First Layer On-chain Analysis: BTC DAA
What are Bitcoin Daily Active Addresses?
When you set up a Bitcoin wallet (or a wallet for other cryptocurrencies), your wallet gets a unique address assignment. This address is vital to ensure the sender sends their cryptocurrency to the intended recipient. A typical crypto wallet address contains a combination of alphanumeric characters – in other words, a combination of words and letters. Usually, the address is between 26 and 35 characters long, and it can be represented by a QR code.
This string of characters comes from a hashed version of the wallet's public key and a checksum to avoid any typos. A checksum is a mathematical value assigned to a file sent through a network (in this case, the Bitcoin blockchain). The value verifies that the data contained in the file remains unchanged. Essentially, it's a method for error-checking data.
Digital wallets make it easy to copy and paste your address to ensure accuracy. For example, you can quickly and easily scan a QR code or use the corresponding address to send and receive crypto over the blockchain.
In short, the active address allows you to send or receive transactions within a set time period. Successful transactions are visible on the blockchain, which works as a public distributed ledger. You can observe and analyze other investors' activities on the ledger to better understand what's going on daily in the crypto world.
Active Addresses
An address becomes active as soon as it's been a part of a successful transaction – either as a sender or receiver. Because of this, active addresses help indicate daily users' activity on the blockchain.
In other words, they represent the total number of active users on any given day on the network. So if you hear the term monthly active users, that's referring to the total number of users that either send or receive crypto in a specific month.
However, it's important to note that a specific address is counted just once in a particular timeframe. So, if you're counting the number of daily active addresses but someone makes two transactions in one day, the address will only be counted once.
Another essential point to note with active addresses is that they must be a part of an on-chain transaction. This is because on-chain transactions are considered successful once they've been recorded and confirmed on the blockchain.
On-chain transactions are permanently recorded on blockchain networks, including private blockchains, public blockchains, hybrid blockchains, and consortium blockchains.
On the other hand, wallets with off-chain transactions are not counted as active addresses, as they are not recorded on the blockchain like on-chain transactions. Instead, off-chain transactions use traditional peer-to-peer transfer methods, including exchanging private keys linked to a new wallet.
How are Daily Active Addresses Related to Price?
So, how do price and daily active addresses correlate? Generally, a price drop will also lead to a decline in daily active addresses.
When crypto prices start to drop, investors will attempt to leave the market. However, active addresses can sometimes go up, as those who bought their Bitcoin at a low price will want to preserve any profits before the price falls even lower. In other words, they'll sell their Bitcoin and convert it to fiat currency.
Additionally, some people will exit the crypto market to avoid succumbing to losses during a market meltdown. Investing can be a rollercoaster of emotions, and often people will sell coins during these fluctuations because they can't handle this emotional rollercoaster.
When investors dump coins based on their feelings, it leads to fewer active addresses. For example, when China cracked down on Bitcoin in the summer of 2021, the number of daily active users dropped by nearly 60%, from 1.3 million to about half a million.
Exploring the DAA Data
Data from daily active addresses can be used in many ways. For example, their number can indicate how healthy the Bitcoin network is. The metric shows you how the network grows over time. It helps you tell how many people are utilizing the blockchain and whether a blockchain project is attracting new investors.
Active addresses also follow the rules of supply and demand. If the demand for a product goes up while the supply remains the same, the price will increase. Similarly, if a network sees an increase in daily active addresses, the cost of the particular coin will also likely go up.
For blockchain projects like Ethereum that have an unlimited supply, a high number of active addresses is crucial. If a network like Ethereum sees a lot of transit, that’s a good sign of scalability.
In this case, the crypto gains value because of its utility instead of its scarcity (as with Bitcoin). Therefore, active addresses give you the trust to invest in the project.
Building DAA Data into your Investment Strategy
While you shouldn’t solely rely on DAA data for your investment strategy, it is an important factor to consider.
If you’re thinking of investing in a new crypto project, paying attention to the DAA can tell you how much traction the project is gaining and how much trust others have in it.
In terms of Bitcoin, the DAA data can help let you know when it may be a good time to buy or sell. For example, if you notice fewer daily active addresses, that may indicate you should sell, particularly if the price looks to be turning lower at the same time. However, if you’re using Bitcoin as a long-term investment strategy, DAA data shouldn’t be your sole reason for buying or selling.
As we mentioned earlier, emotions can play into investing. If you wait out the price drops, you may see bigger returns in the future.
Conclusion
Paying attention to daily active addresses is an important component of Bitcoin investing. It can also help you learn about the popularity and trust around new projects. However, it shouldn’t be your only guiding factor in investing.
Wallet
Taking profit from NFT? 🕵️Digital art is experiencing a renaissance. Therefore, in this idea, I have provided all the information needed to start making and selling our art in the form of NFT (non-fungible tokens) on blockchain.
-- What is NFT? --
NFT is for Non-Fungible Token, something like Certificate of Authenticity. In real life, classic artwork and valuable, historical artifacts are often sold at auction with receipts indicating the object's authenticity.
NFT does the same thing for digital items. They certify uniqueness in GIF, JPEG, MP3 and any other format. This technology creates a new kind of ownership for digital files that wasn't previously possible. NFTs can be bought, acquired, or sold, and even destroyed as physical objects.
The process of converting your work to NFT is called " Minting ", which refers to the process of creating a new blockchain coin and will forever be attached to that content, such as your image file. Artists multiply the internal NFT by adding an internal commission to the token (usually 10 to 30%). Whenever their work is resold, they are entitled to this commission.
-- Is it possible for my work to be converted into NFT? --
Perhaps, we live in the Wild West of the NFTs and anything is possible. Digital arts, songs, memes, recipes and even startups are now on the list of NFT stores. Currently, there are very few restrictive rules on what can be converted to NFT.
-- What does it take to start building NFT? --
You do not need to know enough about cryptocurrencies to build NFT, you only need some tools, such as Crypto Wallet and some Ethereum .
-- How to connect wallet to NFT market? --
Once you have your wallet ready and you have bought some Ethereum, it is time to choose the store where you want to build and sell NFT. Recommended for beginners working on the Rarible website ; Because it offers the easiest way. To connect the wallet to the rebel, first go to this website and click Connect from the right corner of the page.
On the next screen, select WalletConnect if you use Rainbow or Metamorphosis, and click WalletLink if you are using Coinbase. Many other wallets use this option and it is worth checking out these options to choose the preferred wallet.
It does not matter what wallet you use; Because the next step is the same. After selecting the connection option, a QR code is displayed on the screen. Scan this code using your Wallet app. After scanning, confirm the wallet connection to Rarible. Because this connection is secure, Rarible forces you to confirm your purchases after each transaction. Once your wallet is connected, your Rarible account will be created immediately. Now you have all the tools you need to build, mint and sell your first NFT.
-- Where to sell my NFT? --
The more news there are about NFT, the more stores will be created. Here's a list of huge digital stores for NFT:
Zora:
Zora is a store built on the idea that content creators should take control of their work from the main platforms. Zora allows creators to mint images, videos, audio files and even plain text documents. Currently, this store allows pre-invited creators to operate.
Rarible:
Rarible is one of the most popular websites for creators and collectors who want to enter the NFT world. Uploading content and building NFT on this website is as easy as posting a video on YouTube. In a market full of websites that can only be operated by pre-invitation, Rarible is one of the NFT destinations that allows new developers to sell their work from the moment of registration. However, due to this freedom of action, it is necessary to change the copyright and content control laws on this website.
SuperRare:
SuperRare is an NFT store for digital artists. You will not find memes or text posts or simple sound effects for sale here. The Super Rear series is very organized, new works are placed on this platform at a slower speed. Searching in SuperRear is like stepping into a specialized digital gallery. NFT works on this website are a reflection of thousands of hours of artist effort, with prices sometimes rising sharply and new builders being accepted only upon request.
Nifty Gateway:
Nifty Gateway is an NFT store that focuses exclusively on collectibles. Nifty works with prominent artists and musicians such as Grimes and Justin Roiland to release limited edition collections of NFTs. Nifty Gateway is one of the main NFT websites that separates itself from other digital retailers on the list by accepting credit cards. Like SuperRre, art works are often very expensive, and new artists must apply to this website before they can post their work.
OpenSea:
OpenSea is one of the first NFT stores and a huge library of content at various prices, including digital art and 3D collections and in-game video items. This website is one of the most accessible websites for NFT novices and offers a great experience in searching for pieces of art.
-- How to create NFT? --
There is no specific technique for making pieces of art that can be converted to NFT. If the store supports the file format you created, then you can convert it to NFT. This creates a new world for content that can be turned into money. Any image and file in TXT, JPG, PNG, MP3 or GIF formats can be converted to NFT on Zora or Rebell. Have you made a great meme or written a recipe for a delicious meal in TXT format? Well, it can be converted to NFT.
If this idea, helped you to get to know about NFT more, don't forget to hit the like button and leave comment. That will be a great motivation for me folks..
