On-Chain Data 101: How to Read the Blockchain Like a Pro

Episode Transcript

Speaker 1 (00:08):
Welcome back to another episode of the Cryptosphere, where we
dive deep into the world of cryptocurrencies and help you
become more savvy in this ever evolving space. Today, we're
tackling an exciting and essential topic, on chain data one
hundred and one. How to read the blockchain like a pro.
Whether you're a crypto investor, a trader, or just curious

(00:29):
about how blockchain technology operates, understanding on chain data is
a crucial skill. To start, Let's define what on chain
data is. Essentially, on chain data comprises all the information
that is permanently recorded on a blockchain. This includes transaction
data such as the amounts, timestamps, and wallet addresses involved,
as well as more granular details like transaction fees, block sizes,

(00:52):
and the creation of new coins or tokens. Understanding this
data isn't just for tech wuizzz. It's pivotal for anyone
involved in the crypto market. Why because analyzing this data
can offer insights into market trends, coin popularity, the health
of a blockchain, and even fortel potential price movements. Let's
break it into chunks and go over how you can

(01:12):
start using this data to your advantage. The basics blocks
and transactions. A blockchain is made up of a series
of blocks, and each block contains a set of transactions.
Every time a cryptocurrency transaction occurs, it's recorded in a block.
Understanding the nature of these transactions is your first step.
You can see the amount exchanged, the addresses involved, and

(01:33):
whether it was a standard transfer of funds or a
contract execution. Exploring block explorers to start peeling the onion,
you'll need to use tools known as block explorers. These
are websites or applications that allow you to view all
the transactions that have happened on a blockchain. Some popular
block explorers include ether skin for Ethereum, blockchain dot com
for Bitcoin, and BSc scan for Binance smart chain. When

(01:57):
you open a block explorer, you can search by block, block, transaction, address,
or even a specific token. For example, entering a bitcoin
address will show you every transaction that has involved that address,
including the amount of bitcoin cent or received, the date
and time of each transaction, and the transaction fees paid.
Transaction details. Now, as you look into these transactions, focus

(02:19):
on a few details. The hash a unique identifier for
that transaction, almost like a digital fingerprint, inputs and outputs.
For cryptocurrencies like bitcoin, look at the input addresses who
sent the bitcoin and the output addresses who receive the
bitcoin fees. Analyzing transaction fees can give you insights into
the urgency or importance of a transaction during different network conditions.

(02:42):
Confirmations This indicates how many blocks have been added to
the blockchains into particular transaction was recorded. More confirmations typically
mean greater security. Network health indicators on chain data provides
vital signs of a blockchain's health. Transaction volume. More transactions
generally mean higher usage and utility of the blockchain. Hash rate,

(03:03):
particularly for proof of work like Bitcoin. The hash rate
indicates the total computational power being used to mine and
process transactions. A dropping hash rate could suggest less network security.
Gas prices for ethereum this tells you how much it
costs to perform transactions or smart contract operations, which can

(03:24):
indicate how busy the network is. Advanced metrics. As you
get more comfortable, you can delve into more advanced metrics.
The meme pool. This is where all the unconfirmed transactions
wait before being confirmed. A large mem pool might indicate
that the network is congested or miners are prioritizing higher
fee transactions. MVT ratio network value to transactions. This metric

(03:47):
compares the market cap of a blockchain its network value
to its daily transaction volume. A high ENVT might suggest
that the cryptocurrency is overvalued relative to the actual amount
of transactions being carried out on the network. Behavioral indicators.
Some of the most intriguing uses of on chain data
relate to investor behavior. For instance, address growth, the number

(04:09):
of new addresses being created can signal new or increasing
interest in a cryptocurrency. Ho DL waves. This chart shows
the proportions of a cryptocurrency circulating supply that has been
held for different periods. It's a great way to see
how long term investors might be behaving. Besides these points, platforms
like glass Node or coin metrics offer complex tools and

(04:30):
dashboards that provide deeper analytics derived from on chain data.
They can help track everything from minor revenue to changes
in major holders, wallet balances, whale watching, to trends in
token age consumed, which reflects how old tokens are moving
for the first time in a while. Before we wrap up,
remember to use this powerful tool responsibly. On chain data

(04:51):
provides transparency and insights, but interpret it within the larger
context of market conditions and global economic indicators. The blockchain
doesn't oper rate in a vacuum, so to all crypto enthusiasts, traders,
and investors out there, getting fluent with on chain data
is an invaluable skill. It requires a bit of technical
knowledge at first, but once you get the hang of it,

(05:12):
it's like having insider information on the health, trends and
activities of any cryptocurrency. We covered a lot today, but
this is just your starting point. Dive into these tools,
get your hands dirty, and start forming your interpretations. That's
it for today's episode on on chain Data one hundred
and one. I hope you found this introduction useful and
that you're excited to further explore the blockchain layers and

(05:34):
the stories they tell. Remember, understanding the data behind the
tokens could be just as important as understanding the tokens themselves.
Thank you for tuning in, and until next time, keep
decrypting the cryptic world of cryptocurrencies, happy trading and analyzing.