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22 March 2023
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Bitcoin transaction volume plummeted by more than 20%, but why?

The transaction volume on the Bitcoin blockchain has plummeted by more than 20% in recent days. According to CoinMetrics.io, the cause is the actions of a single startup: VeriBlock.

VeriBlock is a startup that tries to connect (smaller) blockchains with each other via the Bitcoin blockchain. The project has recently been in a test phase and it claims that it accounted for 20 to 30% of the total number of transactions made on the Bitcoin blockchain.

In a tweet, CoinMetrics.io shows on the basis of a graph that the plunging of the volume coincides almost exactly with the termination of Veriblock’s test network:

The recent collapse in the number of BTC transactions seems to correlate with the end of the VeriBlock test network (on March 4), which accounted for 20-30% of BTC transactions.

VeriBlock claims that even smaller blockchains can use the security level of the Bitcoin blockchain thanks to the Proof-of-Proof model that the startup develops. The startup explains the Proof-of-Proof model as:

A new consensus protocol that allows each blockchain (including side chains and permissioned ledgers) to use Bitcoin’s full security in a truly decentralized, trusted, transparent and permissionless (DTTP) manner.

In short, this means that VeriBlock stores certain data from other block chains on the Bitcoin block chain. However, according to some Bitcoin users, the Bitcoin blockchain is only meant to store transaction data, and they therefore criticized the practices of the startup. In addition, many wonder whether Veriblock’s practices are sustainable given the large number of transactions that the startup carries out.

Despite the criticism, there are also positive sounds. For example, the blocks of the Bitcoin blockchain would often still be too empty. And so they welcome the data that VeriBlock wants to store with open arms.

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