Aren't
Bitcoin Days Destroyed a good enough quantitative measure?
The problem with this thread is that it was started based on the assumption that there get to be a method to determine quantitatively the proporition of "dormant" coins.
What if this idea doesn't make sense?
What is a "dormant" coin after all?
Assuming you get a different result with any value of T, where T is the period during which an address has to retain its balance to qualify as "dormant".
Then when is the right T? why not a few more days? Or a few less weeks?
This "dormant" criterion is like trying to decide when you have got enough sand to have a heap of sand.
IMO, the analysis need to be done and ploted on many evenly spaced values of T, or none.
And some general conclusion on the past behavior can only be made if there is consistent trend in the results.
Picking a value at random does not allow to make general conclusions.
Beside, I am a bit warry about this quote:
However, there is one thing I would like toclarify: I do not want to have a target-shopping experiment, in which once you will see the results you will decide whether you like it or would prefer to change the methodology again in order to geta politically more appealing result. We thus propose to wait until some consensus emerges, and only then run the selected methodology on the data and announce the results.
I'd like to highlight that should the community reach a consensus about a reasonable way to calculate this metric as requested by Dr. Shamir, it has to be clear that this is only that and nothing else: a measure of the number of coins that haven't moved within a given timeframe.
There is absolutely no basis to deciding that this measure represents savings, or hoarding or whatever.
Which means there is no ground for claiming this could affect anyone's political agenda, as suggested in this quote.Regardless of the results found, I urge Dr. Shamir to refrain from making connections in his revised paper that aren't backed by sound evidence.I am going to give an example that, hopefully, will help understand why coin inertia cannot in anyway be related to money velocity in the economy.
Many people use online wallets, which also includes balances at exchanges. Due to the networking effect, people will tend to subscribe to the same wallet or exchange service as other people with whom they wish to transact on a regular basis. Which means that a significant number of transactions will happen within wallet and exchange systems. BUT, and this is very important;
within a given exchange or wallet system, transactions are done using the system internal ledger and do not appear in the blockchain as they do not require actual bitcoin transfers. Since actual coin deposits and withdrawals are only a fraction of the exchange and wallet sites activity, exchanges and wallets tend to put most of their coin deposits in cold storage. Depending on whether the operator uses a FIFO (First In First Out) or LIFO (Last In First Out) approach to managing cold storage, large amounts of coins could appear to be "dormant" as long as there isn't a major bank run.
Why does the above invalidates the proposed study? Because there is a very weak and loosy relation between deposit / withdrawals, and money spending. For the sake of the example, MtGox could have a daily turnover of half of the market cap, and involving several times the total amount of bitcoins on deposit, and yet not write a single transaction in the blockchain.
By analogy, it's like trying to determine money velocity of the paper dollar under the gold exchange standard by studying the movements of gold between central banks, and totally dismissing that the economy was in fact using paper dollars, and central banks making massive reserves in foreign currencies and book keeping, and rebalancing gold reserves only occasionaly if at all. By applying the same methodology as in the proposed paper, one would find that 95% of the gold-backed dollars were dormant, and that the world economy was on the verge of clinical death for about half a century...
In short, I think this measurement doesn't make any economic sense.
Now, this isn't a paper about economy, but about quantitative measurenents.
Therefore I am fine with whatever measure are published
*so long as no claim is made that these figures have any economic significance, or represent anything else but what they are meant to be: quantitative measures of some sort*.
