BIS paper finds major gap in Bitcoin onchain transfer estimates
A BIS study found widely used crypto metrics can obscure economic activity, with measurement challenges spanning Bitcoin, Ethereum and stablecoins.
A new Bank for International Settlements (BIS) study reveals significant discrepancies in how Bitcoin onchain transfer values are estimated, with variations up to sixfold dependent on the measurement method employed. Unlike trading volumes on crypto exchanges, this study focuses on onchain Bitcoin transfer values. The sixfold gap arises from differing approaches to handling change outputs and transfers back to the sender, a characteristic of Bitcoin's transaction structure.
When users spend Bitcoin, unspent funds are often returned to them as change, which is counted as an additional output even though it does not represent funds transferred to another party. The BIS study, analyzing 100 billion blockchain records across Bitcoin, Ethereum, and Tron, also found that Bitcoin's market capitalization can be up to four times higher than the actual capitalization, calculated by valuing each coin at the last recorded price.
Similar measurement issues persist across the broader crypto ecosystem, particularly in Ethereum's stablecoin market, where the predominant stablecoin, USDT, has diverse purposes and usage across different blockchains. Ethereum's smart contracts accounted for roughly 54 million out of 67.5 million active contracts, with their USDT holdings exceeding 20% in 2022, compared to around 1% on Tron.
The study concludes that onchain indicators should be viewed as "noisy approximations" rather than precise measures of economic activity.
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