The number of active addresses, which can be an indication of the number of active users, is shockingly low for almost all cryptocurrencies.
There are 52 cryptocurrencies with market caps in excess of USD 100 million, which should suggest a tremendous user base for each of those cryptos. Yet, only 20 cryptocurrencies have had over 1,000 active addresses in the past 24 hours as of 9 September 2018. This would suggest that market cap is not a good measure of a crypto’s true strength or use, and this article explores this further.
Onchainfx.com is a site that is similar to CoinMarketCap.com, except they have even more stats than CoinMarketCap.com. One of these stats is active addresses for the last 24 hours. This doesn’t directly translate to active users since crypto users often use multiple addresses for anonymity purposes. Therefore, the number of active users can be far lower than the number of active addresses, but there is no way to know by how much. All stats in this article are from Onchainfx, and it must be noted that Onchainfx only lists 107 cryptocurrencies, while CoinMarketCap lists well over 1,000.
Bitcoin is actually quite healthy with 667,000 active addresses in the past 24 hours. Likewise, Ethereum has 293,000 active addresses. So for the top 2 cryptos, the rankings according to market cap are the same as the rankings according to active addresses. However, beyond this, there is a tremendous divergence.
Litecoin comes in at #3 with 88,000 active addresses, even though it is only #7 when ranked with market cap. EOS has 70,000 active addresses, and then very surprisingly Dogecoin has 64,000 active addresses, making it #5, even though it is #20 when ranked with market cap. Dogecoin has always had an extremely active user base centered around its Reddit subforum, r/dogecoin, and perhaps it could be considered the true #5 crypto.
Dash, the top X11 crypto, has 40,000 active addresses. The privacy coins Zcash and Monero have 30,000 and 18,000 active addresses respectively. Bitcoin Cash, Verge, Digibyte, Decred, and Ethereum classic are the rest of the cryptos with active addresses above 10,000.
There are only 7 cryptos with active addresses between 10,000 and 1,000, putting the number of cryptocurrencies with active addresses over 1000 at only 20. This is despite 52 cryptos having market caps in excess of USD 100 million, and 105 cryptos having market caps in excess of USD 10 million. There is clearly a huge disparity between many cryptos’ actual use and their value. It seems prices for many cryptos are far above what they really should be, most likely due to speculation. This suggests that in the long-term, many crypto market caps will be collapsing towards zero.
A couple of cryptos, MaidSafeCoin and KuCoin Shares, really stand out since they have market caps in excess of USD 100 million yet 24 and 13 active addresses respectively. Basically, no one is using these cryptos yet they have USD 100 million in their market cap. Obviously, these market caps are prone to a quick collapse. There are many cryptos with a market cap of over USD 10 million yet less than 100 active addresses.
Another shocking stat is Stellar, which has a market cap of USD 3.7 billion, yet only 500 active users. This is really nonsensical and might be an indication that Stellar’s recent rally is all from manipulation. However, this requires further investigation.
All hope is not lost for crypto, however, quite the opposite. This is just confirmation of what most crypto experts already know, that Bitcoin is the #1 cryptocurrency. Bitcoin has the most liquidity, infrastructure, demand, and the biggest user base, and it would seem crypto users are choosing to use Bitcoin when transacting instead of altcoins. Ethereum is strong too since it is the #1 cryptocurrency platform for developing dApps.
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