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[FAQ] What are coin "days destroyed"?

  • Moderators | Tip wrapper

    The idea of coin “days destroyed” came about because Bitcoin programmers realized that total transaction volume per day might be an inappropriate measure of the level of economic activity in Bitcoin.

    After all, someone could be sending the same money back and forth between their own addresses repeatedly. If you sent the same 50 btc back and forth 20 times, it would look like 1000 btc worth of activity, while in fact it represents almost nothing in terms of real transaction volume.

    With “days destroyed”, the idea is instead to give more weight to coins which haven’t been spent in a while. To do this, you multiply the amount of each transaction by the number of days since those coins were last spent. So, 1 bitcoin that hasn’t been spent in 100 days (1 bitcoin * 100 days) counts as much as 100 bitcoins that were just spent yesterday (100 bitcoins * 1 day). Because you can think of these “days” as building up over time until a transaction actually occurs, the actual measure is called “bitcoin days destroyed”. This is believed to give a better indication of how much real economic activity is occurring on the blockchain network.

    Bitcoin Days Destroyed

    [Ref 🙂 https://bitcoin.stackexchange.com/questions/845/what-are-bitcoin-days-destroyed

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