Bitcoin Network Usage Nears All Time High

The number of bitcoin transactions inputs and outputs per day has risen to near the December 2017 peak levels.

There were some 860,000 transaction inputs on July the first, compared to the all time high of 885,000 on the 15th of January 2018 during peak prices.

As we can see, bitcoin’s usage has been steadily increasing since at least 2012, reaching a peak in late 2017.

They then fell, but a recovery that begun in April this year has made a nice U shape. Likewise for bitcoin transaction outputs.

That mid-2015 spike was probably during the blocksize debate, so likely some test or otherwise fake usage, but like inputs, outputs too have seen a steady rise to a peak of just over one million with it now standing at around the same as the peak.

The above charts show there were about one million what you’d more plainly call a bitcoin transaction.

Unlike say in ethereum where a transaction generally transfers only one set of value in an A to B manner, in bitcoin a transaction can be from A to the whole town.

That’s because a bitcoin transaction can contain multiple inputs and outputs. Thats computer speak for one transaction can be from many address to many addresses or can transfer value from many people to many people in one transaction.

The above is showing input zero, say a miner block which is a special transaction. The miner now is sending two transactions that once sent then become inputs and so on.

In the real world, what might sound very complicated can actually look pretty intuitive, like this:

This is a random recent transaction and we can see someone sent about 400 bitcoins to what we manually counted as about 100 addresses.

Each of those addresses can be different individuals, just as they can be the same individual, but they’re normal addresses in as far as in ethereum this would be counted as 100 transactions.

What is interesting about this transaction is that it shows just how efficient it can be to make these sort of transactions whereby you bundle payments.

We can see the size of this transaction is about 2,500 bytes. An ordinary A to B transaction is 250 bytes, so this is just 10x more while allowing 100x more transactions, or otherwise said it’s 10x cheaper and more efficient.

From this we can estimate the size of a transaction output is just less than 25 bytes, significantly less than a “plain” transaction.

The fee paid here was $22 worth of bitcoin, or 20 cent per what you’d normally refer to as transactions.

From the above data we get a very different story than when you look at the transaction chart below:

Here too it kind of looks the same because we have zoomed out a lot, but if you focus on only the last part of the graph, transactions are shown as being pretty much static since April.

When you look at inputs and outputs, however, they’ve grown by about 100,000 more since that period.

How much higher this can now go is not clear as although there is no limit to the number of inputs or outputs, there is a limit to how much the total size of them can be in a transaction.

If we’re not mistaken there’s a limit of inputs and outputs themselves of about 100,000 bytes in total, that being 100kb per transaction. Then there’s the actual blocksize limit which we have not yet seen maxed out, so it’s unclear what the limit actually is in practice, but it should be about 2MB to around 2.5MB with segwit usage.

Currently the network is running at 1.16 MB, so there’s still plenty of space with the vast majority of transactions still one on one when there can be considerable efficiencies by say a wallet app bundling transactions to popular exchange addresses.

Devs are also working on a number of protocol level compressions to lower the amount of bytes it takes for a transaction and inputs as well as outputs.

So if we are to estimate we’d say this can probably handle between 2 million to 4 million transaction inputs and outputs a day at max capacity.

If we take the outputs to effectively be one million transactions, then bitcoin is currently the most used network out of the top decentralized blockchains.

Ethereum had about 740,000 transactions in the past 24 hours, with transactions here being what you’d call a bitcoin output transaction which stands at more than one million.

The rest are no where close in usage, with another potentially interesting stat being the amount of bitcoin that is moving at 7.6% of BTC.

In eth it is far lower at 1.7%, but bitcoin has change addresses whereby your money is returned to you minus whatever payment you made. So if we halve it, about maybe 4% of bitcoin’s market cap is moving.

That’s still a lot more than eth where only half a billion has moved in the past 24 hours, while for bitcoin technically it is probably around $8 billion with maybe $1 billion of it being the actual movement of value in a commercial way per day.

These are estimates because we do not know who is paying and for what, we can only see how much bitcoin is moving and how that changes.

Such measure by itself can be useful, but if you’re counting network effects to measure any correlation with price in line with Metcalfe’s law, you’d probably want to look more at the number of inputs and outputs which might suggest the level of active usage and thus demand for the bitcoin network.

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