Recently, cryptocurrency network and market data provider, CoinMetrics, published the 24th issue in their State of the Network series. The report talks about the complex crypto-economy of Bitcoin, and how there are different perspectives through which it can be analyzed.
One interpretation is that Bitcoin is the sole good manufactured and sold in its economy. The other is viewing the Bitcoin network as a full-fledged economy in which BTC is used as a medium of exchange for goods and services. According to CoinMetrics, despite efforts and improvements in data collection methods and calculation methodologies, macroeconomic data is reported with lengthy lags and is subject to revisions long after the initial release, with policymakers forced to drive decisions based on imperfect information. Crypto-economies, however, are less susceptible to this lag and measurement error.
“The most fundamental action in any economy is a transaction between a willing buyer and a willing seller for a good or service, and a crypto-asset’s shared, immutable, and open ledger reveals each individual transaction (except for layer 2 transactions, and transactions taking place inside custodians), allowing analysis of the economy in real-time.”
The report further claimed that, in theory, for an actor who knows the identity behind every address and the nature of each transaction, the state of a crypto-economy could be reported with no lag and with close-to-perfect precision.
One of the most important macroeconomic indicators for a country is its GDP. In the report, CoinMetrics claims that their ‘adjusted transfer value’ (ATV) is the network metric which most closely matches the concept of GDP, by measuring the value of the native units transferred over a given period in U.S.