Hacker News Reader

Comment by crystaln | Hacker News Reader

The number of transactions is a poor measure of the popularity of and demand for bitcoin.

Both transactions excluding popular services that post very high volumes of low value transactions, and USD value of all transactions, are much closer to reflecting the recent rise of bitcoin.

https://blockchain.info/charts/n-transactions-excluding-popu...

https://blockchain.info/charts/estimated-transaction-volume-...

View on HN

Uh, the number of transactions is just about the best simple indicator there is of popularity. Can you think of anything better (and reasonably simple)?

The price

That is about the worst possible measure for the utility of a payment currency. Unless perhaps you mean price stability.

No it is not a good indicator. The reason is simple: SatoshiDice represents maybe 30-60% of all transactions, but only ~5% of the volume of bitcoins. (Informal estimations based on block chain analysis, go here to get an idea: http://blockchain.info/popular-addresses)

There is no simple and reliable indicator of Bitcoin activity. The simplest indicators can be very variable (eg. spamming the network with transacitions). Indirect indicators, like the number of merchants using Bitcoin are better. And looking at these indicators, it is very clear that Bitcoin activity is dramatically increasing. For example BitPay recently announced 10,000 merchants using their bitcoin payment processing platform (it took them more time to go from 0 to 1,000 merchants than from 1,000 to 10,000!).

This Techcrunch article was written by someone who did bad research and can't even draw correct conclusions from the graph :-/

Its possible that 5% is actually higher because 100% of transaction volume includes change and there is no way to determine what was change and what was a real transfer of Bitcoin to another person/service/etc...

Also, note that SatoshiDice's classic transaction-heavy mechanism – 2 transactions per bet – may be losing popularity compared to both SatoshiDice competitors and SatoshiDice's new "Tribute" game. Those alternatives resolve most bets in an off-blockchain web session, only creating transactions for deposit/withdrawal.

> Can you think of anything better (and reasonably simple)?

I linked to graphs of two better indicators. Did you read my comment past the first sentence?

- Number of transactions exclusive of very low quantity transactions, approximated by excluding very high volume transactors.

- Overall value of transactions, converted to a more stable currency, in this case USD.

Both of these indicate increased usage approximating tracking the increase in bitcoin's money supply.

Reply on news.ycombinator.com