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Author Topic: 2012-10-17 78 percent of Bitcoin currency stashed under digital mattress, study  (Read 1721 times)
jgarzik
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October 17, 2012, 03:11:14 PM
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URL: http://arstechnica.com/tech-policy/2012/10/78-percent-of-bitcoin-currency-stashed-under-digital-mattress-study-finds/

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78 percent of Bitcoin currency stashed under digital mattress, study finds
Significantly fewer digital coins are in circulation than previously presumed.

by Dan Goodin - Oct 17 2012, 8:00am EDT

More than three-quarters of the digital coins in the Bitcoin digital currency scheme aren't circulating because they remain dormant in user accounts that have never participated in outgoing transactions, a recently published study has found.

The figure translates to more than 7.019 million BTCs, the term used to denote a single coin under the digital currency, which uses strong cryptography and peer-to-peer networking to enable anonymous payments among parties who don't necessarily know or trust each other. Based on exchange rates listed on Mt.Gox—the most widely used Bitcoin exchange—the coins have a value of more than $82.87 million. On May 13, the date the researchers analyzed their data, there were slightly more than 9 million BTCs in existence.

[...]

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October 17, 2012, 03:12:05 PM
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This Ars article is simply covering the Ron/Shamir paper.

Here is the forum discussion of that [flawed] paper:  https://bitcointalk.org/index.php?topic=118797.0


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October 17, 2012, 03:44:46 PM
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78 percent of Bitcoin currency stashed under digital mattress, study finds
Significantly fewer digital coins are in circulation than previously presumed.

Damn.  Here we go a gain.  Guess a lot of people are going to come and complain about deflation/thesaurization/whatever.


78% to me seems good enough, anyway.
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October 17, 2012, 06:25:11 PM
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It would be interesting to know:
*how much cash actually is circulating on a frequent basis
*how much money is actually circulating on a frequent basis (money in bank accounts)

Perhaps there is official data available to compare to Bitcoin?

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October 17, 2012, 06:27:33 PM
 #5

This means that 22% is actively used in the bitcoin economy  Wink

and what's wrong with saving money? They aren't happy that we spend everything and get debt and debt and even more debt to buy things?  Cheesy
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October 17, 2012, 07:02:26 PM
 #6

This means that 22% is actively used in the bitcoin economy

Except that it doesn't mean that.

That's the thing about a pseudonymous digital currency -- the blockchain data reveals so little about its usage.

We know that Mt. Gox and other exchanges use cold storage.  Thus the coins moving to and from the exchange's hot wallet represents a lot of monetary velocity, and the vast majority of the bitcoin value is held in static coins in cold storage.

Individuals might follow a similar pattern.  A big chunk of their coins are stored in a secure manner (on a paper wallet, or air gap system) and left untouched, and a smaller amount used on a mobile or wallet used for daily spending from a standard, network-connected computer.

Because Bitcoin works not just as a payment network but as a currency, even the exchanges won't show the degree of commerce occurring. Online gambling through SatoshiDICE, for instance, is not cashed out to USDs, and players don't necessarily need to use an exchange to get bitcoins to play.  So much of those flows likely never touch any exchanges (except for players buying bitcoins or cashing out if they were a big winner perhaps).  

Other merchants though will still route bitcoin revenues through the exchanges.  Coinabul, for instance, at a current revenue rate approaching a quarter-million USD worth of trading each month (based on numbers from an interview by Julia of @DGCMagazine), converts revenues to dollars right away after each sale, apparently.

As Bitcoin moves up the supply chain though (and/or is used for salaries, paying dividends, etc.) more and more of those bitcoin revenues will remain as bitcoins without landing at the exchanges.

So it is going to be really tough to measure the blockchain, or even monitor it for trends, to tell what really is occurring with the Bitcoin economy.

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October 18, 2012, 09:12:13 PM
 #7

This is why I keep some orders open for $2 per bitcoin... just in case one of those addresses decides to dump on the market some day Smiley


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