Same price, different Bitcoin: How the fundamentals have changed compared to 2017

As Bitcoin (BTC) continues to hit an all-time high of over $ 20,000, its network fundamentals paint a different picture from the previous 2017 bull run.

Three years ago, on this very day, Bitcoin hit an all-time high of $ 20,000, recording a 2,000 percent increase in that year. Throughout 2020, Bitcoin had another bull run that pushed its price to new historic highs and for the first time surpassed $ 23,500 on December 17.

Comparing the bulls of 2017 and 2020, one might think that December has a special meaning for Bitcoin. But different from this coincidence, the demonstrations differ widely in institutional needs and degree of adoption. From a fundamental perspective, this year's Bitcoin bull run is not the same as 2017 - especially in terms of transaction fees.

TRANSACTION FEE REDUCED MORE THAN 90% IN THE EXPECTATION OF PRICE IN 2020
Bitcoin's 2020 bull run is significantly healthier in terms of cost per transaction. Miners' revenue per transaction - a metric that also includes block rewards - went up to $ 130 by December 2017 and around $ 60 on December 14, 2020, according to data from Blockchain.com .

Transaction fees are significantly cheaper. According to monitoring resources like BitInfoCharts, the average BTC transaction fee drops to $ 5 by December 2020 from $ 50 in 2017.

The contrast is even more apparent when looking at the total BTC transaction fees, which fell from around 1,500 BTC on December 21, 2017 to just 70 BTC on December 14, 2020, according to Blockchain.com.

Historical chart of total BTC transaction fees. Source: Blockchain.com
Several mainstream media have highlighted the surprisingly low BTC transaction fees recently. On December 13, an unidentified user paid only around $ 12 for a 32,253 BTC ($ 628 million) transaction, Finance Magnates reports. BTC transaction fees are still skyrocketing throughout 2020. By October 2020, BTC transaction costs have increased by around 200%.

HASHRATE BITCOIN INCREASED NEARS 10X
Bitcoin's 2020 rally also differs in hashrate - one of Bitcoin's key metrics shows overall computing power and network security as well as its resistance to attacks.

According to data from Blockchain.com, the BTC hashrate has grown steadily over time, with the total hashrate increasing from about 14 million terahashes (TH) per second in December 2017 to over 130 million TH / s by December 2020. 

 

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Bitcoin hashrate historical chart. Source: Blockchain.com
The Bitcoin hashrate recorded some significant movement in 2020. In early November 2020, BTC's hashing power increased by more than 40% over two days after seeing a sharp drop in October.

It is worth noting that the hashrate increase could also be attributed to more efficient mining equipment that has emerged in the past three years. Compared to 2017 miners, they produce about three times more hashes per watt of energy. However, without a doubt, the network is more secure compared to the same time during the 2017 bull run.

THE NUMBER OF CONFIRMED BTC TRANSACTIONS INCREASED
As cryptocurrency adoption continues to grow each day, the number of confirmed daily transactions has steadily increased each year. While BTC transaction fees are still much lower than in 2017, the Bitcoin network is processing significantly more transactions than it did three years ago.

Bitcoin processed about 320,000 transactions on December 14, 2020, compared with around 280,000 transactions in mid-December 2017, according to data from Blockchain.com. An all-time high in the number of confirmed transactions was recorded in May 2019, when the price of BTC started to recover from around $ 3,000.

2017 PRICE HIGHLIGHTS CONFIRM MORE CONFIRMED TRANSACTIONS
The number of unconfirmed transactions in the Bitcoin network is another indication that Bitcoin's 2020 bull run is much healthier in terms of network fundamentals.

During the 2017 BTC rally, about 120,000 transactions were stuck in the BTC network in mid-December. According to the latest data recorded on Blockchain.com, the number of unconfirmed BTC transactions is just 68. on December 16.

As Bitcoin's rally continues to gain momentum, it remains to be seen whether the ongoing bull run holds a positive trend towards the fundamentals of the network.