More bitcoins are domant, what does this mean?

[tonychow]

According to dormant bitcoin chart at http://www.dormantbitcoin.com/, we can see that the last two bars are very close. Approximately 20% of the bitcoins in wallets which have sent some bitcoins between block 270000 to 28000, but did not sent anything since block 280,000. This percentage is historically high, since historically the percentage of the second last bar is around 10%, which indicates that more bitcoins are dormant in recent months. A complete picture can also be seen in http://dormantbitcoin.com/dormantbitcoin/panorama/.

Well, this observation is a little bit counter intuition of mine, since bitcoin should be more active with the growing popularity.

People are hoarding bitcoins and thinking they can be richer counting on bitcoins?

Or the dormancy is due to the recent price drop?

The bottom line is that, I personally are hoarding bitcoins. I am always buying and never selling and bet the the price will go up further.

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[BitCoinDream]

Bitcoin will pay u back with time. Keep hoarding...

[beatljuice]

This is total speculation from someone that has no formal financial education. But I think we're (the bitcoin ecosphere) building up "potential energy" to launch forward. Less like a rubber band - more like a snowball at the top of a hill.

Companies and users keep patting on a little more snow each day while the snowball just sits at the top of the hill, not really going anywhere. Sometimes a little snow even gets knocked off, but all the building keeps going on in the background. Eventually something big will happen that will push the snowball over the edge of the hill and the momentum will keep building as snow piles on until we have another huge bubble similar to the dot-com boom of the late 90's.

I think this "big-boom" will be less dramatic than the dot-com thing because investors have that recent experience to look back on, but I think there will be a big boom and bust in the next 2-5 years. Hopefully after that we'll see the more steady growth we've seen with the internet since the bubble.

Just my 2 satoshi

[quone17]

I'm hoping it means people are getting the bitcoins and then holding onto them, saving them up because they "believe" in Bitcoin.

[tonychow]

Let's back to the one of the fundamentals that determines the bitcoin price. That is related to the cost of miners.

The miner won't sell for their bitcoins under their cost. However, it seems that current bitcoin price is well below that cost.
How can you explain that?

[windpath]

I think one of the big flaws with any discussion of the volume of Bitcoin moving around is the fact that it can be transferred from one address to another where both addresses are owned by the same group or individual.

With a transaction fee of 0.0001 you could create an enormous amount of "transaction volume" on the network with just 1BTC moving from address to address but never leaving the control of a single owner.

This is not necessarily done intentionally, for example lets say I buy BTC1 on an exchange.

Then I move it from the exchange to a wallet in Armory on my PC.

Then because I want to save some of it and spend some of it I move BTC0.20 to a paper wallet.

That alone creates BTC2.20 of transaction volume, when the only transaction involving another party was the BTC1 purchase....

[nkocevar]

This is just proof that people are hoarding bitcoins and waiting for the right time to sell and !BAM! you see a market flooded.

[franky1]

the simple fact that the numbers prove is that only 20% of people are smart enough to hoard coins, instead of selling them at a below $1000 (loss)

[Nagle]

According to dormant bitcoin chart at http://www.dormantbitcoin.com/, we can see that the last two bars are very close. Approximately 20% of the bitcoins in wallets which have sent some bitcoins between block 270000 to 28000, but did not sent anything since block 280,000. This percentage is historically high, since historically the percentage of the second last bar is around 10%, which indicates that more bitcoins are dormant in recent months.

Mt. Gox.

About 7% of Bitcoins are stuck in Mt. Gox.

[ebliever]

Ugh, I think this is bad news if I am interpreting it correctly. I had hoped that price drops the last few months were at least partly due to increasing velocity of the bitcoin money supply due to increasing uses as a currency. The faster money changes hands, the larger the effective supply of it, driving down the value of it. This is a factor in hyperinflation, where people spending money as fast as they can aggravates the problem of too much money printed.)

So if it is the opposite and the velocity of bitcoin has decreased, it is harder to explain the drop in value. Hopefully that is just due to the constant influx of new bitcoins from mining, while we wait for the next big shock in the fiat world (stock market drop, argentine financial crisis, PIIGS in euro, etc.) to send people scrambling desparately for bitcoin. Then we see another big rise.

[jc01480]

I will hoard bitcoins until you can buy beer with them at my local Seven-Eleven.  Then it's game on!

[Bit_Happy]

Hoarding bitcoins is not a major problem.
It's a sign that people are confident about the future of BTC.

I spend at least 33% of the BTC I earn from multiple part-time jobs/freelancing.

[calian]

I think one of the big flaws with any discussion of the volume of Bitcoin moving around is the fact that it can be transferred from one address to another where both addresses are owned by the same group or individual.

With a transaction fee of 0.0001 you could create an enormous amount of "transaction volume" on the network with just 1BTC moving from address to address but never leaving the control of a single owner.

One time someone was doing this with 300 BTC. Every block they'd move it to a new address and because of the amount of coins they never paid a fee.

In answer to OP I'd say bitcoin is still undervalued. When 2-3 coins will buy a house plenty will spend them.

[Bonio]

Im not hoarding my coins as such, I've been happy to buy PC parts I need online until that price dropped. Now if I were to buy anything I would be losing money because the coins I have were bought (and mined) at a higher price.

If I buy I'm losing money, if the price increases I will go back to using them, in the meantime I'm slowly stocking up.

[Soros Shorts]

According to dormant bitcoin chart at http://www.dormantbitcoin.com/, ...

What exactly does this chart show? The fraction of addresses that received coins but did not spend them? There is no description on the site. OP if this is your site you need to improve it.

If this is so, it doesn't necessarily mean hoarding. You also need to look at the total number of addresses observed within that period to make a better determination of what happened. For example, people breaking up wallets containing large number of BTC's into multiple smaller wallets would also give you the same effect on the chart.

[Soappa]

According to dormant bitcoin chart at http://www.dormantbitcoin.com/, ...

What exactly does this chart show? The fraction of addresses that received coins but did not spend them? There is no description on the site. OP if this is your site you need to improve it.

If this is so, it doesn't necessarily mean hoarding. You also need to look at the total number of addresses observed within that period to make a better determination of what happened. For example, people breaking up wallets containing large number of BTC's into multiple smaller wallets would also give you the same effect on the chart.

True, and for the same reason, all those bitcoin transaction volume statistics is just some guess.

[dowsey14]

In answer to OP I'd say bitcoin is still undervalued. When 2-3 coins will buy a house plenty will spend them.

2 to 3 coins will buy a house? You wish.

Maybe a deposit on a house, but the full deal? I doubt it.

I'd love to see BTC at $50,000/coin but I can't see that happening for an incredibly long time. Sure, there is a chance, but it's a very small one.

$5,000 is much more likely than $50,000...and much much much more likely than say the $100,000 that some bitcoiners are claiming.

Buy some BTC for $500 each today and sell them @ $5,000 each...you'll have made 10x your investment. Now, that's not to be sneezed at.

[tonychow]

According to dormant bitcoin chart at http://www.dormantbitcoin.com/, ...

What exactly does this chart show? The fraction of addresses that received coins but did not spend them? There is no description on the site. OP if this is your site you need to improve it.

If this is so, it doesn't necessarily mean hoarding. You also need to look at the total number of addresses observed within that period to make a better determination of what happened. For example, people breaking up wallets containing large number of BTC's into multiple smaller wallets would also give you the same effect on the chart.

A description is on http://www.dormantbitcoin.com/dormantbitcoin/dbchart/.

A bitcoin address is called dormant since its last sending block. Accordingly, all its bitcoins are said to be stayed in that block. If an address has never sent, the first received block is considered as the starting of the dormancy. In the Dormant Bitcoin (DB) chart, the X-axis is the block range, and the Y-axis is the number of bitcoins staying in the corresponding block range.

If an address is dormant for a long time, it is very likely that the owner losts the key, and hence bitcoins. With this chart, the picture of the dormancy of all bitcoins becomes clear. Also, total lost bitcoins could be guessed. Knowing this information is very interesting, since existing bitcoins are more valuable if more bitcoins are lost. As shown in the chart, most of early-age bitcoins are dormant, since miners do not care them due to low values.

In addition, although most of middle-age bitcoins are spent, a small fraction of them is stayed. This information is more important, since it gives the answer on bitcoin lost rate when people cares. It can give us a guidance on how many bitcoins WILL be lost in the future.

[Rockefeller]

I hope that a lot of people people are hoarding bitcoins. That means we can feel calm and be richer counting on bitcoins

[tonychow]

For example, people breaking up wallets containing large number of BTC's into multiple smaller wallets would also give you the same effect on the chart.

If people breaking up wallets and did not spend, the dormancy starts with the time of breaking.