A Bank for International Settlements study identified significant measurement challenges in widely used crypto metrics, including Bitcoin transfer values, market capitalization and stablecoin activity. Estimates for Bitcoin's on-chain transfer values can vary by as much as sixfold depending on measurement methodology.
The discrepancy stems from Bitcoin's transaction structure, where unspent funds are frequently returned to the sender as a change output. These change outputs are often counted as transaction outputs even though they do not represent a transfer to a distinct party.
Bitcoin's market capitalization also presents a measurement problem. BIS researchers found that conventional market capitalization has at times been four times higher than realized capitalization, which values each Bitcoin at the price it last moved.
The study analyzed 100 billion blockchain records across Bitcoin, Ethereum and Tron. Similar measurement challenges extend throughout the ecosystem. Ethereum exhibited a distinct issue: of approximately 67.5 million active smart contracts examined, about 54 million could not be categorized using established classifications, complicating interpretation of network activity.
Stablecoin activity poses additional difficulties, as the same asset can serve different purposes across blockchains. Tether's USDT illustrates this variance. USDT on Ethereum was more closely associated with DeFi activity—in 2022, more than 20 percent was held by smart contracts. USDT on Tron was linked more with payment and store-of-value functions, with only around 1 percent held by smart contracts during the same period. Aggregating USDT activity across these blockchains conflates different types of economic activity and obscures actual use cases.
BIS researchers concluded that on-chain indicators should be regarded as "noisy approximations" rather than precise measures of economic activity. Some analytics providers already differentiate between raw blockchain activity and adjusted measures. Visa's Onchain Analytics dashboard, which uses data from Allium Labs, displays both total and adjusted stablecoin transaction volumes to address these complexities.
