{"id":65719,"date":"2023-09-26T15:37:56","date_gmt":"2023-09-26T19:37:56","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/crypto\/this-new-tool-tracks-bitcoins-price-without-using-an-exchange\/"},"modified":"2023-09-26T15:37:58","modified_gmt":"2023-09-26T19:37:58","slug":"this-new-tool-tracks-bitcoins-price-without-using-an-exchange","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=65719","title":{"rendered":"This New Tool Track\u2019s Bitcoin\u2019s Price Without Using An Exchange"},"content":{"rendered":"
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The Bitcoin blockchain alone is now capable of tracking Bitcoin\u2019s price without help from the outside world, thanks to a developer\u2019s new tool.<\/p>\n

As created by @SteveSimple on X (Twitter), UTXOracle is a Python program that \u201cestimates the daily USD price of bitcoin using only your bitcoin Core full node,\u201d according to the program\u2019s script.<\/p>\n

\u201cIt only reads blocks, analyzes output patterns, and estimates a daily average USD price of bitcoin,\u201d the program states. The tool is fully open source, and can be used while disconnected from the internet by simply reading blocks from one\u2019s device.<\/p>\n

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Price data for a given financial asset is typically sourced from centralized crypto and stock exchanges, where an active trading market creates liquidity to form a market and track current value. Naturally, however, such exchanges are centralized entities, subject to subjectivity, unreliability, and corruption that Bitcoin is supposed to escape.<\/p>\n

This is especially true in the realm of crypto smart contracts, which require data price data and other external information to realize most of their use cases. By bringing price discovery purely on-chain, massive swaths of decentralized finance (DeFi) can become 100% \u201cdecentralized,\u201d just like standard transactions.<\/p>\n

The process for calculating price is a bit complicated: it involves using heatmaps of the Bitcoin blockchain to detect trendlines in the round BTC and USD denominations that users are transacting at, and assess price based on where those lines intersect.<\/p>\n

Combined with just one day of external data to prime the model, UTXOracle can infer the daily price of Bitcoin with remarkable accuracy, within a 1% margin of error. On Monday, for example, it calculated Bitcoin\u2019s on-chain price to be $26,448 USD, while Yahoo Finance calculated a \u201cdaily close\u201d for Bitcoin at 26,183.21, based on CoinMarketCap data.<\/p>\n

Not Practical For Ethereum<\/h2>\n

In a message to CryptoNews<\/i>, the program\u2019s developer \u2013 @SteveSimple on X (Twitter) \u2013 said the same type of program isn\u2019t \u201cpractical\u201d on Ethereum. While paying great respect to Vitalik\u2019s work, he said that Ethereum nodes are impractical for running on a local computer in the first place, thus defeating the purpose of his project.<\/p>\n

\u201cYou need the full blockchain on a local computer to run the UTXOracle code,\u201d he explained. \u201cThis amazing new era of money that we\u2019ve entered into with cryptocurrency is highly dependent on people keeping independent full copies of the blockchain on their local machine.\u201d<\/p>\n

While many Ethereum users run their own nodes, they often operate through centralized cloud computing companies like Amazon Web Services (AWS). They may also run \u201cpruned nodes\u201d \u2013 nodes that don\u2019t contain full copies of the blockchain.<\/p>\n

\u201cI want to encourage people to run their own nodes, as that is the key to this beautiful new era of humanity.\u201d the developer concluded.\u00a0
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