With the means to establish Bitcoin’s scarcity and security, we can essentially measure its effectiveness as sound money. That information, is however, meaningless unless we know whether anyone is actually using it. Given its open source nature, we can access a number of useful usage metrics:
Number of Blockchain Addresses
This is the raw measure of the number of unique reference points on the Bitcoin blockchain that funds can be sent to and from. It shouldn’t be confused with actual users as addresses can be created at no cost, and one user can have multiple addresses.
Number of Transactions Per Day
This is more meaningful as it measures actually activity, though doesn’t specify what that activity relates to.
Average Daily Transaction Value
If the average value of transactions increases, this suggests greater confidence in the network.
Number of UTXOs
A UTXO, is an unspent transaction output, essentially what is left after bitcoin has been sent or received. This provides a more refined value that total addresses which could hold no value.
These metrics really only scratch the surface in telling us whether the Bitcoin network is being used and if usage is growing.
If you think for example, that hodling is a great measure of confidence, you can look at the number of UTXOs that haven’t changed for a specific time.
The same might be true of flows from exchanges to and from hard wallets, indicating saving or preparation to sell; or perhaps size matters, and the activity of whale accounts – buying/selling/moving – is considered more telling.
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