The increasing number of Bitcoin transactions is the result of the system’s improvement and growth, some experts say.
The daily Bitcoin (BTC) transaction volume has been recently increasing to the levels not seen since January 2018, after BTC hit the $20,000 price mark, according to data from transactionfee.info. Some industry players believe that it is a sign of the evolution of the cryptocurrency’s ecosystem and fundamentals.
Bitcoin transactions per day. Source: transactionfee.info
Jameson Lopp, chief technology officer at Bitcoin personal key security system firm Casa, published a Medium post with an analysis of the fundamental performance of Bitcoin, concluding that “the system is improving and growing.” In the course of his investigation, Lopp delved into various sources and statistical measurements of Bitcoin’s growth over 2018. Lopp wrote:
“A variety of improvements in block propagation have been implemented by Bitcoin Core over the past couple years and as nodes are upgrading, they appear to be having an effect. There’s also a new highly performant miner relay network.”
According to Lopp, “Lower transaction demand, improved fee estimation algorithms, adoption of segregated witness (SegWit), and transaction batching have resulted in more efficient use of block space and less contention for this scarce resource.” SegWit is designed to reduce processing and wait times, as well as transaction fees.
In 2018, the percentage of BTC transactions spending SegWit inputs purportedly increased from 10 percent to 40 percent, while the average BTC transaction size found its peak at 750 bytes in February before falling to 450 in the fourth quarter of 2018. This, per Lopp, is a result of increased SegWit adoption.
In 2018, the market dominance of BTC reportedly returned to over 50 percent, after falling to 32.5 percent. “The number of reachable nodes didn’t fall much in comparison to the exchange rate — my suspicion is that people who run these nodes are highly dedicated to Bitcoin and/or using them for economic purposes, thus they are unlikely to turn off the node due to exchange rate volatility,” Lopp further explains.
In November 2018, crypto evangelist Anthony Pompliano stated in a blog post that Bitcoin fundamentals, such as cost per transaction and number of transactions, increased. Pompliano emphasized seven fundamentals of Bitcoin, outlining the increasing number of Bitcoin wallets as well as the growth of the amount of daily confirmed transactions.