Hacker News Reader

Comment by eric_bullington | Hacker News Reader

If you're looking for a good metric for BTC transaction volume, I would suggest Bitcoin days destroyed:

https://en.bitcoin.it/wiki/Bitcoin_Days_Destroyed

Here's a chart of BDD per week (log scale is best in this case):

http://blockchain.info/charts/bitcoin-days-destroyed?showDat...

Here's an attempt to track transaction volume, minus change transactions (the Bitcoin client almost always performs a transaction to issue change back to the sender whenever he/she sends money to someone): http://blockchain.info/charts/estimated-transaction-volume-u...

Both of these metrics point to a slow but steady growth in the number of Bitcoin transactions conducted -- this in spite of a huge increase in their exchange value against the USD and other fiat currencies. So people are spending their Bitcoins. And this trend will likely continue as more companies accept Bitcoins.

View on HN

I'm not getting an intuitive grasp on what the days destroyed tells you? Is it how many people are holding bitcoins? What does a higher number mean, what does a lower number mean?

A larger number means that people are holding onto BTC for long periods of time, a smaller number means that people are spending BTC soon after receiving it.

In a sense, its a more granular way of looking at money velocity.

Can you please explain what you mean by "a more granular way of looking at money velocity"? This is probably a good point, but I'm missing it. I understand "granular" and "money velocity", but am having trouble understanding what you mean here.

Money velocity is an aggregate phenomenon: if a single dollar is passed around a billion times, it is treated the same as a billion dollars passed around once.

Under BDD, if i understand it correctly, the single dollar case would result in a nearly 100% BDD while the billion dollar case is much more modest. It looks at each bitcoin independently. The dollar analogy would be if we kept track of every single dollar bill etc.

You're absolutely right, Bitcoin Days Destroyed only indirectly tells us about transaction volume. What it's trying to measure is the amount of "hoarding" occurring in the Bitcoin economy. More BDD suggests less hoarding. So it looks like people are spending their Bitcoins more and more.

Shouldn't hoarding be estimated by comparing BDD to total Bitcoin days? Or does the block number roughly reflect Bitcoin days?

The increasing number of bitcoins means that there are more and more days to destroy, so I'm having trouble relating it back to behavior.

well there are more and more ways to spend them. in the usa soon you'll be able to pay for city services and you can already top up your phone worldwide as well as pay electricity in southafrica. You can buy stuff over amazon or with bitspend anywhere else.

Reply on news.ycombinator.com