You ever wonder where your crypto is? Or maybe you want to trace your transactions to see exactly how anonymous your wallet really is. Or maybe still you're just curious to see the blockchain in action.
Before we dig into tools and techniques, let's first establish how blockchains function.
So how does the blockchain work?
Let's start at the beginning.
Because I am such a great guy I decide to send you 1 whole Bitcoin directly to your wallet. So what happens next?
- My wallet sends a signal to the Bitcoin network that I want to transfer Bitcoin. This transaction then enters what is called the "mempool". Keep these fancy words in mind, they will be useful later.
- Each mining node scoops up these orphaned transactions and bundles them to form a block (this is the block part in block-chain). The miners then solve a complex cryptographic problem.
- Whichever miner guesses the right answer first. broadcasts their solution to the rest of the miners who then validate it. Assuming the answer is correct and the miner didn't make a mistake, the block is then added to the blockchain ledger.
- You open up your wallet and see that you are one Bitcoin richer. Immediately, you send me a thank you email promising that you will rename your first born after me.
If you are still in the dark I added a diagram below.
Each of these process can be analyzed and identified because (unlike traditional banking infrastructure) everything is open source.
But how can I actually see the ledger?
This is the easy part. Instead of running a node or downloading the entire 400GB+ bitcoin ledger, other people have created publicly available websites that stores this data. Making it much easier than downloading the ledger and combing through mountains of data (trust me I have tried it).
There are many different online free open source websites that all pretty much do the same thing with a different coat of paint and a few minor changes.
It all depends on what you want to do. For example, what if you...
Want To See How Private Your Wallet Is
For this use case I would personally recommend BTC.com. You can search your wallet address and find exactly where the transactions have come in from and where they have left. BTC.com also has wide assortment of stats about the network which would be useful if you wanted to know...
Will the price go up or down?
Now full disclosure will price go up or down is not my specialty, but what I can tell you is that certain investors have made predictions based off of specific on-chain metrics such as:
- Hash rate difficulty
- Wallet activity
- Confirmed transactions
- Miners Revenue
The list goes on. Now as far as how these signals translate into price movement, again you might want to ask an expert. What I can say is that a good place to keep track of these stats is blockchain.com. They have a lot of statistics and charts about the health of the blockchain.
But what if you want to invest in a blockchain that isn't Bitcoin?
What does a healthy blockchain look like?
Say you want to invest in a new up-and-coming blockchain and want to see how healthy it is before investing. Check its pulse if you will. To do this, you'll want to get a read on it's vital signs. Just like how a good doctor wouldn't use a colonoscopy camera to check a heartbeat, you gotta know which tools to use and what you are looking for.
That is where my personal favorite, Blockchair.com comes into play. They have over 20 different blockchains with detailed charts tracking all the important metrics. Such as:
- Inflation - to see how much of the currency is being created
- Transaction count - find out exactly how much activity is going on
- Difficulty - This graph displays how hardened a network is (no not like that). The higher the difficulty the harder it is for it to be hi-jacked or taken over by malicious actors (hashrate is a similar metric)
- And much more!
A common tactic is to compare the performance of the newer chains to more established blockchains (such as BTC) to measure growth, security, activity, etc.
Here are just a couple of the uses for blockchain explorers, at the end of the day it is another excellent tool to add to your arsenal of web3 solutions.
Now that you can navigate the blockchain like a pro, what are your next moves from here?