As I talk to more people about cryptocurrencies, regularly, the question comes up how much of it is pure speculation.
As the blockchain is more or less anonymous, we actually don’t know. So I thought about the next best thing.
A 24 hour volume analysis of the blockchain versus exchange traded bitcoin.
Exchange traded bitcoin = ∑ 24 hour Bitcoin volume on exchanges / ∑ 24 hour Bitcoin volume in the blockchain
According to Coinmarketcap, the volume of Bitcoin traded in the last 24hours is BTC 680k and the blockchain recorded transaction for BTC 1826k
Exchange traded bitcoin =680’665 / 1’826’794 = 37%
Of course, this doesn’t give a good view for many reasons.
Exchange trades are not recorded on the blockchain. We would need to assume that the seller first sends BTC to the exchange, then trades with the buyer and the buyer sends BTC to a wallet. That actually takes 2 blockchain entries, so the blockchain volume for an exchange trade is double counted – if both traders don’t leave BTC in their exchange wallet.
*Exchange traded bitcoin = (2 ∑ 24 hour Bitcoin volume on exchanges) / ∑ 24 hour Bitcoin volume in the blockchain
Exchange traded bitcoin = 1'361'330 / 1’826’794 = 75%
Of course, the percentage would be lower if traders leave their bitcoin on the exchange. (Because the factor 2 would then decrease).
But I’m not sure if OTC trades are included in the volume traded on Coinmarketcap. If not, this would increase the percentage.
As these factors are both unknown, but have a balancing effect, I could live with the conclusion that approximately 75% is used for speculation and 25% for purchasing goods. Of course there are a lot of other factors that play a role, like the 24 hour time window, but one could consider doing this daily to see if exchange trades are having and increasing or decreasing volume.
Does this make sense? Please be kind if I’m writing nonsense 😄
Please let me know your opinion!
Source: Coinmarketcap.com on 13/10/2017 (17:00 CET)
Source: Bitinfocharts.com/Bitcoin on 13/10/2017 (17:00 CET)