Bitcoin Forum

In this article http://www.coindesk.com/bitcoin-price-long-term-potential/ the author says that the velocity is 9.

Where does this number come from ?

If it's true, and given that the velocity of fiat currencies is around 1.5, I think everyone who complain about hoarding and the economic effects of a deflationary currency should just stop telling bullshit.

poeple hoard USD too i keep a healthy amount in my bank account.
same with the bitcoins, everyone has their hoard but that doesn't stop them from using bitcoin as money, thats what makes bitcoin valuable.

They may have obtained the velocity number from this chart:
http://blockchain.info/charts/estimated-transaction-volume

An estimate of the transaction-volume based on blockchain records. It's just an estimate since there is no certain way to determine which output was used for the change and which was the actual spending. Blockchain.info uses some sort of undisclosed algorithm to figure that out, no idea how accurate it is.

According to that chart, an average of 250K-300K BTC is transacted per day, if you take 300K, you get 110M BTC transacted per year and there's currently 11.9M BTC in existence, so that'd give an estimate for the velocity close to the aforementioned value of 9.

Of course there are several caveats (besides the mentioned uncertainty in determining the change-output):
- Many transactions may involve people moving coins from one wallet to another. If I move some coins from my personal wallet to an exchange, but don't use them on the exchange, it is counted towards the total transaction volume. Similarly when a website (exchange, gambling-site, webwallet-service) moves coins from deposit addresses to central locations such as their cold storage. These transactions shouldn't be counted in.
- Part of the coins in existence are permanently lost. Corrupt wallet.dat, encryption key forgotten or simply people that mined some blocks in 2009, didn't think it worthwhile and deleted everything.

I think the first point greatly outweighs the second and that the estimate of 9 for the money velocity of BTC is too high.

It now seems very possible that Silk Road has processed nearly 10 million bitcoins in the last 2 and a half years, that's nearly 90% of all bitcoins in existence, based on this I would say the velocity is quite high as may be half of all bitcoins ever mined are in cold storage or unable to be extracted forever.

Even if the velocity is very high, as long as it is not accelerating, bitcoin will be "deflationary" (deflationary in the price sense, not the monetary base sense). 

I think there is a major economic effect of a FAST currency as well. When it takes 3 (business) days to transfer money, as opposed to 10 minutes, that means a whole lot more money can be transferred without the need for debt.

I can understand why.  It's a universal currency that can be adopted by anyone around the planet with a computer. It's virtual gold man!