Kevin Rooke, a cryptocurrency commentator, has suggested that the vast majority of altcoins are nearly inactive. Rooke’s observation is based on data from the market aggregator OnChainFx:
Forget about dApps with no users, let's talk about tokens with no users.
Only 27 cryptocurrencies had over 400 active addresses today. Yes. 400 users.
You'd think if there was ever a time to 'buy the dip' or 'panic sell' it would be today. pic.twitter.com/l1INETwawj
— Kevin Rooke (@kerooke) September 6, 2018
The site measures the active addresses of various cryptocurrencies. This statistic is defined as “the number of unique addresses that participated in a transaction at any point during the past 24hrs.”
One commenter notes that low active wallet numbers may be due to people storing coins on exchanges. Although it is possible that exchange users may hold some cryptos for long enough to affect the data, another commenter points out that “leaving crypto in an exchange is not using it.”
In other words, exchange wallets that are used to store crypto would not be considered to have active addresses, just as a personal wallet that is used to store cryptocurrency would not be considered to have active addresses.
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Other commenters note that a lot of data is missing: active address stats for major coins such as Ripple, which has an $11 billion market cap, are not measured by OnChainFx. Rooke argues that OnChainFx covers “almost all the big ones,” but, in actual fact, the site only counts active addresses for 62 of the 107 coins it does cover.
Finally, token activity should not be confused with overall platform activity. Some tokens may have very few active addresses if their platform uses multiple tokens. For example, the prediction market Augur has about 300 active addresses using its REP token. However, the platform mainly uses ETH tokens in bets, while its REP tokens are only occasionally used to create markets and dispute outcomes.
Do the Numbers Mean Anything?
Although OnChainFx is not comprehensive, it does collect very particular data for the coins it covers. OnChainFx, combined with individual block explorers, can provide a complete picture of just how many people are using various altcoins.
Although Rooke’s conclusion is dubious, and these numbers alone are certainly not a reason to declare minor tokens dead, the statistic is a useful one. Some coins really do have a low number of active addresses by any measure.
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