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The passage around this formula

That last detail is the fact worth sitting with, because it is a fact rather than an inference: a protocol adopted natively by its author’s competitors, while still under that author’s sole governance, is an arrangement institutional participants have reasons beyond altruism to want changed. A shared specification only pays off once enough independent parties are using the same one — a dynamic economists have long formalized informally as a network externality, where a network’s value scales not with the number of participants but with the number of pairs of participants able to interoperate: $V(n) \propto n(n-1)$. This is a coarse model — it treats every pair as equally valuable and…

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