Cryptocurrency analysis platform DataLight recently published a long-form report on its research focusing on Bitcoin (BTC) transactions in 2018. In the report, DataLight finds that, despite losing over 80 percent of its value, Bitcoin transactions are steadily increasing — both in amount and volume.
The research made comparisons between Bitcoin as a payment system against the metrics provided in the annual economic reports published by global payment processors, such as Visa, Mastercard, and Paypal.
It was found that, in 2018, $3.4 trillion was transferred through Bitcoin — which was 5.8 times higher than that of Paypal during the same year.
Besides this, the average Bitcoin transaction size was around 450 times higher than the average figures reported by Visa — at $41,615 vs $90, respectively.
Economic Indicators Against Bitcoin
As it stands, Bitcoin is heavily outmatched when it comes to the total number of transactions it processes as a payment system when compared to the likes of Visa and Mastercard.
In 2018, the number of transactions processed through the Bitcoin network was only 81 million, while Visa and Mastercard combined processed close to 200 billion transactions, in the same year. The established networks were also able to grow these figures when compared to 2017. Yearly growths of 12 percent, 17 percent and 28 percent in the total number of transactions were reported by Visa, Mastercard, and Paypal, respectively.
In this regard, Bitcoin fell majorly short of its competitors — as it lost nearly 22 percent of its transaction volume in 2018, as compared to the year prior.
Another metric that is seriously hampering Bitcoin’s adoption rate as a payments system is its bandwidth. Bitcoin’s scaling problem has been widely reported and acknowledged by the community, with the network currently considered to be limited to just 10-14 transactions per second (TPS) — compared to the thousands of TPS offered by VISA.
Part of the reason why the full integration of the nascent Lightning Network is hotly anticipated by the community is that it is designed to address this very limitation — potentially putting it on-par with centralized competitors.
Economic Indicators For Bitcoin
Out of all the economic indicators checked, the main parameter that signifies Bitcoin’s growth in the last year is its capitalization-to-transaction ratio.
Here, a low indicator value would indicate a high network activity index. Using this indicator, the researchers at DataLight were able to analyze the network activity by using market evaluation. Between 2017 and 2018, Bitcoin’s figure saw a 182.7 percent drop, while the figures for Visa and Mastercard remained roughly constant.
In hindsight, it is important to remember that Bitcoin is the youngest of all these payment systems — a fact that is belied by its market capitalization, which was comparable to Visa in 2017 and much higher than PayPal or Mastercard.
What do you think is the main parameter that should be used to measure the success of a cryptocurrency? Let us know in the comments below!