A Network Analysis of Burst as an Investment and a Framework for Analyzing other Potential Cryptoassets.
When looking at cryptoassets from an investor standpoint, there are many aspects that should be considered beyond current/past price performance. In previously posts I’ve mentioned that things like the development team, the community, the issuance structure, and the technology itself should play a role in decision making, however many of these factors are difficult to quantify. In a world where new coins appear daily, and many are likely doomed to fail, the importance of good analysis cannot be overemphasized.
I recently read Cryptoassets by Chris Burniske and Jack Tatar. It’s an excellent read for those already invested in cryptocurrencies, as well as novices to the subject. In the later chapters, the authors provide some guidance on how to analyze different projects prior to making investments. I’ve kept some of their ideas in mind and expanded on some of these. You can view my calculations, some additional analysis, and interactive graphs in this jupyter notebook.
I’ll be using burstcoin.cc, explore.burst.cryptoguru.org, and blocks.fastpool.info, all Burst blockchain explorers, as my sources for these calculations. I’ve also pulled from other sites such as Cryptomiso, Coin Market Cap, and Google for additional details.
Note: I am not a professional investor, the following analysis should not be construed as investment advice or an endorsement.
The following factors to consider are in no particular order.
Mining
Examining the specifics around how a cryptocurrency is being mined can be eyeopening in terms of how secure a network is and how much its miners have invested in the currency. For example, in Cryptoassets, the authors demonstrate that in March of 2017 the Bitcoin network was secured by a hardware investment of ~$660 million dollars. In other words, this is how much have people invested in the support infrastructure for a cryptocurrency through mining or node hosting.
Total Miners?
From my scraping of burstcoin.cc, it appears that at the time of writing there were 19,461 active miners. Not too shabby.
Number of pools?
Burstcoin.cc also reports there are 31 pools in addition to 151 solo miners.
Total Capacity of the Burst Network
According to the blocks.fastpool.info Burst Explorer, the total capacity of the network at the time of writing (1/24/2018) is roughly 184,372 TB or 184 Petabytes. Though I’ve seen this estimate fluctuate as high as 240 PB in the past few days. For context, it would take 223,000 DVDs (4.7Gb each) to hold 1 Petabyte of data. So the current network size is around 41 million DVDs.
Average Capacity Per Miner
This number is still fairly low, at 9.5 TB. This indicates to me that while there are many large miners, that there are still many small miners involved.
Hardware Investment Cost
I’ll be using very general figures here to illustrate a point. This should by no means be taken as a precise measurement.
Average Cost per TB: $25Average Miner Overhead Cost (Computer): $500
Total Capacity Cost = 25 x 184,372 = $4,609,300Total Overhead Cost = 500 x 19,461 = $9,730,500Total Network Cost = 4,609,300 + 9,730,500 = $14,339,800
Supply
Existing Supply
While there appears to be some variation on this figure depending on where you look, the general consensus seems to be that roughly 1.9 billion Burst have already been mined. Only 2,158,812,800 Burst will ever exist. That means that we’re approaching only 10% of Burst that haven’t been mined yet. Currently the block reward for forging a block is 1220 Burst, that reward will gradually decrease 5% a month. However, as long as transactions are still happening, miners need not fear this lowering reward as the transaction fees will become an increasing lucrative prize as trading volume increases.
Rich List
When examining a cryptocurrency it is also good to look at how distributed the existing supply is. For example, if you’re looking at a currency and huge amounts belong to a relatively small number of parties, that may be a cause for concern. By looking at the graph below you can see that while there are a few whales, the overall wealth of the network is relatively distributed.
Trading
Trading Partners
One thing to note when analyzing some of the newer/lesser known altcoins is that while you may often see the prices for these coins displayed in their USD equivalent. However, very rarely can you actually do trading based on these numbers. In almost all cases you must use an intermediary asset in-between; typically Bitcoin, Ethereum, or some token proprietary to the exchange. For Burst the primary trading partner is Bitcoin.
Growth of Value Over Time
While the transaction rate between BURST/BTC has been fairly volatile, due to the increase in the value of BTC in the past year, BURST’s value in USD has increased over time.
Trade Volume
Trade volume is difficult to track due to how many users keep their currency in exchange wallets. For example, when the two largest BURST exchanges, Bittrex and Poloniex, do buys/sells internally, those transactions do not appear on the Burst blockchain because all the exchange does not leave the exchange’s wallet. We can, however, track the daily volumes using data from the exchanges.
Wallet Creation
New wallet creation numbers are up nearly 3x in the past month. However, as you can see from the graph below, they are down from previous highs in late December/early January. While new wallet creation doesn’t necessarily correspond to new Burst users, it’s still a nice metric to watch.
Market Cap
The market cap as reported by Coin Market Cap is $89,308,917.00, though this number is a bit low compared to other sources I’ve seen. This valuation places Burst in the 190s based on market cap rankings.
Development
Developer Activity
According to Cryptomiso, Burst is currently ranked in 61st place in terms of core development activity. This places it above other more prominent projects such as Stellar Lumens, Dash, Bitcoin cash, and Ripple. According to this source, the Burst repo has had 486 commits by 19 different developers in the past year. It is important to note that all of the activity has really only happened since July 2017 and activity appears to be gradually increasing.
Technology
In my opinion, one of the most exciting things about Burst is Proof-of-Capacity. Not only is the technology itself new and innovative, but Burst has pioneered PoC and will continue to drive it. I foresee more projects in the future picking up on the Pros of PoC.
The announcement of the Dymaxion has also given speculators reason to believe that Burst will continue to innovate and make strides in terms of scalability, usability, and security.
Popularity
Number of Exchanges Listing Burst
While Burst isn’t listed on all of the largest exchanges, it has made its way onto a handful. While the increased availability would be nice for attracting new investors, the current exchanges seem to be sufficiently filling the current need.
Listed in order of trading volume:
- Bittrex | BURST/BTC| $2,241,130 USD/24h
- Poloniex | BURST/BTC| $626,148 USD/24h
- Livecoin | BURST/BTC | $23,596 USD/24h
- Coinroom | BURST/PLN | $1,566 USD/24h
- C-CEX | BURST/BTC | $567 USD/24h
Google Trends
Another indicator of popularity is how often people try to find information on the project. Unfortunately, “Burst” is a fairly common word in English, and is therefor hard to extract the organic search for Burst as a cryptocurrency, as opposed to Burst by Shopify or Burst | Mobile Video Platform — Burst.
“Burst Cryptocurrency” from Google Trends
Summary
In my opinion, the most promising aspects of Burst are the use of Proof-of-Capacity as a differentiating technology and basis for distribution, the development roadmap as delivered in the Dymaxion whitepaper, and the overall gradual increase in metrics across the board. While many coins are rocketing to the moon based on hype and unsustainable speculation, Burst’s strong development team, steady growth, and promising technology make it a good longterm bet for me. Be sure to check out the rest of my technical analysis and interactive charts here.
I’d love to hear how you evaluate cryptocurrency investments! Leave your thoughts in the comments.
If you liked this make sure you check out the rest of my series on Burst.
Part 1 — What is Burstcoin?
Part 2 — macOS Wallet Setup Tutorial
Part 3 — Proof-of-Capacity
Part 4 — Network Analysis
Part 5 — How to Buy Burst
Part 6 — The Burst Dymaxion Explained
Donations are always appreciated:
Burst *** BURST-Q944–2MY3–97ZZ-FBWGB
BTC *** 1KUMJDvX8fGTpsZ49NXmmL9UpWiUX8g6K7