Bitcoin Q&A: What are “bitcoin days destroyed”?


On “bitcoin days destroyed,” Grinners asks,
“Bitcoin days destroyed is calculated by taking… the number of bitcoins multiplied by the
number of days since those coins were last spent.”‘ “What is the significance of this?
What does this actually tell us?” It gives us an idea of the maturity of coins,
how often coins are moved and in what amounts. You can look at it this way: somebody
moving one bitcoin after a hundred days, is equivalent to someone moving
one hundred bitcoins after just a day. That is, the amount of bitcoin multiplied by the
number of days it has been sitting in the same UTXO. It gives [a measure of economic] velocity in the network, the volume of money circulating in the
economy within some period of time. For example, let’s say that I leave this place,
take a taxi, and give the taxi driver $20. They stop at the gas station
and [use that $20 to buy gas]. Then somebody buys a cup of coffee, [along with some
other goods], and they get that $20 back in change. Then they go to buy a muffin, pay
with the $20, and get some change. At the end of the day, the [muffin bakery] pays
its employees; one of them gets my $20 note. That $20 has now moved [five] times in a day. While it is one $20 note, it has participated in [$100]
worth of economic activity overall, by changing hands. In order to get an appreciation for velocity in the Bitcoin
economy, we used the metric “bitcoin days destroyed.” It tells us [what sums of money are
moving and within what period of time]. The product of those two numbers is the metric.
I hope that helps to explain [what it means]. I have only really seen one place
track that, which is Blockchain.com. They had that chart running since the very early days, one of the first charts that they offered which
nobody else [did], in terms of blockchain analysis. I still think it is one of the few places
where you see that metric. I find it fascinating. Every now and then, you will see a news article or
someone tweeting [about] a lot of money on the move. They will use bitcoin days destroyed to give people
an idea of the magnitude and maturity of that money. A very interesting point by Camile, that velocity
of money means nothing for Austrian economics. Velocity of money, as a concept that underlies
economic value, is definitely a Keynesian [metric]. But I’m not doing the economic analysis on this one.
I’m just explaining what it means. Thank you for jumping in and making that
observation, Camile. That’s very interesting.

20 thoughts on “Bitcoin Q&A: What are “bitcoin days destroyed”?

  1. Hello Andreas, can you make a small video explaining Blockstream and the influence it really has on Bitcoin? Thank you in advance!

  2. Question for Andreas:
    Back in 2009 I mined 10$ worth of Bitcoin. But I later on destroyed the HDD it was stored on. So approximately 10,000 bitcoins were forever lost. Back than they were about 10 bitcoin per penny.

    Is there a way to know how many bitcoins are missing and no longer in circulation?

  3. One day, in the not to distant future. The saying "Andreas told us about that" will be commonplace. Thank you for all the information you provide.

  4. Wrong. Velocity is assumed constant and maxed per block but the actual occupancy velocity of how much activity occurs is the one you mention.

  5. Thanks Andreas. If you can, please adjust the volume of the outro to be on the same level as the video, because I always have to quickly lower the volume before the outro starts to avoid waking the whole house

  6. is it a problem for the future of bitcoin that for your bitcoins to be safe they have to be kept on something like a hardware wallet?

  7. Is Hodl eventually bad for economy. Wealth locked up in Address, or Hardware wallet is not available to be lent out to people needing to buy a house, Farmer to buy a needed barn, small business to fund inventory. How can that eventually work with this new currency.

  8. So can you calculate the velocity of Bitcoin per year from the days destroyed? Would be interesting to see how this compares with other currencies.

  9. Hey Andreas,

    I think this bitcoin days destroyed metric is really interesting. Blockchain.com took down their chart, do you have any other source?
    (https://www.blockchain.com/charts/bitcoin-days-destroyed? is down)

  10. Some people say that 0-conf transactions are low-risk as long as it's a low-value payment because few people are going to go through the trouble of crafting a doublespend if the gain is small. Others say that 0-conf transactions are not safe for any payment, because all it takes is a popular wallet adding "attempt a double spend" as a default option, and suddenly 5% of all 0-conf transactions become double spends. Are 0-conf transactions safe for low-value payments?

  11. super, I'm glad to have found your channel, I speak Spanish and with the subtitle in English and its very good pronunciation and didactics I understand it quite well, congratulations for your contribution to the community, greetings from Caracas Venezuela.

  12. You, Mister Antonopoulos, are more punk than punk, and I salute you. In this video, I would have loved to know the numbers on what a "good day" vs a "bad day" would be in Bitcoin Days Destroyed. Which, by the way, is a helluva name for a punk band. Bitcoin Days Destroyed.

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