Big Data is all about using large sets of information to make more informed decisions. In a lot of ways, Big Data has been helping companies tame what was once thought to be chaotic data sets, bringing order and creating new insights. Bitcoin, perhaps the epitome of a chaotic currency, in fact has a lot to gain from the power of Big Data.
How Big Data predicts block chain trends
In many ways, Bitcoin is seen by digital traders as a sort of mythical object. To many it appeared out of thin air with an enormous value, and continues to be shrouded in mystery with respect to its creator, its viability, and sheer complexity as a concept. However, Bitcoin is simply waiting to be better understood, just as millions look to financial analysts and other experts for insights into market trends.
For example, Bitcoin is unique in that it has a block chain through which endless insights can be obtained. The block chain is essentially a ledger that every single Bitcoin transaction must pass through in order to be verified by the millions of other peer to peer users. This means that every transaction is public, and that every Bitcoin user’s activities are visible to the millions of other people on the block chain.
This is, of course, easier said than done. There are more than 80,000 transactions per day, and there is no identifying information in the transaction itself. The block chain only knows the two wallets that exchange currency, as well as the amount of that currency. The rest must be determined through other insights. However, this isn’t stopping firms like Coinalytics and numerous other small firms looking to begin high-grade data analysis of Bitcoin activities. Experts in the field are able to identify which transactions mark Bitcoin currency movements by key stakeholders, as well as incorporate knowledge about the currency trading industry when analyzing Bitcoin activities. This information, powered by the scale and scope of the block chain, provides powerful insights into the currency’s ongoing trends and activities.
How Big Data predicts social Bitcoin trends
There are other ways to use Big Data with respect to Bitcoin. While some data enthusiasts look for trends in the Blockchain, others look for a human element to understand what will impact currency volatility and other concerns about the cryptocurrency. As Bitcoin’s popularity grew in late 2013 and early 2014, the cryptocurrency began to fluctuate depending on major world events and general community sentiment. Even now, sentiments on the Eurozone and other grand financial systems impact the price of Bitcoin.
This has resulted in powerful data sets that are being tapped for insights into cryptocurrency trends. For example, analysts used social media in the wake of a major Bitcoin trading website, Mt.Gox, shutting down in early 2014. The trends on social media were plotted to identify everything from key voices and stakeholders in the event, to strong sentiments, positive or negative, about Bitcoin around the world. Compared to the block chain, which cannot as easily associate specific people to wallet accounts, this information provides analysts key ways which with they can draw powerful demographic information into cryptocurrency analysis, as well as bridge the currency’s performance to major world events, just like any other financial asset.
Ultimately, Bitcoin remains a very wild currency, volatile in nature and only partially understood even by experts. Still, Big Data can help chip away at this identity as the currency grows in usage around the world. There’s no excuse for those interested in Bitcoin to not use Big Data and other, similar tools to make educated insights into the currency’s future performance.