Outputs per day paints a more accurate economic portrait of the state of the bitcoin blockchain as larger players in the bitcoin industry use techniques to cut down on transaction costs, giving traders and investors an important tool upon which to base their decisions. Here’s why.
One of the main critiques of bitcoin is its high transaction fees. Fees were on the climb in mid-2017, and the collective inefficient use of space on the bitcoin blockchain became increasingly scrutinized. Exchanges faced pressure to batch transactions to make better use of this scarce blockspace. (Some had already been doing for years)
Bitcoin’s scaling issues in times of high transaction volume means it takes longer and costs more to send your bitcoins. The digital currency’s mempool (the pool of unconfirmed Bitcoin transactions on the Bitcoin network) last became congested in December 2017. But, many users believe a more efficient use of the network’s blockspace can alleviate such scaling issues.
Exchanges, mixers, payment processors, and mining pools, are responsible for the preponderance of throughput at times of mempool congestion. One way in which they could alleviate the congestion entails ‘batching’. This is done by combining multiple outputs into a single transaction. Entities that send multiple transactions simultaneously can cluster outputs into a single transaction to more efficiently use blockspace and save them on transaction fees.
Since each transaction comes with overhead in the form of fixed data, if you combined 10 payments into one transaction, rather than sending them individually, you can save block space. So, batching allows users to send more transactions into the blockchain.
Transactions can have virtually unlimited number of inputs or outputs. (The record, for instance, stands at 20,000 input and 13,107 outputs) Each transaction has at least one input and one or more output.