Days destroyed

[klee]

https://blockchain.info/charts/bitcoin-days-destroyed-cumulative

Bitcoin Days Destroyed is a measure of the transaction volume of Bitcoin. If someone has 100 BTC that they received a week ago and they spend it then 700 bitcoin days have been destroyed. If they take those 100BTC and send them to several addresses and then spend them then although the total transaction volume could be arbitrarily large the number of bitcoin days destroyed is still 700.

Ok, I am lost - can someone explain it to me and why is so important?

Thanks!

[oakpacific]

Large DD=lots of coins which have been put in cold storage are being moved=something big about to happen.

[theonewhowaskazu]

I don't quite get how that's a measure of transaction volume, more a measure of "long-stored" coins finally getting moved. Which is more a "feathers being ruffled" meter rather than a transaction volume meter.

[klee]

So basically this is bullish on the one hand (price high enough to motivate hoarders to sell) and bearish on the other (big amounts of coins sold would crash the price in an exchange - though they might be traded in private in bulk..).

Hmmm..

[MaxwellsDemon]

I don't quite get how that's a measure of transaction volume, more a measure of "long-stored" coins finally getting moved. Which is more a "feathers being ruffled" meter rather than a transaction volume meter.

Yes, but in a sense it's also a measure of economic activity. Transaction volume alone may often be the result of a small portion of bitcoins being moved around a lot, while BDD means a larger part of the bitcoin economy is active.
A sharp increase in BDD may indeed signal that hoarders are about to sell. But a slow increase (specifically, an increase in the ratio of BDD to transaction volume) may signal a broader awakening of the bitcoin economy.

[Sukrim]

It's more of a "drums in the deeps of Moria" kinda measurement and harder to manipulate than transaction volume or amount of coins moved.

Definitely an interesting metric but on it's own not too meaningful I guess.
Might be interesting to combine it with a few other metrics and let a prediction engine figure out the rest!

[theonewhowaskazu]

I don't quite get how that's a measure of transaction volume, more a measure of "long-stored" coins finally getting moved. Which is more a "feathers being ruffled" meter rather than a transaction volume meter.

Yes, but in a sense it's also a measure of economic activity. Transaction volume alone may often be the result of a small portion of bitcoins being moved around a lot, while BDD means a larger part of the bitcoin economy is active.
A sharp increase in BDD may indeed signal that hoarders are about to sell. But a slow increase (specifically, an increase in the ratio of BDD to transaction volume) may signal a broader awakening of the bitcoin economy.

Imagine a perfectly active economy, in which coins were sent the moment they are received.

That'd mean 0 days are destroyed, right?

So what the heck?

[MaxwellsDemon]

I don't quite get how that's a measure of transaction volume, more a measure of "long-stored" coins finally getting moved. Which is more a "feathers being ruffled" meter rather than a transaction volume meter.

Yes, but in a sense it's also a measure of economic activity. Transaction volume alone may often be the result of a small portion of bitcoins being moved around a lot, while BDD means a larger part of the bitcoin economy is active.
A sharp increase in BDD may indeed signal that hoarders are about to sell. But a slow increase (specifically, an increase in the ratio of BDD to transaction volume) may signal a broader awakening of the bitcoin economy.

Imagine a perfectly active economy, in which coins were sent the moment they are received.

That'd mean 0 days are destroyed, right?

So what the heck?

Well technically yes, but that's not possible. Imagine, instead, an economy in which coins are sent 1 millisecond after they are received.
Actually, imagine two economies: A. All coins are sent 1 millisecond after being received. B. Half of coins are sent 0.5 milliseconds after being received, and the other half never move at all.
BDD, but not transaction volume, will distinguish the two economies.

More practically speaking, I think a sustained change in BDD can tell you something about changes in overall market participation. Maybe BDD on its own means nothing, but an increase in the BDD to transaction volume ratio over time may signal more players actively participating in a transaction economy.