Measuring Bitcoin’s Economic Activity — Transaction Value (USD)

The Bitcoin Network is first and foremost a global public payments infrastructure. Unlike traditional payments networks, the unique architecture of Bitcoin gives us a window into the volume, frequency, and value of transactions across the Bitcoin Network. In this article, we will look at how we measure the value of transactions and the historic state of transactions on the Bitcoin Network, as displayed on the ByteTree terminal.

Defining Transaction Value

Transaction value (Tx) is the on-chain transaction value measured in BTC or US dollars. Transaction value indicates the value of economic exchange between two parties over the Bitcoin Network. We always measure transaction value in individual blocks or weeks, rather than days. This accounts for the weekday bias in Bitcoin’s economic activity.

Refining The Transaction Value Output

Transaction value is actually a more complex calculation than it appears. The architecture of the Bitcoin Network means that each transaction involves multiple inputs and two outputs, of which one is the transaction amount and the other is “change”. In order to identify the economic value of the transaction, we need to identify and remove the change from the total spend. The result is the transaction value.

The latest block’s transaction, median and max values are displayed in USD and BTC on the ByteTree terminal.

The ByteTree terminal monitors transaction value across multiple time frames. The most granular level is in the blockchain section where we measure the transaction value in the latest block. In the example above, we can see that a total of $21.7MM was transacted between wallets in the latest block, generating $1,638 of Block Fee income to the block miner. We can also see the total number of transactions for a the latest block, which in this case is 2,710 transactions. The median transaction value tells us the value of the most common transaction in that block, which in this case is $31.98. The max transaction value tells us the largest single transaction value in the block, which in this case is $13MM.

The 1 Week Cumulative Spend/Fees (USD) chart shows the average fees in blue and the on-chain spend in gold. This chart reflects the Cumulative Spend/Fees from 27th September to 4th October 2019.

We also track the cumulative transaction value over a 7-day rolling window to monitor short term trends. On the chart above we can see the average on-chain spend lingering on $19Bn before subsequently decreasing to $12Bn as the average fees increase. The steeper the gradient, the more aggressively the transaction value is increasing or decreasing.

This medium article is based on the ByteTree blog post published on 29th July 2019.

Applied data for digital asset investors. ByteTree provides real-time data, fundamentals, technical and deep blockchain market analysis for Bitcoin, and more.

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