5 ₿itcoin Metrics You Should Be Tracking Today
…If you own BTC
When people talk about Bitcoin, they mostly talk about the future of this technology, what it might become, the challenges ahead for mass adoption, etc. By focusing only on the future though, we sometimes forget to see what has been achieved in less than ten years, and more importantly what the metrics are today. So here are the 5 most important things to focus on if you own bitcoin :
1- Daily confirmed transactions are rising!
On Blockchain.info website it’s easy to follow the recorded transactions on the bitcoin network. In the last 24 hours ~348 000 transactions have been made on blockchain for an average of 0.52 BTC per transaction(~$2 000 US).
Even if bitcoin prices fell off dramatically, from $11 000 a year ago to almost $4 000 today, transactions didn’t follow the same path. Yes, volume has decreased but not in the same proportion as BTC prices. As shown in the images below, there is a clear divergence between the bitcoin price evolution and the daily confirmed transactions:
2- LocalBitcoin and Paxful volumes are skyrocketing
The difference between LocalBitcoins and most exchanges is that LocalBitcoins doesn’t require personal information when making trades. Users usually meet in person to make the transaction.
Because of stiff regulations, in some countries these platforms are the only way for people to buy bitcoins.
A Bitcoin boom in South America?
The currency crisis occurring in multiples countries in South America is influencing people to use bitcoin as a store of value. In those countries, regulators are not “bitcoin-friendly” as they are in North America or in Europe, that’s why platforms such as LocalBitcoins and Paxful are so popular.
To my knowledge Venezuela is the only country in South America that allows people to use bitcoin in order to buy Petro, a government issued cryptocurrency. As a result, BTC usage is growing exponentially as the country’s current crisis deepens.
I could have shown transactions volume from centralized exchanges, but in my opinion, they don’t give a good insight on the real adoption, since speculators and investors mainly use them.
**I highly recommend you to use Coinpaprika and Messari as alternatives to Coinmarketcap in order to have accurate data about prices and volumes from crypto exchanges. Indeed, Coinmarketcap doesn’t exclude transactions volume from exchanges accused of allowing wash trading.**
3- The Lightning network adoption
For those who didn’t know, the highly-anticipated upgrade to Bitcoin is already live, although in a beta-version! Lightning network is second layer on top of the Bitcoin network that expands its capabilities to process fast transactions at near-zero fees. This sidechain allow users to do micro transactions such as tipping, buying a coffee, paying a meal at a restaurant, etc.
Here is how lightning network works under the hood: nodes open payment channels with each other that are funded with bitcoin. When transactions are made across those channels, the channel balance is reflected without having to broadcast a transaction on the main chain.
According to 1ml.com (image above), there are 6541 points of services and 28 584 opened routes, for a total of 707,89 BTC that can be processed on the lightning network today.
The Bitcoin lightning torch
On January 19, 2019 Hodlonaut started a movement on Twitter that involves transferring bitcoin via the lightning network to community members. People receiving the “torch” are invited to pass it to another person via Twitter. Essentially, it looks like an email chain letter but with digital money.
A lot of high-profile personalities participated in this social experiment, including the CEO of Twitter and Square Jack Dorsey. At the time of writing this article, 4.56 BTC had been raised with this movement. The community plans to donate the proceeds to multiple charitable causes.
4- The mining hash rate is more distributed than before
In order to succeed and thrive, the Bitcoin network needs to remain decentralized, but this important aspect has been challenged a few times in the past.
In June 2014, the mining pool Ghash.io (owned by BitFury) got more than 50% of the network hash rate, causing turmoil in the community fearing an attack to the network. Today, BitFury has only 3% of the pie.
The same thing happened with BitMain which owns BTC.com and AntPool: At one point in 2018 its mining pools had 42% of the total network hash rate. Now these pools account for 30% of the network. All in all, the mining hash rate amongst the largest pool is more distributed today and it’s a good thing that new companies are entering the space :
5- High activity on GitHub
Last but not least, analyzing the GitHub (code repository) gives a good insight on what the developers community are currently working on. For instance, last month 200 commits to the master branch has been done by 35 contributors. I also noticed that the developers continue to contribute to the source code over the year, even in bear market.
The recent activities on GitHub show us that the developers are still devoted to improve the Bitcoin’s source code.