Hashrate, SegWit, Taproot: What about the network?

The price does all kinds of things, but one thing is certain: the network continues to grow unabated. You can see that on the basis of the activity on the blockchain. In this article, we take a look at the hashrate, activity on the network, transaction costs and the adoption of SegWit and Taproot.

hash rate

The hashrate hashrate The hashrate is the number of hashes per second. A hash in this case represents an attempt to find a suitable block. In short, the hashrate is a way of expressing the amount of computing power of miners. continuously breaks records. Currently, the total network hash rate is approximately 225 Exahashes per second (EH/s). That’s 225,000,000,000,000,000,000 attempts every second to find a suitable hash for the next block.

Source: Bitinfocharts.com

The graph clearly shows the effect of last year’s Chinese mining ban. According to estimates, up to the summer of last year, about 65% of the global hashrate came from China, but because of the mining ban, many Chinese miners ceased their activities to look for housing elsewhere. In the period after, the hashrate dropped from a high of 190 EH/s to a low of 75 EH/s.??

However, that turned out to be short-lived. Many miners sought refuge in the US and another large part moved to Kazakhstan. In the months that followed, the hashrate recovered to its old level, breaking records again after six months. Since the beginning of this year, growth has continued uninterrupted. So there is still a lot of investment in mining equipment.

Activity

The exact number of users or wallets cannot be determined through analysis of the blockchain, because both users and wallets often have multiple bitcoin addresses. The total amount of bitcoin addresses with a balance therefore does not say much.

However, it is possible to see how many bitcoin addresses were active in the previous 24 hours. This shows that activity on the network is steadily growing.

Source: Bitinfocharts.com

It is clear that there are peaks in activity that correspond to peaks in the bitcoin price, with reduced activity as the price cools. Nevertheless, there still seems to be a growing trend.

Through on-chain analysis, however, it is hardly possible to gain insight into the use of the Lightning Network . Lightning Network The Lightning Network is a new technology that makes bitcoin transactions almost instant and virtually free. With Lightning transactions, most of the transactions happen off chain and only a few transactions take place on the blockchain. , which keeps a lot of activity out of sight.

transaction costs

The transaction costs in the form of miner’s fees miner’s fees Transaction costs on the Bitcoin network that are paid to the bitcoin miners. The higher the fee, the greater the chance that miners will add the transaction to a block. have been relatively low for some time. They usually are, but during periods when the price was high, they increased considerably. Outliers were the periods November 2017 to January 2018 and November 2020 to June 2021 – during both periods the price reached new highs.

Source: Bitinfocharts.com

It is remarkable that the fees have been lower since the last peak, but still a lot higher than before. At the moment the average miner’s fee is about ???????1.50 to ???????2 euros. That is an average, so it is also possible to pay lower fees. If your transaction is not in a hurry and can wait a few blocks, it often costs just a few cents.

SegWhite

Perhaps the low fees have something to do with the SegWit upgrade. SegWit was activated on the Bitcoin network in 2017 and it introduced a new type of Bitcoin address that allows transactions to take up less space in blocks. As a result, there is more transaction capacity and therefore transaction costs are lower.

SegWit was implemented as a soft fork, meaning the upgrade is optional. Such a decentralized upgrade process therefore takes a while, because it is up to the users of the Bitcoin network to make the switch.

Source: Woobull

Shortly after activation, the number of SegWit transactions quickly rose to 40%. After that, adoption seemed to stagnate somewhat and the percentage fluctuated between 40% and 60% for several years. Since the summer of last year, the percentage of SegWit transactions has rapidly increased to 80%, perhaps because wallet provider Blockchain.com finally implemented the upgrade around the same time.

The remaining 20% of transactions are not yet SegWit transactions. A large part is likely to come from the exchange Binance, which has not yet completely switched to Segwit, but takes up about 15% of the space in blocks with deposits and withdrawals.

Tap root

With the adoption of the latest upgrade, Taproot, things have slowed down so far. Taproot was also activated as a soft fork in November 2021 and it also introduced a new address type. Taproot improves privacy and scripting capabilities, and also makes some transactions cheaper.

Six months after activation, adoption still seems low: Currently, only about 0.5% of all transactions are Taproot transactions. Presumably because the technology is still new and various wallet providers, but especially service providers, have yet to implement it. As with SegWit, this is expected to be a gradual process that will take some time.

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