Did you know that vast amounts of cryptocurrency data can be tracked and shown through visualizations to gain insights? This is where on-chain metrics come into play. In this article, you are about to learn what on-chain metrics are and some of their examples, and their relevance.
On-chain data includes information of all occurring transactions on a particular Blockchain network. Whenever someone sends crypto to another person through a public blockchain, those data are represented through on-chain data.
Then, on-chain data is visualized and represented by on-chain metrics. When used correctly, valuable crypto insights can be made from these.
There are platforms that make on-chain metrics accessible to everyone. Dashboards and visualizations about blockchain data are provided so users can have a glimpse of the movements of crypto. Here are some of the following on-chain analytics platforms that offer some free features:
One of the examples of on-chain metrics is the Bitcoin: Hash Rate available on Glassnode. This metric measures the total computational power used by Bitcoin to process blockchain transactions - the higher the hash rate, the more secure it is. By visualizing such crypto variables, anyone can quantify the security of Bitcoin in real-time.
It can be observed that over the years, Bitcoin’s security has exponentially grown.
Another example of on-chain metrics is the Bitcoin: Number of Addresses with Balance ≥ 1. This graph shows the Bitcoin price and the number of unique wallet addresses that own at least 1 Bitcoin. This kind of on-chain metric offers a view of the addresses’ movement with regards to BTC price.
It can be observed in the chart above that since 2010 there has been a constant increase in the number of unique wallet addresses that own at least 1 BTC.
Tip: the visualizations mentioned above are just examples of Bitcoin's on-chain metrics. Other on-chain metrics for other cryptocurrencies like Ethereum are available in the other platforms we mentioned above.
In case you are interested to check out other on-chain metrics, sites like Glassnode and IntoTheBlock offer contextualized and actionable market insights, reports, and analyses based on on-chain metrics.
Analyzing on-chain metrics can significantly help everyone in their investing decisions, and gain an understanding of the current status of the blockchain. Getting contextualized and actionable insights from the on-chain metrics that involve actual blockchain data are beneficial since it is a data-driven approach. Given the amount of commotion in the cryptocurrency space, being data-driven helps everyone to filter out noise, and focus on the actual developments on the blockchain.