Bitcoin cash has seen a surge in prices, and its market value has become the second largest cryptocurrency.
Relative to the price rise, I am more concerned about the changes in the number of transactions on the chain.
On chain transaction of LTC
Some time ago, when the domestic exchange was closed, there was a time when the BTC prices of biter and okcoin were very different. A friend of mine told me that it was possible to move bricks! I said that the RMB channel has been closed. You don’t have RMB in both exchanges. How can you move bricks? One day later, he said that he made some money moving bricks, and that he moved them in biter and okcoin. I asked him how he did it? He told me that bricks were carried with lettercoin.
The figure above shows the comparison of the number of transactions on the chain between BTC and LTC. For a long time, the number of transactions on the chain of LTC has been very small. At that time, BTC was not congested. Since 2017, BTC began to be congested. It can be seen that the number of transactions on the chain of LTC began to increase, and the number of transactions on the chain of LTC began to increase at the time when BTC handled the highest number of transactions per day (that is, when BTC was most congested) There will be a small peak in the number. On the one hand, the price growth of LTC leads to the increase of transaction demand of LTC, which leads to the increase of transactions in LTC chain. On the other hand, LTC has the function of value transfer on the chain. This part of the demand cannot be completed by BTC due to transaction congestion, and the overflow transaction demand is realized by LTC.
Since bitcoin cash bifurcated from August 1, the correlation between the increase of LTC transactions and BTC congestion is not so obvious. This part of the spillover trading demand is partly replaced by BCH.
The above figure is a comparison chart of the number of transactions on the chain of BTC, BCH and LTC in three months. Blue represents BTC, red represents BCH, and orange represents LTC. From this, we can see that with the development of BCH, the correlation between the increase of LTC’s on chain transactions and BTC congestion is becoming smaller and smaller. In the case of no drastic fluctuation of LTC, the number of transactions on the chain of LTC does not increase with the congestion of BTC.
LTC had a high price in September, and then the price fluctuation was relatively stable. Compared with the number of transactions on the chain in September as shown in the figure above, the number of transactions on the chain of LTC will increase when the price is high. Obviously, we can see that the number of transactions on the chain of LTC is very stable, and the price does not fluctuate greatly. Moreover, with the increase of the number of transactions in BCH chain, the number of transactions on LTC chain decreases.
What are the demands of chain trading?
Move brick: buy in the platform with low price, and then transfer to the platform with high price to sell. From a station with the lowest unit price of special currency in foreign exchanges, move bricks to domestic exchanges, sell them at high prices, or do the opposite operation, you can make a profit.
If it is a cross-border platform to move bricks need to use domestic legal currency, this is a very troublesome thing. The foreign exchange control of French currency is very strict, and the exchange of foreign exchange is also a very challenging thing. Moreover, the exchange cost of French currency is also very high, but the cryptocurrency is different. It is universal and has low transfer cost (BCH). If you move bricks in a different way: when you move bricks, you don’t earn the difference between French currency and BCH or LTC?
For example, one currency of exchange a is 0.1 BCH, while the price of another exchange B is 0.2 BCH. Then I only need to buy in the a exchange and sell in the B exchange, then I can earn 0.1 BCH, and move the bricks.
The currency that can be used to move bricks needs to meet the following requirements:
Low transfer fees
Make sure it’s fast
There are huge deals
Large user base
It has to be said that there is still a gap between the confirmation time of LTC and BCH, one of which is 2.5 minutes and the other is 10 minutes. However, as long as the confirmation can be made within 1 to 2 block time, generally speaking, the price fluctuation during this period will not be particularly huge, and it is still acceptable. For example, the transfer speed of RMB is not so fast, and the brick movers are also acceptable.
When the PBC system is shut down, it is impossible to transfer large amount of money, only small amount of money can be transferred, and the exchange needs time to confirm after transferring legal currency. When it comes to timing, traders who move bricks will try to hedge their own risks. I personally think it is acceptable that the confirmation time should not exceed 2 hours. If it is exceeded, it will affect the brick moving. Low transaction fees are very necessary. It is also unacceptable to move around and earn 200 yuan and charge 100 yuan.
The best way for the exchange to avoid the risk of legal currency is not to exchange legal currency, but only to do currency trading. If an individual wants to buy currency, he needs to get a cryptocurrency first and then go to the currency exchange to buy his own currency. In China, the way of personal access to cryptocurrency is generally OTC. BTC, as the currency with the largest market value and user base, is of course the largest OTC market. But BTC has the problems of too high service charge and too long confirmation time. Of course, the high service charge does not matter to the local tyrants. The service charge of more than 100 yuan is enough for me to wait for the loser for two days.
The transaction friction cost of BTC is too high.
At present, when the domestic exchange is closed, there will be relatively high friction costs if you want to buy currency. If you choose to have someone buy directly in the United States or Hong Kong, the friction cost is about 2% – 7%. Buying coins in the OTC market will also generate friction costs. The first part is the OTC trading platform, which generally charges about 0.3%. The second is the OTC provider. He may be a miner who sells his own money or carries out OTC arbitrage. The friction cost is not very good. The statistics show how much.
If you want to buy other currencies, you can buy BTC first and then recharge it to the currency exchange. However, the transfer fee of BTC is too high. The price of a BTC is now $6100, and the average handling fee per transaction is about 45 to about, and the friction cost is 0.7%.
You need to know that the transaction platform charges about 0.3%, while the transfer fee needs 0.7%. Of course, for the local tyrants who buy 10 BTCs at a time, the friction cost will be reduced to 0.07%, which is not a big deal. Obviously, this is not something that I can do with losers. Losers can only think of other ways.
Apart from buying BTC over the counter and buying other currencies on the currency trading platform, do we have other options? The answer is obvious, BCH.
For example, if I buy BCH outside the venue and then charge it to the currency trading platform, the service charge is only a few cents (Note: RMB). However, BCH has one drawback, that is, it is not stable. Because of EDA (emergency differentiation adjustment), the speed of BCH’s block output is sometimes fast and sometimes slow. This defect has attracted enough attention of the BCH development team. On November 13, a hard fork will be upgraded to DAA (diversity adjustment algorithm). The output block of BCH will be stable at 10 minutes. Only when the block is stable, can we have a better application scenario.
However, after charging BCH to the exchange, there is another problem. You still need to change to BTC to trade, because other currencies are priced in BTC. In this way, the transaction process will become:
BCH > BTC > the currency I want
The intermediate trading platform will charge two transaction fees. It is suggested that the trading platform can increase the number of BCH based transaction pairs. The advantage is that users can quickly purchase the currency they need. Why BCH, not eth or LTC?
The transaction of eth is mainly the transaction of smart contract, and eth also has the problem of transaction congestion.
The transaction volume of LTC is small, and the user base is not big. For example, neither I nor my friends around me hold LTC.
BCH has absorbed the demand of BTC spillover, while LTC has not, the number of transactions on the chain is decreasing. After DAA adjustment, BCH is more stable and has more trading capacity on the chain. In these days of BCH’s large-scale rise, the platforms or individuals who do BCH OTC trading are very happy. The cryptocurrency market is a free and open market. Some people can explore many opportunities from it to meet the needs of users (reduce friction costs). I think there will soon be a trading platform to support currency trading. There will always be people who are very sensitive to the needs of users. If you make better products, your own platform will grow.
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