The following article originally appeared in CoinDesk Weekly, a custom-curated newsletter delivered every Sunday exclusively to our subscribers.
In Robert Heinlein’s novel “Stranger during a Strange Land,” the character Jubal Harshaw asks one among his secretaries to spot the colour of a house within the distance. She replies, “it’s white on this side.”
In other words, if you see something only from a particular angle, you can’t be confident you've got the complete picture. This goes for cryptocurrencies also as for physical objects.
While it might be disingenuous to say the worth of a coin doesn’t matter, it’s just one of several ways to live the success of a blockchain network. watching these in aggregate offers a more useful perspective than obsessively checking U.S. dollar exchange rates on your phone every hour. (Or every minute, for some. Stop that, it’s not healthy.)
To that end, CoinDesk Research’s crypto-economic compass shows more activity happening than simply price movements. It compiles a spread of various sub-factors to form up four other composite measures: developer, network, social, and exchange.
Using this multi-dimensional analytical tool, let’s take a glance at bitcoin cash (BCH), the splinter currency that recently celebrated its first birthday. We’ll compare it to the network it seceded from, the first bitcoin (BTC), which is viewed because the gold standard for cryptocurrencies, along these five axes.
Price and network
The most observed metric, price, saw little or no deviation during BCH’s first year of existence. for many of that period, it remained around 12 percent thereto of BTC. the worth saw all-time-highs of around 20 percent of BTC within the fall 2017 rally but slowly diminished backtrack to normalcy.
The network category refers to activity concerning the on-chain network. Transaction volume occurring on the BCH blockchain remained on the average under one-tenth of BTC’s on-chain volume throughout the year.
However, this last month saw the amount of transactions consistently increasing to about 30 to 50 percent of BTC’s. this might signal increased microtransactions thanks to new app development or stress testing by large entities.
One such app is CoinText which allows users to send and receive BCH through text messages.
Its CTO, Vin Armani, said:
“When high fees and slow confirmation times began plaguing BTC, I shelved bitcoin projects that I had been performing on steadily for years…I know I wasn’t alone in walking through 2017 feeling discouraged…In this past year, Bitcoin Cash has brought hope and artistic exploration back to bitcoin.”
Exchanges and developers
Exchange activity was a touch more varied over the year.
BCH volume transacted on exchanges reached all-time-highs in 2017, even briefly exceeding BTC’s exchange volume on August 19 and Veterans' Day . Over 100 exchanges currently list BCH, many of which added the support in Q3 of 2017.
But when the overall crypto rally of fall 2017 dissipated, exchange activity withered away to eight percent of BTC’s volume in Q1 and 12 percent in Q2.
Developer activity on the protocol level has been relatively low for BCH. While it benefits from the legacy code from before the fork, since then the breakaway network has not maintained an equivalent level of developer interest as BTC.
Meanwhile, the foremost unique observation concerns bitcoin cash’s high levels of group action , reaching about 57 percent of BTC’s.
The sub-factor driving much of this phenomenon is that the posting on the BCH-oriented r/btc subreddit. Another key social media advantage has been the commandeering of the @bitcoin twitter handle with its 800,000+ followers.
It appears that these highly engaged online communities have grown offline. Event meetup groups have maintained steady growth. consistent with the BCH Fund, there are 101 meetups in 40 different countries with about 12,000 total members.
In this way, crypto-economics sheds light on all sides of the house, because it were, and divulges a more holistic understanding of a cryptocurrency’s state of affairs.
BCH on-chain and developer activity remained low relative to BTC, but exchange activity drastically fluctuates speculatively . Bitcoin cash’s price has been ready to stay afloat this past year, thanks in no small part to the tiny but strong group of social communities invigorating this coin.
Measurement tool image via Shutterstock