According to blockchain metrics site CoinMetrics, Bitcoin’s transaction count has dropped roughly 40 percent over the last 10 days. The drastic decline has been widely credited to the close of VeriBlock’s testnet, which reportedly accounted for 25 – 45 percent of Bitcoin’s transactions per their own statistics.
While a significant decline in transaction count, the simple transaction count metric comes with some notable caveats and is not as accurate as CoinMetric’s adjusted transaction volume (ATV) for measuring economic transactions on Bitcoin’s network.
How Does VeriBlock Account for So Many Transactions?
VeriBlock is a blockchain development company that leverages the Bitcoin blockchain to secure its Proof-of-Proof (PoP) mining technology. PoP is used to reinforce the security of other blockchains by binding the Proof-of-Work (PoW) of Bitcoin to alternative blockchains with less hash power that are not as secure.
VeriBlock uses Bitcoin’s OP_Return feature where arbitrary data up to 80 bytes in size can be stored on the blockchain. OP_Return in a polarizing topic in Bitcoin as some observers think that it bloats the blockchain for a use case that is not in line with its primary objective.
Interestingly, VeriBlock was only in its public testnet phase and is pegged to launch its mainnet on March 15th. With the strong correlation between the fall in transaction count and VeriBlock’s own published metrics, it seems likely that it was the leading cause behind the drop and their mainnet should provide more insights once live.
Venezuela Blackout’s Relevance
However, there is no definitive evidence to prove the size of Venezuela’s impact on the transaction volume for Bitcoin — only LocalBitcoins volume which is far below the impact on the network.
Venezuela’s economic struggles have forced many citizens to tap Bitcoin as a last resort of salvaging value from the worthless Bolivar, causing LocalBitcoins volumes to spike and mining operations to access its largely subsidized electricity. The deficient administration of Venezuela’s power grids under President Maduro’s regime is attributed as causing the extended blackout, which is quickly becoming a national emergency for the South American country.
Bitcoin has experienced several sharp declines and rebounds in transaction count over the last couple of years, and VeriBlock’s mainnet launch should provide direct correlation or reveal a more nuanced explanation for the precipitous transaction count slump.