Composition of Bitcoin Economy

[007]

Any ideas on what the composition of the Bitcoin economy is? Meaning, how many of the transactions are simply transfers or distributions, services or goods, or currency conversions? Has anyone tried to deduce a reasonable breakdown?

[sun_tzu]

You can make guesses, but I believe people use the "days destroyed" as the most used way to see unique transactions.

[007]

That's an interesting method of measuring volume. I'll have to think about that a bit. It seems like there would be a way to measure the order of magnitude for other transactions though and infer the composition of that volume. For example, we know the number of transactions on Mt. Gox and other exchanges, we know how much is being mined, you may be able to estimate volume for some vendors, etc. I understand that an exact value isn't possible but even saying that currency exchange accounts for XX% of transactions would be a useful metric. Mostly curious if someone has attempted this.

[007]

This seems to give an indication: http://eprint.iacr.org/2012/584.pdf

[Vandroiy]

The majority of transactions are transaction spam. But is that really what you're asking for when talking about "the Bitcoin economy"? Even if you'd find actual transaction volume, which is not the Bitcoindays destroyed (though those are a good measure), it doesn't tell you which sector is most important for Bitcoin to succeed as a currency. For that, you'd need profit margins compared to a situation where Bitcoins don't exist.

If you're asking what determines price, I'd estimate that the vast majority is speculative hoarding, then there's Silk Road drug dealing, and online gambling like Poker, Satoshidice, w/e. There may be people using Bitcoin for repeated international transactions, it would be invisible to us. But I'm not so sure the people who need that most have properly crossed the digital divide yet.



Either way, the question is: what is the question? (You know the answer is 42. )

[007]

You raise some good points. I suppose a pulse on the 'Bitcoin Economy' is what I'm looking for. When I talk about the economy I mean all transactions denominated in BTC.

I have some thoughts on what the most important sectors are, but having an idea of the current compositions and how those sectors are growing (or contracting) would be useful. For example I could look at the US dollar economy and say that it's X (% or absolute dollars) agriculture, Y technology, Z exports, etc.

For Bitcoin you'd have to get at this in some other way. One method of measuring the 'potential' is valuing all services and products denominated or offered in BTC. That doesn't mean that the market is that size, but the market potential is of that order.

Just some thoughts. If all else fails we could just call it ~42.

[Siturb]

Every thing I've found that takes BTC is some sort of niche market.  Doubt any of them would "dominate" the BTC market but still interesting to see.

[Esoteric]

Good question. I don't know of anyone that has broken down the transactions into economic sectors, not sure if that's feasible at this stage. Given the relative anonymity of the transactions it is obviously a hard task. Just as is shown in the Shamir paper:

This seems to give an indication: http://eprint.iacr.org/2012/584.pdf

There was also a similar study by a German team as you can see at this youtube link: http://www.youtube.com/watch?v=-FaQNPCqG58  There are problems with some of the points being made but you can see the comments for the video underneath. One thing they did was to create a histogram of the transactions (size vs frequency), that is at least the first step.

Of the hot money, I'd guess a high proportion of transactions is mixer spam.

[cabin]

Silk Road is probably a significant fraction as is Satoshi Dice

[007]

There was also a similar study by a German team as you can see at this youtube link: http://www.youtube.com/watch?v=-FaQNPCqG58  There are problems with some of the points being made but you can see the comments for the video underneath. One thing they did was to create a histogram of the transactions (size vs frequency), that is at least the first step.

Interesting video, some of there conclusions are disputable as you pointed out, but interesting nonetheless. It's worth a look.

[zenbarter]

Thanks for post.

[josephliton]

spam {{{{{{{{{{{{ awareness of the digital currency and stimulating the economy and demand-driven aspect of the currency.