Bitcoin Network Growth Metrics and the Next Mega Price Rally

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Metcalfe-Network-Effect

Network growth has been steadily growing larger and stronger over the last two years. While many people only look at the value of bitcoin, they are failing to see the adoption rate. The bitcoin price may have dipped slightly recently, and the record all-time high price of $1,124 USD of late November 2013 may now seem like a long way off.

The bitcoin network itself is continuing to grow larger than ever. While according to Metcalf’s Law, which states the value of a telecommunications network is proportional to the square of its users. There comes a point in this rate of growth where the tipping point is more easily discernable. This article aims to give alternative insight into the growth within bitcoin. We can safely assume that if the total rate of growth and adoption included the entire cryptocurrency space then the numbers would show an even greater adoption rate.

And we can see the exponential growth of the bitcoin network by looking at the following data. The number of transactions per day on a seven-day average excluding popular address recently peaked to a new all-time high. From around 21,000 per day on a seven-day average about two years ago. Up to recently nearly 114,000 transactions per day on a seven-day average.

The last two years of data containing the number of transactions excluding popular addresses.

Number of transactions excluding popular addressesNumber of transactions excluding popular addresses
The number of transactions that are in chains of less than ten transactions. So excluding all bitcoin mixer and tumbling transactions. Plus a lot of other legitimate transactions as well. Also recently peaked to a new all-time high. From a low of around 10,000 per day on a seven-day average around two years ago. To a record new all-time high of just under 40,000 per day on a seven-day average recently.

The following chart is a log chart of the last two years containing the number of transactions excluding chains longer than 10.

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While the number of total overall transactions per day on a seven-day average has recently peaked to a new all-time high recently. From a low of around 35,000 per day on a seven daily average around two years ago. To a recent new all-time high of just under 122,000 per day on a seven-day average very recently.

The following chart is a log chart of the number of transactions per day over last two years.

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The total number of Blockchain.info My Wallet wallets growth has continued to be exponential over the last two years. From around 300,000 wallets two years ago to around 3,000,000 wallets recently. The following is a log chart of the last two years of the number of blockchain.info wallet users. Keeping in mind that some users may have multiple wallets and that other users may have stopped using their blockchain.info wallet.

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The number of new and unique bitcoin transactions used per day is continuing to grow exponentially. From about 46,000 per day on a seven-day average two years ago to a new record all-time high of almost 248,000 per day on a seven-day average recently.

The following is a log chart of the last two years covering the number of unique bitcoin addresses used.

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So if we apply the basis of Metcalf’s Law and the network effect to the bitcoin network and it’s continued exponential growth over the last two years. We can see the networks intrinsic value is growing. While remember according to Metcalfe’s Law the intrinsic value of the growth is proportional to the square of the difference in that growth.

While leveraged margin trading markets can work to help stabilize market prices as this academic paper helps to show why, maybe the next time bitcoin has a large rally in price it won’t be as rapid climb on the dramatic magnitudes that we’ve seen before.

Disclaimer: This article is a contributed piece by Matthew Holt, bitcoin advocate and longtime miner.

Updated: June 15, 2015 at 2:51 pm CET.

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