Cryptocurrencies go beyond buying low and selling high. In fact, blockchain-based assets provide even more insights on a project’s potential beyond utility. To unlock the hidden secrets of a crypto project, savvy investors turn to on-chain data. Below, we explore what on-chain data means and how you can tap into this treasure trove to unlock even more insights in your crypto journey.
What is On-chain Data?
Data means information so, at the core, on-chain data refers to the information recorded on the blockchain.
Blockchain represents the public notebook for cryptocurrency. It is a book open to everyone to see where all the transactions are stored.
Think about it like bank transactions/statements but instead of the information being open only to the bank and the owner of the account, it is publicly viewable allowing anyone to see who sent the coin, where it went, how much was involved and so much more. Cool, right?
How Does On-chain Data Work?
As we noted earlier, on-chain data basically captures transactions done on a blockchain network. It also ensures that:
People can see when you hold a coin or sell it
View the state of a coin to determine its market value
Check its on-chain market cap, total supply, and the largest holders
Monitor crypto whales activities and forecast the likely impact on the market
What are the Benefits of On-chain Data?
On-chain data is like having a backstage pass to everything that’s happening with a cryptocurrency. It’s not based on opinions or assumptions but pure, factual information. It tells you the real story of what's going on behind the scenes. So, what is there not to love? Here are some benefits to look out for with On-chain Data:
● Increased Transparency
Of course, transparency is the major reason for the introduction of on-chain data in the first place. It does make sense that others get access to the ledger of traders and have a front seat to what people are doing. Easy way to detect any fraudulent move, right? But, majorly, it promotes openness and trust, making it easy for accounts to be traced and audited.
● Decentralization
Crypto is all about trust-minimized value movement and having the access to confirm this is what on-chain data is all about. With crypto assets remaining distributed, users can be assured that centralized control of the network is not achieved. On-chain ensures system integrity is maintained at all times.
● Enhanced Security
It is pretty simple – while the blockchain remains an open book, the transactions are encrypted thereby making it automatically secure. Also, the decentralized nature is one of the reasons why the data cannot be tampered with.
Tools to Make On-chain Data Easy
Over time, some incredible tools have been designed to make on-chain data analysis easier. These tools help to gather, analyze, and display the necessary information in simple ways, making it easy for everyone to understand. While there is a long list of tools for this, here are some of the most popular ones:
● Etherscan
Etherscan is one of the popular ones, leading the block explorer for the Ethereum blockchain. Let's call it the Ethereum search engine, allowing users to check out transactions and wallets. Through this platform, people see the rise and fall of the coin and can make informed decisions.
The platform can be trusted for its security because it is independent. It is not associated with nor funded by Ethereum, so, of course, you can trust the data to be unbiased.
● Glassnode
Looking for something with more presence and power? Glassnode is the tool for you. It is mainly used by serious traders who want to study the in-depths of transactions. The Glassnode gives you access to the charts, metrics, and numbers. You are also exposed to the news, trends, and transaction volume on the platform. It is like the app you go to when you want to see the 360 of what is going on in a wallet, and it does the job well. Because it gives comprehensive reports, it has been on the rise since 2018 when it was first introduced. Today, this platform is one of the most popular.
● Nansen
Here is another top tool that helps in on-chain data analysis. And like the first two mentioned, Nansen also has its focus. It is the tool that combines blockchain data with 250+ labeled wallets, and the one you go to when in-depth dashboard, easy predictions, smart alerts, and custom reporting. While the Nansen tool is mostly used by professionals, newcomers can also use it to learn about digital currencies.
● Dune
Dune is where you can query the Ethereum blockchain using SQL queries. It is an all-in-one platform that allows you to stay updated with crypto news, query, explore market reports, and show high volumes of blockchain. It’s great for both beginners and experts!
Final Thoughts
A lot of people want to know what is happening in the crypto world, and the surface–level answer is that a lot is happening. But beyond the trend, there are charts, metrics, and news that people should know about.
Understanding on-chain basics gives a clearer and bigger picture beyond the trends. With these on-chain data analyzing tools, you have real data at your fingertips. And the best part? You do not need to be a crypto expert to begin. Tools like Etherscan and Nansen are enough to help you understand things.
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