On-chain data suggests that Satoshi’s original vision is still alive and well, and the Bitcoin network is shifting its focus toward smaller transactions.
Bitcoin P2P payment transfers are gaining popularity recently
In Up-to-date fasting on X, CryptoQuant founder and CEO Ki Adolescent Ju spoke about changing the transaction pattern on the BTC network, which can be classified as peer-to-peer (P2P) payments.
First, Ju discussed the trend of transaction fees on the Bitcoin network. “Transaction fees” here naturally refers to the fees that senders on the blockchain have to attach to their movements as compensation to validators.
Below is a chart shared by the CryptoQuant CEO that shows how the median transaction fees on the BTC network have differed from those on Ethereum over the past decade.
Both the networks appear to have seen a cooldown in fees in recent months | Source: @ki_young_ju on X
As the chart shows, Bitcoin’s median transaction fees were higher than Ethereum’s before 2021, but since then the metric has been generally lower for BTC. As Ju notes,
Contrary to popular belief that Bitcoin transaction fees are always higher than Ethereum, BTC transaction fees have been lower than ETH most of the time since 2021.
The median fee for BTC is around $0.40, while for ETH it is around $0.68. Now, if users had to employ Bitcoin as a means of payment, they would only employ it for transfers immense enough to make this fee worth it.
“Considering the transaction fee rate of 1-3% in developing countries, the lower limit is $13-40,” says the CryptoQuant founder. Therefore, to filter the data only for transfers that are likely to represent P2P payments on the network, the analyst selected transactions that fell between $40 and $1,000.
Below is a graph of the relationship between the daily median transaction value (in USD) and the daily number of transactions over different time periods.
Looks like transactions have recently been getting smaller in size | Source: @ki_young_ju on X
These transactions do not include movements related to runes and ordinals, as transfers related to these protocols do not exactly correspond to real P2P payments.
The chart shows that between 2019 and 2022 the median size of these transactions was higher, but from 2023 onwards the transfers became smaller.
Not only that, the number of transactions has also increased simultaneously, suggesting that many tiny movements are happening now. Ju believes that this is likely due to actual P2P payments.
Therefore, while some may believe that Bitcoin has not fulfilled Satoshi’s vision when he created the cryptocurrency, the data suggests that Bitcoin has been trending in the right direction in recent times.
BTC price
Bitcoin has failed to recover significantly so far and its price remains at around $57,800.
The price of the coin appears to have been sliding over the past month | Source: BTCUSD on TradingView
Featured image from Dall-E, CryptoQuant.com, chart from TradingView.com