Introduction to On-chain Metrics

June 15, 2022
Photo by Lukas on Pexels

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.

Bitcoin: Hash Rate as seen on Glassnode

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.

Bitcoin Market Cap as seen on Glassnode

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.


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