are and how AuBit leverages their power for greater total returns with no extra risk on the world’s top financial products like gold, stocks, and bonds.

The magic is in the bold part of the sentence: greater total returns no extra risk. It’s a big claim because it has never been done before. 

Typically, risk and reward increase in correlation. If you want better investment returns, you have to be willing to accept increased investment risk. But AuBit is different. For the first time ever, it’s possible to get better total returns without additional risk. And that’s only possible now thanks to AuBit’s network effects.

So what is a network effect?

In economics, a network effect is the phenomenon by which the value or utility a user derives from a good or service depends on the number of users of compatible products. It simply means that as more users join or use the network, the network becomes increasingly more valuable to all users. This creates explosive exponential growth. 

The most famous example is the telephone. What use is a telephone if no one else has one? As more people own telephones, the more its utility grows.

As more people own telephones, the greater the utility
of the network. That’s the network effect in action.

So, network effects are nothing new. But in recent decades, the idea has really come to the fore. In fact, according to a study by NFX, almost every tech unicorn in the last 23 years — such as Apple, Google, Spotify, Uber, AirBnB and Dropbox — can attribute 70% of their value to network effects. 

According to a study conducted by NFX, a Seed & Series A VC Fund, 35% of technology companies had network effects at their core, accounting for 70% of their total market capitalisation.

  • 70% of Alphabet’s $1.22tn market cap is $854bn.
  • 70% of Apple’s $2.1tn market cap is $1.4tn.

Source marketwatch

That’s a total of $2.28tn in added value from the network effect in these two companies alone.

Google is the information network. The more information and searches there are, the more useful Google is to you as a user.

Apple is the digital accessibility network. The more apps, music, and films there are, the more valuable the network is to the user. 

Like these big tech companies, AuBit is built to leverage the exponential power of network effects for the benefit of all users. Unlike the aforementioned tech companies, however, AuBit is the first to bring the idea of network effects to finance. 

“Network effects have revolutionised just about every industry. However, no one has yet used the right tech to leverage their potential in the world of finance, until AuBit.” — Joel Krueger, Global CIO at Aon Insurance and AuBit’s Chief Investment Advisor

Introducing AuBit’s network effects

Usually in finance, fees leak out of the system and into the hands of asset managers and platforms. However, unlike traditional finance, AuBit redistributes 80% of all network revenues back to investors for approximately 1-3% additional asset growth per year depending on the product.

For example, if you buy and hold AuBit-networked gold, AuBit reinvests 80% of networked-gold product transaction fees into more of the same gold — and gives it proportionally to you and the other existing holders. 

That means you get more AuBit-networked gold in your account every time anyone anywhere in the world trades that same product. That’s network growth. 

You might be wondering, “how can a business afford to give away 80% of product and transaction revenue?” 

Well, in AuBit’s case, it’s the AuBit Edge Protocol that makes the redistribution work. Built using blockchain technology, it automates all trades, transactions, and revenue distribution — massively reducing costs. 

That means, AuBit can reliably maintain the network with just 20% of trading revenues, and can give back the remaining 80% to users. It is in the redistribution of the remaining 80% of fees that powers AuBit’s network effects for network-enhanced returns. So AuBit users get the potential for asset price growth as well as asset volume growth — without any extra downside risk.

Would you like better total returns on the world’s
top investment products with no extra risk?

Visit aubit.io now to sign up for the waiting list and be one of
the first in the world to enjoy network-enhanced returns.

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