CryptoMetrics: Active Blockchain Addresses as a Measure of Cryptocurrency Value
Given that the majority of investments in the cryptocurrency space are speculative bets on the future adoption of early-stage technology, studying the overall network activity for popular blockchains may provide a useful metric for valuing cryptocurrencies.
Currently, most reports reference relative differences between the number of decentralized application (dApp) and their activity as a measure of a network. These reports have revealed important insights such as the fact that the Ethereum and EOS blockchains, collectively valued more than $30 billion, only have 6 dApps with more than 500 daily active users. across both blockchains.
While dApp activity is certainly a solid metric for real-world use cases of a smart contract blockchain, perhaps a more meaningful measurement is daily address activity across the network.
However, sorting all blockchain projects by active addresses yields a less-than-overwhelming result. Currently, only 26 different blockchains have seen more than 400 active addresses over the last 24 hours. An active address is one that that participated in a transaction at any point during the time period.
While the top-30 list includes many names that you would expect, including Bitcoin and Ethereum, some smaller-cap altcoins have shown a significantly better ratio of market cap to daily active wallets. Two such examples include privacy coin PIVX (PIVX), which has a $59M market cap and 2,600+ active addresses, and Vertcoin (VTC), which has a $32M market cap and 2,280 active addresses over the past 24 hours.
A notable project that ranks surprisingly low on the top-30 list is TRON (TRX), which recently surpassed the total number of addresses of EOS (EOS) and stands at roughly 40% the total daily transactions of the Ethereum network. Despite these early network advancements, TRON has only seen 663 active addresses over the last 24 hours. This indicates that it there could be significant upside on total daily transactions if it the TRON network were to reach the 300,000+ active addresses seen on Ethereum.
All things considered, filtering potential investments by network address activity provides solid insight into the overall network value and overall health. Additionally, this metric can be correlated with other network stats, including total transaction volume and dApp number, to more accurately calculate the current and potential value of notable blockchain projects.
Disclaimer: This article’s author has cryptocurrency holdings that can be tracked here. This article is for informational purposes only and should not be taken as investment advice. Always conduct your own due diligence before making investments.