Recently, CoinMetrics had released the 24th issue of their State of the Network report, in which they assess and analyze the network, its growth, and potential for the future. According to CoinMetrics, though the Bitcoin transaction count doesn’t map to a traditional macroeconomic financial indicator, it can serve as an alternative measure of growth and provide a focused perspective on a single element of economic activity.
Current transaction count according to their data stands at 302,000 per day, peaking at 400,000, at which level fees rise, incentivizing market participants to perform transactions via second layer channels.
“Counting transactions on the blockchain layer and higher layers (in the future) is one important aggregate measure. An alternative related metric is transfer count which counts the total number of transfers within all transactions.”
Transaction count growth gives insight into Bitcoin’s deflationary nature for economic activity. Currently, growth is at -30%, and has been negative for the last several months. As Bitcoin price rises, the price of goods and services denominated in Bitcoin decreases. This deflationary economic environment reduces incentive to spend, as holding existing BTC means and individual can avail more goods and services at a future point in time.
“This is a key reason why almost all the planet’s central banks have price stability as their central mandate and a small but positive inflation target of 2% as one of their policy objectives.”
Another commonly examined growth indicator is capacity utilization, which measures the degree to which an economy’s productive capacity is being utilized. For a nation, this is normally a measure of its manufacturing industry. For Bitcoin, CoinMetrics uses block size capacity utilization as a comparable metric which,