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Rethinking Network Value To Transactions (nvt)ratio

Rethinking Network Value To Transactions (nvt)ratio

Chief Research Officer @ Cryptolab Capital. Technology investor, cryptoasset believer, snowboarder, Stanford grad Rethinking Network Value to Transactions (NVT)Ratio Cryptoasset prices have been quite turbulent in the past few weeks. At times like this its especially important to look at the fundamental foundations of cryptoasset prices, and quantitative metrics. Today I will share with you one of the main metrics we use in our investing decisions at Cryptolab Capital . Emerging field of cryptoeconomic ratioanalysis In traditional finance, ratio analysis is one of the most widely used valuation methods. Lacking the detail of other valuation approaches, such as DCF analysis, ratio-based valuation is much faster and is still a good proxy of fair value. It also allows one to easily track asset price dynamic over long periods of time as well as compare different assets to each other. Over the course of the last year, a new study of cryptoeconomic ratio analysis emerged. The main idea behind this new field is to study the relationship between price of a cryptoasset and its fundamentals. One of the most widely known ratios is Network Value to Transactions, or NVT. Introduced and popularized by Chris Burniske , Willy Woo , and the team behind Coinmetrics , NVT is often called crypto PE ratio. Heres the definition of the ratio: In a traditional PE ratio, the earnings metric in the denominator is used as a proxy for the underlying utility of the company created for the shareholders. While cryptoassets dont have earnings, one can argue that the total value of transactions flowing through the network is a proxy for how much utility users derive from the chain. It is worth highlighting that Daily Transaction Volume in NVT takes into account only on-chain transactions. All the trad Continue reading >>

Network Value To Transactions Ratio

Network Value To Transactions Ratio

The Network Value to Transactions (NVT) ratio measures the dollar value of cryptoasset transaction activity relative to network value. This is a simple way to compare how the market prices one unit of on-chain transactions across different networks. Generally speaking, a low market to transaction value denotes an asset which is more cheaply valued per unit of on-chain transaction volume. Network value consists of the total market value of all tokens in circulation. The transaction element is an estimate of the value of on-chain transaction activity drawn from block explorers and blockchains. Due to change outputs which inflate estimations of on-chain transactions, the figures themselves are imprecise. However, this skewed estimation is consistent both on a time-series and cross-sectional basis (across different cryptoassets), so relative change and positioning of NVT ratios between cryptoassets are meaningful. For more on this caveat, see this post and our FAQ . We owe thanks to Willy Woo and Chris Burniske for devising and popularizing the metric, respectively. It was originally called MTV (market cap to transaction value) but market cap is a misleading name in this context. Daily on-chain transaction volume is calculated as the sum of all transaction outputs belonging to the blocks mined on the given day. Change outputs are not included. Zcash figures for on-chain volume and transaction count reflect data collected for transparent transactions only. In the last month, 10.5% (11/18/17) of ZEC transactions were shielded, and these are excluded from the analysis due to their private nature. Thus transaction volume figures in reality are higher than the estimate presented here, and NVT and exchange to transaction value lower. Data on shielded and transparent transactions Continue reading >>

Bitcoin Puzzle: Price Is Up But Transaction Volume Isn't | Fortune

Bitcoin Puzzle: Price Is Up But Transaction Volume Isn't | Fortune

Earlier this year, when Bitcoins price fell by more than 60% from its record close, a less-noticed Bitcoin figure also plunged: the number of daily transactions. There are many explanations for the fall-off in trading, from software- to news-related. Whats less understood is why the level hasnt recovered as Bitcoins price made a 50% comeback since Feb. 5. Thats left some investors wondering whether the cryptocurrency is waning in popularity. The average number of trades recorded daily has roughly dropped in half from the December highs and touched its lowest in two years last month, even as Bitcoin became a household name and roared back above $10,000. The transaction data may be bad news for Bitcoin bulls, according to Charles Morris, chief investment officer of Newscape Capital Group in London, who invests in cryptocurrencies. Trading and purchases on the Bitcoin network, which can be measured by metrics like transaction volume, is indicative of price direction, he said. We had a hype-cycle and now its cooling down, Morris, whos working on a project that will facilitate price discovery in various cryptocurrencies, said by phone from London. We just may be entering a bear market for Bitcoin. Transactions plunged from a seven-day average of almost 400,000 in mid-December to about 200,000 this week, according to research firm Blockchain.info. The last time it was this low, the currency traded below $500. Transactions waiting to be officially recognized by the Bitcoin network dropped from a seven-day average of 130 million bytes in early January to about 35 million now. Average transaction confirmation times have tumbled though that may be in part because the technology that underlies Bitcoin has already been adapted to address some of these delays. For example, a softwa Continue reading >>

Three Ways To Value Bitcoin Hacker Noon

Three Ways To Value Bitcoin Hacker Noon

Crypto Fund Manager, First Follower, Wartime Founder CEO, Advisor, Angel Investor & Author on AI When talking with anyone interested in trading bitcoin, the question inevitably asked is, How much is bitcoin worth? Its a tough question to answer. Here are 3 ways to consider when evaluating what bitcoin is worth. If you want to take a stab at valuing bitcoin coming from the context that its a commodity, one way might be to estimate it as a percentage to the total value of gold. The market cap of all the gold currently mined today is about $8T . Gold is a good commodity to compare against because its not consumable and it is used mainly as a store of value. Gold was a store of value for a generation. Today, everything is digital, and bitcoin could be a store of value for the future generation. If bitcoin garnered 10% of the total value of gold, then the market cap of bitcoin could rise to $800B. To date, bitcoin has a market cap of about $100B . This is one way FundStrat Global Advisor co-founder Tom Lee is attempting to value bitcoin , though he uses 5% of gold. This might be one way to value bitcoin. That would still put the longterm value of bitcoin at $400B. Lee also explains the network effect and Metcalfes Law . Value is established in this way: the more engagement, the more value gets created. As more and more people use bitcoin, the higher the value because of the network effect. This focus on bitcoin as a technology or social network conveys the strong opportunity for non-linear growth. Speculation every speculative dollar that trades in bitcoin increases the value Merchant Adoption every new merchant that accepts bitcoin increases the value of the network Consumer Adoption every time a new consumer can buy something with bitcoin the value increases Security/Ince Continue reading >>

Analysis: Are 70 Percent Of Ethereums Transaction Value The Result Of A Huge Mixer?

Analysis: Are 70 Percent Of Ethereums Transaction Value The Result Of A Huge Mixer?

Analysis: Are 70 percent of Ethereums Transaction Value the Result of a Huge Mixer? For some months the Ethereum network has processed more transactions than Bitcoin . However, a recent study discovers that 68 percent of the transactions value belongs to a huge mixer which obfuscates the origin of the ether. But the source could be more boring than supposed on first thought. Actually Ethereum enjoys the nimbus of being the white blockchain. While bitcoin has the bad reputation as the Dark Nets currency of choice, ether usually is classified as the innocent currency of banks and geeks. However, this standing has started to totter. Not only has the ICO hype demonstrated that Ethereums first killer app is being a global platform for unregulated crowdfunding a new analysis of Ethereums transaction graph has what it takes to disrupt the nice guy image further. At least the authors of the analyses claim that in the center of Ethereums economic activity is a mixer. And usually, mixers are not said to be a tool for those who have nothing to hide. But before we take premature conclusions, lets take a look at the analysis. Throwaway Addresses at the Core of the Scheme The Cyber Blog team analyzed all Ethereum transactions from Genesis Block to September 15, 2017. To do so, they clustered the addresses, which means that they searched for patterns which indicate that the addresses belong together. The concept is well known from Bitcoin, where sophisticated clustering algorithms have started to play a growing role in law enforcements investigations of Dark Net activities. The clustering analysis of Ethereum s blockchain resulted in a remarkable new finding; there is a class of throwaway addresses. These addresses received money, sent money shortly after and have never been used sin Continue reading >>

Bitcoin Transaction Volumes Up 55% In 2017

Bitcoin Transaction Volumes Up 55% In 2017

Bitcoin Transaction Volumes Up 55% in 2017 Transaction volumes for Bitcoin are up 55 percent on 2016, data shows, now averaging $260 mln a day. Bitcoins transaction volume in 2017 exploded to $260 mln per day - or $180,000 per minute, according to the latest statistics. The figures, which are currently circulating through the community on social media, show sustained solid growth in use year on year. "Bitcoin transactional volume in 2017 has been $260M per day, $180K per minute. Up 55% fro pic.twitter.com/8TOIN6hBal The Bit Coiner (@The_BitCoiner) February 17, 2017 In 2016, widely considered to be a breakout year for Bitcoin, volumes grew by 118 percent during the previous 12-month period. At the same time, citing Chain product architect Oleg Andreev, cryptocurrency investor Trace Mayer noted that Bitcoin moves the equivalent of 45 tons of physical gold every day but with a fee rate of less than 0.01 percent. #Bitcoin moves equivalent of 45 tons of physical $gold every day for less than 0.01% in fees. Lots of $BTC price upside still available! pic.twitter.com/DqZoNgNAVp Trace Mayer (@TraceMayer) February 17, 2017 Mayers comments, however, received mixed reactions , as Andreev himself described the statistics as trolling a bit. Nonetheless, Bitcoins upward trajectory is giving optimism to investors. While many expect the next watershed moment to be the yes or no verdict on the first Bitcoin ETF, cryptocurrency commentators are at odds with analysts over the likely outcome. Meanwhile, an Emerita Capital analyst most recently stated that a positive decision would send the Bitcoin price surging by around 65 percent of its current value. Continue reading >>

Will Rising Transaction Fees Bring Down Bitcoin's Price?

Will Rising Transaction Fees Bring Down Bitcoin's Price?

Will Rising Transaction Fees Bring Down Bitcoin's Price? By Rakesh Sharma | Updated December 10, 2017 11:25 AM EST Hydropower: The Key to Bitcoin Mining in the Future? High transaction fees for bitcoin payments claimed a casualty last week, when gaming site Steam announced it would discontinue the use of the cryptocurrency on its platform. In a statement, the game service identified bitcoins volatility and high transaction fees as reasons for its decision. According to Value, the studio behind Steam, the fees resulted in unreasonably high costs for its gameswhen the payment mode was bitcoin. The high transaction fees cause even greater problems when the value of Bitcoin itself drops dramatically, the studio stated. (See also: How Much Cheaper Are Bitcoin Fees As Compared To Credit Card Fees? ) The Relationship Between Transaction Fees And Bitcoin Price Bitcoins average transaction fees have kept pace with the increase in bitcoins price. At the start of 2017, the average transaction feefor transactions that used bitcoin as a payment mechanism was $0.392. As of yesterday, it had risen to $21.567. The price of a single bitcoin in dollar terms has shot up by more than 1,000 percent since the start of 2017. But it is difficult to ascertain causes for the increase. Even though the cryptocurrency has gained traction and has even been legalized in some countries like Japan, statistics regarding its usage are hard to come by. (See also: Bitcoin Gets Boost From Japan .) Will High Transaction Fees Bring Down Bitcoins Price? But will high transaction fees hurt bitcoin's price? Not really. Analysts surmise that bitcoin usage constitutes a very low percentage of the cryptocurrencys transaction volumes. In July, Morgan Stanley payments analyst James Faucette wrote that bitcoin accept Continue reading >>

Can You Legally Protect A Bitcoin Transaction?

Can You Legally Protect A Bitcoin Transaction?

Can you legally protect a Bitcoin transaction? A bitcoin is a digital representation of value enabled by blockchain technology, which provides a decentralized ledger to publicly document and track bitcoin transactions occurring across a peer-to-peer network. Although the blockchain's functionality as a public ledger provides efficiencies to transactions, the lack of a central authority creates a legal enigma. How can an entity protect itself when trading a value of bitcoin on the blockchain with a value of anything else (e.g. U.S. dollars) when the blockchain only facilitates one half of the transaction? The bitcoin transaction involves a simple transfer of value between two parties. Each party is known to the other by a "public key" that allows its identity to remain anonymous. A "private key" held by the transferor enables it to initiate the transaction, which is then broadcast to the bitcoin network for verification. "Miners" verify the transaction by solving complex equations in exchange for newly minted units of bitcoin. Once verified, the transaction becomes another "block" in the bitcoin blockchain. There is no centralized authority, whether a bank, regulator, or otherwise, involved in a bitcoin transaction. Therefore, unique problems arise when parties seek to exchange bitcoin for USD. For example, if a buyer transfers a value of USD from its bank account to the seller, but the seller fails to deliver bitcoin through the blockchain, the buyer has no recourse against the seller unless additional protections are put in place. There are some tools that can be implemented to try to mitigate this risk: Use of an escrow. Buyers may mitigate risk associated with a bitcoin transaction by initiating a multi-signature transaction. A multi-signature, or 'multisig,' transa Continue reading >>

Change - How Does Blockchain.info Calculate The

Change - How Does Blockchain.info Calculate The "estimated Transaction Value?" - Bitcoin Stack Exchange

Each of the output addresses has never before been used, and there is only one input address. Why does blockchain.info guess that 0.7695 BTC has been transacted with 3.7216 BTC as change rather than the reverse (see "Estimated BTC Transacted")? Does it just pick the second address as the change address? In other cases, I am able to guess similarly to blockchain.info, for example: (1) If multiple input addresses are used, the change address should not be greater than the lowest input address (unless, of course, this is being purposely obfuscated). (2) If both of the output addresses have been used before, they may run a degrees-of-separation query to try to connect one of the output addresses more closely to the input addresses, more closely identifying it with the input addresses and therefore as the change address. (3) If only one of the output addresses has been used before, it is more likely to be the change address according to the heuristic in (2) because by definition the used address is more closely "connected" than an address that has never been used. But what heuristic could be used if each of the output address is new? The spending pattern of the input address? Randomness? Thoughts? You can see how this question affects views of the total/daily volume on Bitcoin in aggregate by comparing/contrasting both of the "Estimated Transaction Volume" charts available on . They claim the second chart adjusts for change, but provide no details about the algorithm. Continue reading >>

This One Factor Could Tell How Far Bitcoin Will Plunge

This One Factor Could Tell How Far Bitcoin Will Plunge

Bloomberg the Company & Its Products Bloomberg Anywhere Remote LoginBloomberg Anywhere Login Bloomberg Terminal Demo Request Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world. Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world. This One Factor Could Tell How Far Bitcoin Will Plunge Transactions hold the key for the future of the digital currency. @stephengandel More stories by Stephen Gandel While the sharp drop in bitcoin -- 25 percent, or nearly $4,000, overnight (and 33 percent from the beginning of the week) -- has some predicting the bubble is starting to burst, it may also provide evidence of the cryptocurrency's longevity. The price of bitcoin has fallen in the past week but is still well above where it started the year The critical issue is transactions. And if you are looking for where the bottom could be to bitcoin's plunge, that's a pretty good place to start.Tom Lee, one of Wall Street's biggest bitcoin bulls and head of research at Fundstrat, said on Bloomberg TV on Friday morning that anyone who says bitcoin is based on nothing hasn't "done their homework."The increase in bitcoin this year has followed an uptick in the value of transactions. At the start of the year, there were $275 million in daily transactions in bitcoin. Earlier this week, that had grown to more than $5 billion. That's a 1,700 percent increase, which is more than the rise in bitcoin this year, even before its current tumble. So Lee says the talk about bitcoin not having any intrinsic value -- that it's a Continue reading >>

Bitcoin Valuation Metrics

Bitcoin Valuation Metrics

Is Bitcoins exchange rate overvalued or undervalued? Stock market investors have developed a variety of metrics to spot a good deal. Can we do the same with Bitcoin? The most commonly-applied stock valuation metric is the price to earnings ratio (P/E ratio). It is computed by dividing a companys price per share by its earnings per share. Both forward (next years estimated earnings) and trailing (last years reported earnings) P/E ratios be considered. Comparing the current P/E ratio of a stock with its historical average, or the average of similar stocks, can give insights into fair value. A P/E ratio that exceeds its historical value says that investors are willing to pay more today for the same unit of earnings than they were in the past. If P/E falls below its historical value, investors are paying less for the same unit of earnings. Likewise, two similar companies can be compared by P/E to spot potential over- or under-valuation. Many factors, both internal and external, can influence a stocks P/E ratio. If a company is expected to earn more in the next five years than it has in the previous five, then its P/E ratio might increase to reflect this optimism. Likewise, a company with gloomy prospects may be punished with a reduced P/E ratio. High interest rates tend to depress P/E ratios by making bonds more attractive than stocks, whereas overbought stock markets tend to inflate P/E ratios across-the-board. Willy Woo recently proposed a Bitcoin valuation metric he calls the Network Value to Transactions Ratio (NVT). This is an interesting first step toward a fair market BTC/USD exchange rate analogous to a P/E ratio. NVT can potentially be applied to any cryptocurrency for which a block chain records publicly-viewable transaction values. As Woo explains: What would be Continue reading >>

Bitcoin Now Processes $2 Billion Worth Of Transactions Per Day, A 10x Increase In 2017

Bitcoin Now Processes $2 Billion Worth Of Transactions Per Day, A 10x Increase In 2017

Bitcoin Now Processes $2 Billion Worth Of Transactions Per Day, A 10x Increase In 2017 Opinions expressed by Forbes Contributors are their own. The bitcoin logo is displayed on an automated teller machine (ATM) at the Coin Trader bitcoin retail store in Tokyo, Japan. Photographer: Tomohiro Ohsumi/Bloomberg 2017 has been bitcoins biggest year yet, with the digital asset reaching another new all-time high above $8,000 over the weekend. In addition to the exploding price, the total value transacted on the network per day has also seen substantial gains this year; however, the actual number of transactions processed by the network per day has been rather stagnant in 2017. Lets take a look at the numbers provided by Blockchain.info. Estimated USD transaction value per day on the Bitcoin network (Blockchain.info). For most of January, roughly $200 million worth of bitcoin was being sent around the Bitcoin network per day. Things didnt really take off until May where there was a steady rise in the total value of the transactions processed by the network. Near the end of that month, days where more than $700 million was transacted on the network were common. After declining over the next couple of months, the value being transacted on the Bitcoin network spiked in the runup to the release of Bitcoin Cash, which forked off from the Bitcoin ledger on August 1st. The lock-in of the much-anticipated Segregated Witness (SegWit) improvement for Bitcoin also occurred around this time. Roughly a billion dollars of value was sent around the Bitcoin network per day in early August. This number declined down to $600 million by late September before exploding to $1.5 billion by late October. November 16th set a new all-time high for value transacted over the Bitcoin network in a single da Continue reading >>

Bloomberg: Bitcoin Txs Dropping But Article Ignores Key Facts

Bloomberg: Bitcoin Txs Dropping But Article Ignores Key Facts

I heard that a dancer in Vegas has a bitcoin QR code tattoo and all I could think of was... I hope it is a temporary tattoo because they might want to upgrade to a bech32 native segwit address to save on fees. Also address re-use is poor privacy. Andreas M. Antonopoulos (@aantonop) February 28, 2018 Mainstream publications such as Bloomberg and Forbes have recently reported on the drop in Bitcoins daily transaction volumes. The articles indicated a drop in the popularity of bitcoin and suggested the price has further to fall as usage is dropping. However, many in the crypto community refuted the analysis claiming that it missed some key points; batching, Segregated Witness and spam. The Bloomberg article cited data from Blockchain.info, a popular bitcoin block explorer. The chart below was used in the article to suggestbitcoin was losing popularity and price will likely follow. However, what was not mentioned in the article was the recent upgrades from some of the largest exchanges such as Coinbase, Shapeshift and Kraken. These exchanges have recently implemented SegWit and started batching transactions which has reduced the daily bitcoin transaction volume. The author of Mastering Bitcoin, Andreas Antonopoulous, responded to the article: You're going to need to learn how to evaluate metrics in this new technology. Don't botch it on batching! Andreas M. Antonopoulos (@aantonop) March 2, 2018 Batching transactions drastically reduces the number of transactions sent by exchanges to settle user payments. Coinbase was infamous for often sending two transactions to settle one users payment. With optimised transaction batching it is thought this can be reduced significantly. Wow! A block was mined containing 83% #segwit transactions. #bitcoin pic.twitter.com/A2kmBjfF9T Armin Continue reading >>

Bitcoinity.org

Bitcoinity.org

8MB- blocks containing string "8M" in their coinbase scriptSig (i.e. miners supporting block size increase to 8MB citation needed ) BIP100- blocks containing string "BV" + some digits in their coinbase scriptSig that is BIP100 (and others based on it), also includes blocks with string "BIP100" in coinbase BIP101- blocks with version 0x20000007 as defined in BIP101 None- blocks mined without any indication of block size increase support Continue reading >>

Total Cryptocurrency Transaction Value May Surpass $1 Trillion

Total Cryptocurrency Transaction Value May Surpass $1 Trillion

The overall cryptocurrency transaction volume has grown a fair bit in the past few years. Bitcoin, Ethereum, Litecoin, and a few other currencies are all maturing in front of our eyes. As a result, we have a market cap hovering around the US$160 billion mark. A new study by Juniper Research predictswe will see over US$1 trillionin transaction value for all cryptocurrencies combined in the near future. Total Cryptocurrency Transaction Value is on the Rise The research by Juniper foretells a rather interesting future for Bitcoin and most other cryptocurrencies. With so many coins finally cementing their place in the ecosystem, it is only a matter of time beforewe see some big changes. The combined transaction value of all cryptocurrencies isslowly increasing. During the first half of 2017, transactions surpassed the US$325 billion mark, which is pretty impressive for something a lot of financial experts deem to be a niche market. This increase in value is mainly driven by Bitcoin and Ethereum. Especially now that both ecosystems are inching closer to creating a scalable ecosystem inthe future, interesting things are bound to happen in the future. If more transactions can be processed on those twonetworks, we may reach the projected US$1 trillion cap a lot sooner than anticipated. The new research projects this value will be attainedat some point between now and 2022. One also has to keep in mind the typical daily trading volume of all major cryptocurrencies combined is well in excess of US$2 billion these days. We have seen US$6 billion or even US$9 billion, depending on the day.Bitcoin itself handles around US$2 billion in 24-hour trading volume on a regular basis now, which goes to show the global demand for cryptocurrency willnot slow down anytime soon. Ethereum and L Continue reading >>

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