- By Pierre-Alexandre
July 17th, 2019
Here’s a look into some of the key metrics determining the performance and growth of the Bitcoin blockchain network.
It’s been a decade since the inception of Bitcoin and it continues to dominate the crypto industry as the world’s largest cryptocurrency. The Bitcoin blockchain network has been exemplary in a way to set the precedence for other cryptocurrencies to arrive in the market.
Although Bitcoin enjoys the first-mover-advantage in the crypto industry, it continues to be a top choice for investors due to some of the unique features of its blockchain network. Let us discuss some of the key performance metrics which provide strength to the Bitcoin blockchain network and determine the blockchain activity.
Key Performance Indicators for the Bitcoin Blockchain
Our infographic about the top Bitcoin Blockchain Indicators
- Active Users: The active users of any blockchain network are also called as the wallet users for any blockchain. The active users show the amount of investor interest for any particular blockchain. The number of Bitcoin wallet users has been on a constant rise since its inception in 2009.
According to Blockchain.com, the total number of active users on Bitcoin has reached close to 40 million as on June 5, 2019. Over the last year, nearly 15 million active users have joined the Bitcoin blockchain.
- Total Transactions: The Bitcoin blockchain activity is on an uptick as the daily number of transactions of the Bitcoin blockchain is on a steady rise over the last year. The daily number of confirmed Bitcoin transactions has reached close to 400,000.
Similarly the number of transactions per block has been on a constant rise over the last year. As on date, each block on the Bitcoin blockchain can process around 2500 transactions. Besides, the transactions per second or the transaction rate as on date is 3-4 TPS.
- Realized Capitalization: This is slightly an alternative approach to the market capitalization of any cryptocurrency. Market Cap calculation considers all the Bitcoins ever mined even if they are lost or frozen. On the other hand, realized capitalization only considers Bitcoins that are currently in circulation.
- Market Value to Realized Value (MVRV): As the name suggests, the MVRV ratio is obtained by the division of Market Value to Realized Value.
Another useful extension is the MVRV-z which tracks the z-score distance between the market value and the realized value. In fact, the MVRV-z indicator represents the strong deviation between the market value and the realized value.
- NVT Ratio: The Network Value describes the total market value of all BTC tokens currently in circulation. On the other hand, the transaction value provides an estimate of the on-chain transaction activity drawn from blockchain and block explorers.
The Network Value to Transaction (NVT) Ratio calculates the dollar value of Bitcoin’s transaction activity that is relative to the network value. Lower the NVT ratio means that the cryptocurrency is cheaper per unit of the on-chain transaction volume. The NVT ratio has a similar behaviour to the P/E ratio and the metrics spikes up when the asset value is actually greater than the market usage.
A simple way to calculate the NVT ratio is to divide the market cap by the volume transmitted by the blockchain. At the current time, the Bitcoin NVT Ratio is close to 60.
- Mempool Transaction Count: Mempool indicates the number of transactions waiting to be confirmed and added to the Bitcoin blockchain network. This is basically the nodes holding area for all the pending transactions.
As on date, June 5, 2019, the Mempool transaction count stands at 10,900 transactions.
- Hash Rate: The hash rate is defined as the speed at which the miner solves the code to add new blocks to the Bitcoin network. Higher the hash rate means higher opportunity for cryptocurrency mining or receiving the block rewards. The current hash rate for Bitcoin network is 59 Tera Hashes per second.
- Aggregate Security Spend: Many analysts believe that market cap doesn’t give the true value of a cryptocurrency as it doesn't distinguish the lost coins from the circulating supply. Nic Carter proposed a new way to measure the appropriate value of the network.
Some cryptocurrencies are traded through Over-the-Counter (OTC) and thus all the capital inflows in the network doesn’t come through the exchange only. Carter says that the true inflows are actually the aggregate of resources spent by the miners. Thus, the Aggregate Security Spend is basically what is paid out to the miners from the network against their investments.