Researchers at the Bank for International Settlements found that estimates of Bitcoin onchain transfer values can differ by as much as sixfold depending on how transactions are measured. According to Cointelegraph, the finding applies to onchain Bitcoin transfer values rather than trading volume on crypto exchanges, and the gap comes from differences in measurement methods, including how change outputs and transfers back to the sender are treated. The researchers said Bitcoin’s transaction structure creates the discrepancy because unspent funds are often returned to the sender as change, which can appear as another output even when no funds are being transferred to another party. They also wrote that metrics such as transaction volumes, market capitalisation and total value locked can suggest a level of accuracy that is not supported by the underlying data. The study, based on 100 billion blockchain records across Bitcoin, Ethereum and Tron, found that similar measurement issues extend across the broader crypto ecosystem.
The researchers also said the measurement problem affects Bitcoin’s market capitalization, with the conventional measure at times as much as four times higher than realized capitalization, which values each coin at the price when it last moved. According to Cointelegraph, Ethereum presented a separate challenge because of the spread of smart contracts, with about 54 million of roughly 67.5 million active contracts examined unable to be categorized using the study’s classifications. Stablecoin activity also proved difficult to interpret because the same asset can serve different purposes across blockchains. The researchers said USDT on Ethereum was more closely linked to DeFi activity, while USDT on Tron was associated more with payment-like and store-of-value purposes. They added that the share of USDT held by smart contracts on Ethereum exceeded 20% in 2022, compared with around 1% on Tron. Because of those differences, the researchers said aggregating USDT activity across blockchains can conflate different types of economic activity and obscure how stablecoins are actually being used. They concluded that onchain indicators should be treated as noisy approximations rather than direct measures of economic activity. Visa already separates raw and adjusted stablecoin data on its Onchain Analytics dashboard, which is powered by data from Allium Labs. Visa said its adjusted methodology is designed to remove distortions from high-frequency trading, bots, bridge routing and internal exchange operations. The dashboard currently shows $6.4 trillion in total stablecoin transaction volume across the networks it tracks over the past 30 days, compared with $313.1 billion in adjusted volume.
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