Both broke through $8,000. What changes have occurred in the fundamentals of Bitcoin in 2017 and 2019?

Half a year ago, the cryptocurrency circle was still immersed in the negative atmosphere of "Will Bitcoin fall below 3,000 US dollars?" After April, the price of the currency soared by leaps and bounds, breaking through many pressure levels and reaching 8,000 US dollars. The fierce offensive can't help but remind people of the crazy rise in 2017.

In November 2017, Bitcoin broke through the $8,000 mark, and three weeks later, the price of the currency soared 150% to reach its historical high. Today, the price of Bitcoin has soared to more than $8,000 again, but compared with 2017, Bitcoin has changed dramatically.

Market share

On November 25, 2017, Bitcoin reached $8,000, accounting for 52% of the total market value of all cryptocurrencies.

On May 15, 2019, Bitcoin once again broke through $8,000, and this time its share of the cryptocurrency market increased to more than 57%.

Daily on-chain payments

On November 25, 2017, there were 838,000 active Bitcoin addresses, and 336,000 transactions occurred on that day.

On May 15, 2019, 367,000 transactions occurred on 726,000 active Bitcoin addresses. This shows that the number of on-chain transactions is increasing, but the number of active addresses is decreasing.

After a year and a half, more and more addresses have become "dormant addresses", partly due to the increase in the number of Bitcoin Hodls and partly due to the loss of Bitcoin wallets and private keys. The increase in the number of on-chain transactions also represents the increase in Bitcoin liquidity to a certain extent.

Bitcoin daily output

Another metric that can provide a better understanding of Bitcoin’s performance is the daily output of Bitcoin.

Generally speaking, every bitcoin spends an input and generates an output, and the amount of output generated helps analysts determine when bitcoin has been moved and how much is in the hands of bitcoin HODL. If the daily output data of bitcoin continues to decline, it means that trading activity has recovered, and vice versa.

A year and a half ago, the daily output of Bitcoin was around 865,000, and 2.9 million Bitcoins were traded every day; although the current daily output has increased by about 128,000, the number of Bitcoins being traded is even less - only 1.7 million Bitcoins are traded.

Bitcoin mempool size

We know that to complete a Bitcoin transaction, it must be verified by all nodes. The higher the transaction fee of a transaction, the more likely it is that miners will prioritize it, while those transactions with very low transaction fees will be waited for processing by miners, and these transactions will be temporarily stored in the Bitcoin memory pool (mempool).

At the end of 2017, the number of Bitcoin transactions increased dramatically, and the Bitcoin memory pool was overwhelmed. Thousands of transactions were waiting to be processed, and transaction fees soared. On November 25, 2017, the total size of the memory pool reached 58 million bytes.

Since then, several off-chain or off-chain solutions have been proposed to increase Bitcoin’s transaction processing capacity. As of today, the memory pool is only 7.7 million bytes, a decrease of 87% from its peak.

Since 2017, three technologies have emerged to reduce Bitcoin transaction fees and increase transaction speed:

Transaction batching (combining several transactions into one transaction) can reduce the total number of transactions on the Bitcoin chain and reduce network congestion. It is generally used by exchanges and mining pools.

Segregated Witness was added to Bitcoin through a soft fork in August 2017. Segregated Witness removes the digital signature information in the block, allowing each block to carry more transactions, thereby achieving the purpose of capacity expansion.

The Lightning Network allows transactions to be conducted outside the Bitcoin blockchain, thereby expanding Bitcoin's transaction capabilities. It was first proposed in 2016 and is now used on a small scale. People can use the Lightning Network to create countless transactions before settlement without uploading the information to the blockchain.

A year and a half ago, the fees per transaction were about 147 to 230 satoshis per byte, equivalent to $3 to $5. When Bitcoin rose to $19,900, the fees per transaction rose to $50.

As time went on, different solutions were introduced and Bitcoin transaction fees steadily dropped, currently costing between 44 and 87 satoshis per byte, or between $0.82 and $1.60.

From 2017 to 2019, it is not difficult to find that Bitcoin's transaction speed has become faster, transaction fees have become cheaper, and the overall network has become more secure. It can be said that Bitcoin is now getting closer and closer to Satoshi Nakamoto's vision of "peer-to-peer electronic cash."

This article comes from "Block Wave".