Bitcoin: Declining Number of Daily Active Addresses, New Core, Physical Futures, Payments in New Zealand

Paradigm
Paradigm
Aug 14, 2019 · 24 min read

Biweekly update 30th July — 13th August

Hi, everyone. We are happy to present to you our latest regular update on Bitcoin. The last two weeks have been overwhelming, and we have much news we want to share. Every story demands attention, and we hope you’ll find them excellent too.

First, we want to tell you about changes in daily active addresses. It is obvious that the increase in the number of active addresses reflects the growth of the activity of the entire Bitcoin network. Previously, we saw this growth, which was accompanied by a trend change to bullish. However, we are observing the fall in daily active addresses.

Second, the new version of Bitcoin Core was published. There are a lot of minor changes and improvements. In our view, the regular update shows the development activity, and we like it.

Third, there is news about physical derivatives. While LedgerX announced that it had launched the first physically-settled bitcoin futures contracts, the U.S. Commodity Futures Trading Commission (CFTC) has not indicated any official approval. As of this update, investors can sign up for early access to the futures’ platform, but there’s no clear indication of when it will go live. Though LedgerX did receive approval as a derivatives clearing organization from the CFTC, it’s possible that this was not enough to officially offer physically settled bitcoin futures contracts. So, we are looking forward to becoming trading in physical futures available for every trader. In our point of view, this opportunity would improve the market and attract more investors.

Fourth, more use-cases of Bitcoin is becoming into our life — Bitcoin Is Now a Legal Form of Payment in New Zealand. Correspondingly, New Zealand becomes one of the first nation-states to create a proper framework for employees to receive cryptocurrency as part of their wages. However, it should be noted that the new provisions don’t concern self-employed taxpayers, and a couple of conditions are implied: no lock-up period on the coins and easy convertibility to a fiat currency.

To conclude, the Bitcoin community is still growing and not going to stop. We like it and find it right. In our point of view, there is a bull run followed by the development of investment, ecosystem, etc.

Disclaimer

Trading and investing in digital assets like bitcoin is highly speculative and comes with many risks. This article and information below and above are for informational purposes and should not be considered investment advice. They should not be construed as an endorsement or recommendation to buy, sell or hold. Past performance is not necessarily indicative of future results.

Development

GitHub metrics:

Developer activity (from Coinlib.io):

Bitcoin Core 0.18.1

  • P2P protocol and network code
  1. Add tests and documentation for blocksonly (MarcoFalke)
  • Wallet
  1. Add -ignorepartialspends to list of ignored wallet options (luke-jr)
  • RPC and other APIs
  1. Bugfix: fix pruneblockchain returned prune height (jonasschnelli)
  • GUI
  1. fix the bug of OPEN CONFIGURATION FILE on Mac (shannon1916)
  • Build system
  1. Add test for GCC bug 90348 (sipa)
  • Tests and QA
  1. Pure python EC (sipa)
  • Documentation
  1. Remove text about txes always relayed from -whitelist (harding)
  • Miscellaneous
  1. Catch by reference not value in wallettool (kristapsk)

Social encounters

In an increasingly cashless society, our everyday payments are being tracked and monitored by third parties in an attempt to learn our habits so they can advertise to us more effectively. Tracking our shopping habits to market to us might not be that nefarious, but in some parts of the world this same technology is used to suppress free speech or even affect one’s “social credit score,” as in China. While more free societies haven’t gotten there yet, it could become a very slippery slope, and Lightning Network payments may just be the way to curtail such activity.

This episode features Alex Gladstein of the Human Rights Foundation discussing his recent essay “The Moral Case for Lightning.” We also discuss surveillance capitalism, the Hong Kong protests and how the world might evolve if Lightning payments are adopted by the masses.

Finance

To start analyze Bitcoin’s finance, we should admit that there is a lot of fundamental metrics which can help us make a decision, but metrics are just metrics and there are risks associated with investing in crypto assets. All metrics can only show general market and user sentiment in past and present, not in the future.

We use fundamental analysis as one of several aspects in our approach to investing. For instance, we use the following indicators and ratios.

  • Active Addresses (Daily) — indicator
Source: bitinfocharts

The graph above shows the average number of active addresses used on the Bitcoin blockchain in the last 30 days. It is obvious that the increase in the number of active addresses reflects the growth of the activity of the entire Bitcoin network. Previously, we were seeing this growth which was accompanied by a trend change to bullish. However, we are observing the fall in a number of daily active addresses.

  • Average Transaction Value (Daily MA30) in USD

This graph reflects the average transaction value in the previous 30 day, and, as previous graph, shows a rise in network activity. There is no one man who can deny the trend change, because even transaction value is rising — more rich people want to buy and hold it waiting for the new high price.

  • Mining profitability in USD

No one PoW blockchain can be working without its main power — miners. And the mining profitability can indicate the interest of miners. There is a graph which indicates mining profitability per one day and it can tell us that it can be a nice idea to return to mining business — profitability has doubled in several months.

  • Network Value to Transaction Value
Source: charts.woobull.com

At the end of June, It was a time when we saw the high of Net Value to Transaction, and it could be interpreted as a signal to sell BTC. On 28 June 2019, it was 112. On 30 July, it is 68,9. Then we saw the correction of NVT. It fell into its average level. Today, on 13 August, it is roughly 79.

To be honest, it is not just technical indicator, it is the fundamental indicator which shows the overbought of Bitcoin on the market because NVT displays that the value exceeds usage.

NVT ( Network Value to Transaction Value) = Network Value (Market Cap.) / MA 90-days Transaction Volume

  • Average fee in USD

As we know, every transaction includes fee which is paid to the miners to write this to the ledger, but because of low Bitcoin TPS (Transactions per second), there is a lot of unconfirmed transactions and if any user wants to make his/her transactions confirmed faster he/she is able to pay higher transaction fees. It is obvious that the growth of commission is due to increased activity. And today this fact can be seen on the chart above.

Monetary properties:

  • 60-day Volatility — 9.8%

Red — BTC/USD Volatility Blue — USD/EUR Volatility

Volatility is a statistical measure of the dispersion of returns for a given security or market index over a given period of time. Generally, this measure is calculated by determining the average deviation from the average price of a financial instrument in a given time period. We use standard deviation whose using is the most common, but not the only, way to calculate historical volatility. The higher the historical volatility value, the riskier the asset (in our case, Bitcoin). However, that is not necessarily a bad result as risk works both ways — bullish and bearish. But there is an important point for long-term crypto-investors — Bitcoin volatility is decreasing, however USD/EUR volatility does not change. Nevertheless, everybody, interested in crypto currencies, must remember that investing in digital assets like bitcoin is highly speculative and comes with many risks, but according to Hawley, professor and economist, the higher the risk in business, the greater the potential financial reward is for the business owner.

  • Bitcoin Inflation — 4.11%

When we talk about Bitcoin Inflation Rate, we do not mean the purchasing power of money, we mean the average mined bitcoins. There is a fixed amount of 21 million Bitcoin that can be minted, which means that no coins can be minted once this amount is reached. Approximately 80 percent of the total amount of Bitcoin has already been minted. Bitcoin’s algorithmic inflation rate since 2010 is displayed in the figure below and is explained in the original white paper written by Satoshi Nakamoto.

Inflation rate

Today, 2nd July, the inflation rate of Bitcoin is 4.11 percent. And it isn’t more than last week.

The difficulty re-adjustment makes it impossible to simply mine more Bitcoin by allocating more computer resources to the network. As more people try to mine Bitcoin, the software automatically increases the difficulty of successfully mining a Bitcoin and vice-a-versa.

Once the inflation rate reaches zero, miners will no longer be able to earn money from minting newly created bitcoins. Instead, transaction fees will have to increase or the number of transactions will have to increase.

To conclude, we must admit that Bitcoin Block Reward Halving Date approaches — 21 May 2020. According to the history prices and previous halving, we believe that after this date Bitcoin’s price will incredibly rise, because the inflation rate will drop by half.

  • Bitcoin Future on the Chicago Mercantile Exchange
Source: CME Group

The CME was created in 1898 as a commodities exchange for butter and eggs. It is now one of the biggest financial exchanges in the world, specializing in futures and options across industries, from agriculture to metals to real estate.The CME launched Bitcoin futures trading in December 2017, and volume on the exchange has been rising since then.

On May 13, 2019, the Chicago Mercantile Exchange (CME) reported a daily volume of over $1.3 billion in notional value for Bitcoin futures contracts traded. The CME is a regulated exchange based in the United States, but unregulated exchanges outside of the U.S. report even higher volumes for futures trading. On the same day, BitMEX reported $13 billion in notional value traded. However, on May 28,2019, the volume raised 21 thousand futures. On 18th June 2019, it was only 8 thousand futures. Furthermore, today, it is only 2000 futures.

Source: CoinMarketCap

On August 13, 2019, news broke that the U.S. Securities and Exchange Commission (SEC) has put three bitcoin exchange traded funds (ETFs) on the regulatory backburner.

The SEC has delayed decisions on filings by VanEck/SolidX, Bitwise Asset Managementand Wilshire Phoenix until October 18, October 13 and September 29 of this year, respectively. On these dates, the SEC will have to either accept or reject the filings.

History has not been kind to bitcoin ETF filings, as more than a dozen have been pulled by their sponsors or scrapped by the SEC since 2013. With each failed attempt, the SEC rehashes the usual arguments that the market is too immature, easily manipulated and lacking in internal controls for proper custody to approve a bitcoin ETF. The SEC’s persistent rejections has meant that, over the years, eager anticipation for these products has morphed into assumption that they will be delayed or denied, so much so that a common sentiment on community hubs like Twitter is that ETF news is hardly news now and more like a self-fulfilling prophecy at this point.

Not too long ago, Bitcoin adherents treated the bitcoin ETF like the holy grail of on-ramps for institutional investors who lack regulated access to market. Under this supposition, the coming of an ETF would presage a flood of fresh capital into the asset. But then the gauntlet of delays evaporated any hope that this liquidity would come from an ETF.

The promise of an ETF aside, however, institutional money has found its way into the market all the same.

SEC APPROVAL UNNECESSARY

Indeed, there are plenty of investment vehicles geared toward accredited investors hungry for exposure to bitcoin. The CME and Cboe’s bitcoin futures are two of the more prominent examples, even as the latter ceased operations in Q1 of 2019.

Both of these options don’t offer investors spot market access to bitcoin — only derivatives contracts based on its future price.

But in the past year, options that give investors direct access to bitcoin have also been growing. Barry Silbert’s Grayscale Investments, for example, currently manages $2.7 billion in crypto assets. The vast majority of these holdings, over 75 percent, are in its Bitcoin Investment Trust (GBTC), which are traded through OTC Markets Group, a New York-based over the counter financial market. In 2019 alone, Grayscale has accrued just over $200 million in investments, some 80 percent of which has come from institutional investors.

“As Grayscale is the largest digital currency asset manager, it might be a good indicator of the broader market sentiment and behavior,” Marissa Arnold, Grayscale’s director of communications, told Bitcoin Magazine.

Growing client interest from Grayscale’s competitors corroborate Arnold’s comment. Fidelity Digital Assets, the cryptocurrency investment arm for one of the world’s largest asset managers (with $2.6 trillion under its purview), went live at the beginning of 2019. In a CNBC interview, Fidelity Digital Asset Head Tom Jessop said that 22 percent of the 450 institutions that the company surveyed already hold bitcoin in their portfolios and plan to double their positions in the next five years. Some of its own clients have been using Fidelity’s services to purchase and custody bitcoin since January 2019.

ACCREDITED INTEREST IN BITCOIN

With one of the world’s premier asset managers pioneering institutional interest in bitcoin alongside crypto heavyweights like Grayscale, the narrative of accredited interest in bitcoin is as strong as ever. And the trend plays into the conjecture that these institutions bought the bottom of the bear market from November 2018 to April 2019 and catalyzed bitcoin’s most recent price increase.

Whether or not this is true, institutional demand is apparently growing alongside institutional-grade investment vehicles. Newcomer products like LedgerX’s bitcoin swaps(not to be confused with its bitcoin futures, which have yet to be approved by the Commodity Futures Trading Commission, contrary to news reports from the end of July 2019). The Intercontinental Exchange also has a bitcoin futures investment platform, dubbed Bakkt, that has been forthcoming for quite some time. Nasdaq’s own bitcoin futures have been anticipated for some time, as well.

With these investment options on the horizon coming to complement those already available, institutional investors aren’t holding their breath (or withholding their funds) for something like a bitcoin ETF. If and when the ETF comes, it certainly will give Wall Street another on-ramp to bitcoin — but it will be one of many and far from the end-all-be-all.

The European division of Japanese cryptocurrency exchange bitFlyer has announced a simplified bitcoin trading service for its local customers. Dubbed “bitFlyer Buy/Sell,” the exchange claims that the new service will allow investors to trade easily without the complexity that comes with some advanced exchanges.

The simplified service adds a new dimension to its suite of products in the EU, which includes bitFlyer Lightning, an exchange service for professional traders.

According to the company announcement, buying or selling digital assets can be accomplished in three steps.

“Check the buy or sell price on the corresponding box … Choose the amount of coin (e.g. 0.003 BTC) you want to buy or sell by filling in the Amount box … Click on ‘Buy Coins’ or ‘Sell Coins,’ then confirm the order. The order is executed without any delay or added fee,” the announcement reads.

The new bitcoin buying and selling service won’t keep an order book, and all trades will be executed for free. For now, users are only able to exchange bitcoins for euros, and the maximum daily transaction limit has been set at 20 BTC.

Update, August 1, 2019: While LedgerX announced that it had launched the first physically settled bitcoin futures contracts, the U.S. Commodity Futures Trading Commission (CFTC) has not indicated any official approval. As of this update, investors can sign up for early access to the futures platform, but there’s no clear indication of when it will actually go live. Though LedgerX did receive approval as a derivatives clearing organization from the CFTC, it’s possible that this was not enough to officially offer physically settled bitcoin futures contracts.

Last week Bakkt, an affiliate of the New York Stock Exchange (NYSE) parent company Intercontinental Exchange (ICE), was set to become the first company to pay out traders in bitcoin after its soft launch on July 22, 2019.

However, LedgerX has beaten Bakkt to the punch after officially launching the first physically settled bitcoin futures contracts today, July 31, 2019. The new product allows U.S. residents to trade futures contracts in exchange for real bitcoin (the “physical” commodity) so long as they have a government-issued ID.

According to Paul Chou, CEO of LedgerX, traders are not required to bet on products with U.S. dollars and can buy contracts using only bitcoin. Chou said the new contracts help customers avoid waiting for bank transfers and prevent issues with other components of the U.S. banking system. He explained that the goal of the new contracts is not necessarily to compete with cash contracts and that the two types of contracts “are entirely different.”

“If you imagine somebody that deposits bitcoin, they would not have to use the U.S. banking system at all. That’s why physically-settled is very important,” Chou said, per Coindesk. “I think [it’s] one of the most unique use cases for bitcoin, where you’re using cryptocurrencies as the only collateral.”

Another major aspect of the new futures contracts is that both institutional and retail investors can utilize the product as long as they pass Know-Your-Customer (KYC) protocols. While institutional clients have the ability to trade futures with any LedgerX product, retail customers must use Omni, the latest trading platform from LedgerX. According to Chou, the uniqueness of Omni’s platform is derived from its simplicity.

In order to open an account with Omni, retail users must wire $10,000 to the platform. Once the account is made, users can trade bitcoin, bitcoin options and bitcoin futures for free, according to the company website.

LedgerX launched in 2017 and became the first federally regulated derivatives exchange for bitcoin in the U.S. after registering with the U.S. Commodity Futures Trading Commission (CFTC) as a swap execution facility and derivatives clearing organization. Last month, the CFTC also approved LedgerX LLC as a designated contract market according to a press release at the time.

FTX, a new cryptocurrency derivatives exchange and trading platform, has raised $8 million in a funding round led by blockchain-focused fund Proof of Capital, Consensus Lab, FBG and Galois Capital.

Proof of Capital is a $50 million venture capital (VC) fund launched in April 2019 by partners from Horizons Ventures, Greylock Partners and 500 Startups, and backed by the likes of HTC and YouTube co-founder Steve Chen.

The fund invests in early-stage blockchain startups with a focus on fintech, infrastructure, hardware and consumer products, and made one investment prior to FTX in Ubanx, an API banking infrastructure for fiat-to-crypto exchange in Latin America.

Chris McCann, managing partner at Proof of Capital, said in a statement that his firm will help FTX go to market in Asia.

Developed by a team of former traders at Jane Street, Susquehanna and Optiver, FTX is a new crypto exchange and trading exchange offering futures contracts, leveraged tokens and an over-the-counter (OTC) portal. The platform promises to be “powerful enough for professional trading firms and intuitive enough for first-time users,” according to the company’s website, and claims more than $300 million in total trading volume since its launch.

FTX is currently expanding its team; it recently hired former employees of Huobi, Kraken and Circle, with more to come, Sam Bankman-Fried, co-founder and CEO of FTX Trading,wrote in a blog update on August 5, 2019.

It is now focusing on expanding its userbase and has started rolling out user acquisition strategies in Eastern Europe, Southeast Asia, Taiwan and Australia.

“We have some pretty badass team members from Jane Street, Optiver, Susquehanna, Google and Facebook but we’re planning to hire to grow the team, especially in Hong Kong,” Bankman-Fried told Bitcoin Magazine.

“Hong Kong is the financial hub of Asia so it will give us even more financial talent and fresh blood. We want to hire the best people from both traditional and decentralized financial institutions and expand our userbase globally. We are looking into hashrate futures and many other products to come.”

FTX’s origins trace back to 2017, when the team set out to build Alameda Research, a global trading platform which now claims to trade up to $1 billion per day and manage over $100 million in digital assets.

“Our CTO Gary Wang was tasked with writing an entire quantitative trading firm’s software — from algorithms to front end UIs to trading systems to API connections — more or less autonomously. That software, combined with our experience at companies like Jane Street and Google, is what inspired FTX,” Bankman-Fried said. “We designed FTX for ourselves but as it evolved, we realized our platform has the potential to help other traders tap into derivatives and futures in a way that wasn’t before possible.

CHARTING BITCOIN AND SHITCOIN INDICES

According to Bankman-Fried, FTX’s biggest differentiator is that the platform focuses on making complex financial products more accessible to the average trader.

“It’s much of the reason we created investment vehicles like FTX BTC, a bitcoin futures product that lets traders speculate on the future price of bitcoin, and FTX SHIT, a ‘shitcoin’ index containing a basket of small-cap cryptocurrencies so traders can more effectively hedge risk and create new opportunities,” he said.

Shitcoin Index Perpetual Future (SHIT-PERP)

The company says its proprietary technology and trading features make the trading platform “one of the most liquid cryptocurrency exchanges in the market.”

FTX says its liquidation engine prevents clawbacks by slowly closing overleveraged positions while minimizing market impact, and its backstop liquidity provider system prevents accounts from going below bankruptcy level by automating liquidating and closing down at-risk accounts.

In addition to futures contracts, FTX offers three leveraged tokens for every underlying token or index listed on FTX: BULL (3x), BEAR (-3x) and HEDGE (-1x).

Each of these has an associated account on FTX that takes leveraged positions on the perpetual futures and can be created/redeemed for its share of the assets of that account. These tokens can be withdrawn from FTX as ERC-20 tokens.

Finally, FTX’s 24/7 OTC portal, powered by quant trading firm Alameda Research, allows investors to make OTC trades on over 20 coins with no fees and instant settlement.

The FTX ecosystem has its own native utility token, FTT, which provides holders with a number of benefits including weekly buying and burning of fees, lower trading fees, OTC rebates and collateral for futures trading.

In the August 2019 issue of New Zealand’s Tax Information Bulletin (published by the Inland Revenue Department), a new public ruling integrates “crypto-assets” as legal and taxable forms of payment. Correspondingly, New Zealand becomes one of the first nation states to create a proper framework for employees to receive cryptocurrency as part of their wages. However, it should be noted that the new provisions don’t concern self-employed taxpayers, and a couple of conditions are implied: no lock-up period on the coins and an easy convertibility to a fiat currency.

According to comments by the New Zealand Commissioner of Inland Revenue, bitcoin has all of the required qualities to be considered a form of payment, but it still has the legal status of “property” rather than money. Correspondingly, criteria which make it a legal means of payment and, therefore, subject to taxation include convertibility into fiat and ability to be transferred as a means of payment.

Bitcoin is mentioned no fewer than 18 times within the document. And in the sections where practical examples for fair tax calculations are required, it’s BTC that receives the spotlight. Not only does this highlight bitcoin’s supremacy as the best and most popular of cryptocurrencies, but it also emphasizes the fact that BTC payments to employees are taxable events regardless of “non-money” legal status and community narrative.

Furthermore, it’s worth pointing out that the tax rate in New Zealand is 33 percent and citizens must make the payments in NZD. In this regard, the Inland Revenue Department doesn’t accept BTC itself; rather, it expects taxpayers to convert their crypto into fiat, according to the market valuation around the time when the wage transaction happened.

This is really good news for Bitcoin, as companies in New Zealand are finally able to offer their employees the option to receive a certain percentage of their salaries in BTC. Now the process of #stackingsats on payday has become more seamless. It also opens the door for third-party fees to be eliminated if the company itself already owns the bitcoin — which translates into more satoshis for the employees and extra reasons to HODL until hyperbitcoinization.

Ecosystem

Far-East Trading and Industrial Company, an importer of cryptocurrency mining gear, is being investigated by law enforcement authorities in Russia.

In its report on the investigation, CoinDesk revealed that the miner importer is alleged to have evaded up to $1.2 million in taxes on about 6,012 ASIC miners brought into Russia between August 2017 and February 2018.

According to a search warrant, the Moscow-based company (also known as DTPK) reportedly presented falsified documents to authorities throughout this period, with the documents themselves showing incorrect product prices.

The company was also accused of falsely reporting to the customs service that it got the miners from MSR Co., a Korean firm. Further investigation revealed that MSR Co. hadn’t done any business with the Russian company.

Officers from the Russian Federal Customs Service led a raid of some suspected DTPK business partners earlier this month. Intelion Mining, a company that runs data centers that host miners, saw up to 2,500 of its ASICs seized by the authorities from locations in Moscow and Tula.

The case is the latest in Russia’s efforts to tackle cryptocurrency miners who use equipment without proper documentation.

Statistical analysis has shown that the exchange of Venezuelan bolívars to bitcoin hit an all-time high in early August 2019.

Throughout the first few months of 2019, the Venezuelan bolívar has undergone a period of severe hyperinflation, with the International Monetary Fund (IMF) predicting that the inflation rate would go up between 1 and 10,000,000 percent over the course of the fiscal year.

As a result of this economic instability, cryptocurrency has become a relatively stable store of value, compared to the tumultuous conditions of the economy. In addition to private citizens becoming users of bitcoin and other crypto assets, the Venezuelan government itself has both launched its own state-backed coin and has tested pilot programs for massive bitcoin transfers.

These economic conditions seem to be contributing to a massive upswing in the adoption and use of bitcoin within the nation. Data from Coin Dance shows that the exchange of bolívars to bitcoin on LocalBitcoins.com has increased dramatically, with the current exchange rate posting at more than five times what it was at the beginning of the year. The number of bolívars exchanged for bitcoin has risen by nearly 20 billion in the last month alone.

Further analysis from Coin Dance shows that Venezuela is not the only country to reach its all-time high in trade volume within the last few weeks. Several other nations, such as Colombia and Argentina, have seen the volume of trades from local currency to bitcoin spike in the same time period as Venezuela.

Of particular interest to this trend is the fact that all three of these nations are experiencing a period of inflation at the same time. The Colombian Central Bank announced that inflation was likely to exceed target goals in late July. And Argentina has seen a direct correlation between public confidence in the peso and the use of bitcoin.

  • Bitcoin ATM Network
Source: coinatmradar.com

First, there is the robust growth in Crypto ATM Installations. Now there are 5 362 installations and it seems went fine.

There is the pie chart above which reflects the distribution by manufacturer. The biggest players are General Bytes and Genesis Coin. Must admit, the average transaction fee continues to be pretty high — about 8%.

Moreover, most of them are located in North America. It means that there remains much to do in order to make Crypto ATM as usual as our ordinary ATMs.

Lightning Network

Source: explorer.acinq.co

The Lightning Network is a “Layer 2” payment protocol that operates on top of a blockchain-based cryptocurrency (like Bitcoin). It enables fast transactions between participating nodes and has been touted as a solution to the Bitcoin scalability problem. It features a peer-to-peer system for making micropayments of cryptocurrency through a network of bidirectional payment channels without delegating custody of funds. Lightning Network implementation also simplifies atomic swaps.

Normal use of the Lightning Network consists of opening a payment channel by committing a funding transaction to the relevant base blockchain (Layer 1), followed by making any number of Lightning transactions that update the tentative distribution of the channel’s funds without broadcasting to the blockchain, optionally followed by closing the payment channel by broadcasting the final version of the transaction to distribute the channel’s funds.

  • NodesNumber of nodes with and without channels.
Source: BitcoinVisuals node (lnd)

This chart shows the number of nodes with and without channels. Lightning 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 chain. This creates a second layer on top of the bitcoin network that expands it capabilities.

Blue — with channels. Red — without channels.

  • Channels
Source: BitcoinVisuals node (lnd)

Unique (blue) = channels connecting nodes directly for the first time. Duplicate(red) = channels between nodes that are already connected.

  • Network Capacity
Source: BitcoinVisuals node (lnd)

This chart shows cumulative bitcoin capacity across all channels. Lightning 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 chain. This creates a second layer on top of the bitcoin network that expands it capabilities.

  • Network Capacity per Channel
Source: BitcoinVisuals node (lnd)

Daily median capacity per channel statistics. Blue — average, Red — 90th percentile, Green — 50th percentile, Yellow — 10th percentile.

These and other graphs can be found here.

Social media metrics

Social media activity:

Since this is the first biweekly overview, there is only one period and there are no FaceBook and Reddit dynamics.

  • Google Trends
Source: Google Trends

Another one symptom of a bullish trend, in our view, can be an increasing Google Trends Score (0–100). But as we can see, after the pump there is a decrease again. It seems there is a correlation between Google Trends and BTC price.

“Numbers represent search interest relative to the highest point on the chart for the given region and time. A value of 100 is the peak popularity for the term. A value of 50 means that the term is half as popular. A score of 0 means that there was not enough data for this term. “

  • Tweets
Source: Twitter

The graph above reflects number of tweets with the hashtag #bitcoin. We consider that this index shows the popularity of Bitcoin and the rise, observed nowadays, could predict the larger demand for Bitcoin and other cryptocurrencies.

The graph above shows the dynamics of changes in the number of BTC Reddit subscribers and Facebook likes. The information is taken from Coingecko.com.


This is not financial advice.

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Paradigm fund

Paradigm Fund is an investment firm focused on blockchain technology, cryptocurrencies and cryptonetworks shaping data economy and financial industry since 2013.

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Paradigm

In chaos lies the truth

Paradigm fund

Paradigm Fund is an investment firm focused on blockchain technology, cryptocurrencies and cryptonetworks shaping data economy and financial industry since 2013.

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