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Author Topic: Where does term "Days Destroyed" Come From?  (Read 1301 times)
seattlenonsmoker
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September 17, 2014, 12:15:11 AM
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Where does the term "Days Destroyed" originate? Is it a specifically BTC related term or does it come more generally from other financial instruments, and this measurement of trade volume is more generally known in FOREX and perhaps other markets as well?

Thank you in advance for your knowledge and help with this question Smiley

Stryker




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olocun
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September 17, 2014, 12:51:07 AM
 #2

Where does the term "Days Destroyed" originate? Is it a specifically BTC related term or does it come more generally from other financial instruments, and this measurement of trade volume is more generally known in FOREX and perhaps other markets as well?

Thank you in advance for your knowledge and help with this question Smiley

Stryker






I think its wrong section :|
seattlenonsmoker
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September 17, 2014, 01:12:26 AM
 #3

Thank you for your response.

Which section do you think it would better fit? I would be happy to move if it is a poor fit for the section that this is in.

Best!
baddw
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September 17, 2014, 05:10:28 AM
 #4

It is a Bitcoin-specific thing, but it could be applicable to other markets.  (All Bitcoin-derived cryptos such as Litecoin, Darkcoin, Peercoin, Namecoin, etc. also have it.)

Basically, if address X owns 1 BTC for 1 day, it has 1 Coin-Day.  When X transfers that 1 BTC to address Y, that Coin-Day is destroyed.  Y now has 1 BTC, but it starts at 0 coin-days.  24h after receiving the 1.0 BTC, it has 1.0 Coin-Days.

Basically it is how "old" the coin is in that address.  Analyzing this can tell you a lot about trading volume and whether it is "real volume" or just re-cycled coins.

If I have 1 BTC that I keep sending to myself (to new addresses) over and over and over, I can generate a lot of transaction volume, but none of it is "real" (it's still my 1 BTC) and this is reflected by the fact that each of these transactions will have very few Coin-Days Destroyed.

It would be super interesting if stock markets kept track of stuff like this, but I don't think they do.

BTC/XCP 11596GYYq5WzVHoHTmYZg4RufxxzAGEGBX
DRK XvFhRFQwvBAmFkaii6Kafmu6oXrH4dSkVF
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seattlenonsmoker
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September 17, 2014, 08:56:02 AM
 #5

It is a Bitcoin-specific thing, but it could be applicable to other markets.  (All Bitcoin-derived cryptos such as Litecoin, Darkcoin, Peercoin, Namecoin, etc. also have it.)

Basically, if address X owns 1 BTC for 1 day, it has 1 Coin-Day.  When X transfers that 1 BTC to address Y, that Coin-Day is destroyed.  Y now has 1 BTC, but it starts at 0 coin-days.  24h after receiving the 1.0 BTC, it has 1.0 Coin-Days.

Basically it is how "old" the coin is in that address.  Analyzing this can tell you a lot about trading volume and whether it is "real volume" or just re-cycled coins.

If I have 1 BTC that I keep sending to myself (to new addresses) over and over and over, I can generate a lot of transaction volume, but none of it is "real" (it's still my 1 BTC) and this is reflected by the fact that each of these transactions will have very few Coin-Days Destroyed.

It would be super interesting if stock markets kept track of stuff like this, but I don't think they do.

Thanks for the great answer! So to reiterate, it is the number of BTC * Days elapsed since a trade has occurred.

I wonder if any of the exchanges have utilized this measurement to help deter price manipulation of the instrument...

I suppose it would be more difficult without a blockchain, eh? If I had better knowledge of what kind of transaction records WS keeps perhaps I could "hash out" a way that it would be feasible. Any ideas?

Thanks again!
baddw
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September 17, 2014, 01:52:33 PM
 #6

It is a Bitcoin-specific thing, but it could be applicable to other markets.  (All Bitcoin-derived cryptos such as Litecoin, Darkcoin, Peercoin, Namecoin, etc. also have it.)

Basically, if address X owns 1 BTC for 1 day, it has 1 Coin-Day.  When X transfers that 1 BTC to address Y, that Coin-Day is destroyed.  Y now has 1 BTC, but it starts at 0 coin-days.  24h after receiving the 1.0 BTC, it has 1.0 Coin-Days.

Basically it is how "old" the coin is in that address.  Analyzing this can tell you a lot about trading volume and whether it is "real volume" or just re-cycled coins.

If I have 1 BTC that I keep sending to myself (to new addresses) over and over and over, I can generate a lot of transaction volume, but none of it is "real" (it's still my 1 BTC) and this is reflected by the fact that each of these transactions will have very few Coin-Days Destroyed.

It would be super interesting if stock markets kept track of stuff like this, but I don't think they do.

Thanks for the great answer! So to reiterate, it is the number of BTC * Days elapsed since a trade has occurred.

Well, really it's just "transaction" since (due to anonymity) it's impossible to know where a given transaction was an actual "trade" or just somebody sending money to their own addresses.

Quote
I wonder if any of the exchanges have utilized this measurement to help deter price manipulation of the instrument...

I suppose it would be more difficult without a blockchain, eh? If I had better knowledge of what kind of transaction records WS keeps perhaps I could "hash out" a way that it would be feasible. Any ideas?

Thanks again!

No idea.  I'm sure that an exchange could keep track of it internally, but as you said, since exchange transactions are off-blockchain, there's no way for any of us to tell.  But Bitcoin does have it built-in, and you can see the CDD in a given Bitcoin block, or add it up to find the CDD destroyed in a day, or what have you.

It's also worth noting that Bitcoin has transaction fees, and these transaction fees are usually determined by 3 factors, including CDD.  Basically the transaction fees are there to deter spam (people sending money around for no reason but taking up space in the blockchain) and if the CDD are high enough then the fees are essentially waived.  However, it is up to every user and every miner to determine their own policies for fees.  If you choose to send a transaction without a fee, it might be ignored by miners for hours or days.  (This has happened to me several times.)

BTC/XCP 11596GYYq5WzVHoHTmYZg4RufxxzAGEGBX
DRK XvFhRFQwvBAmFkaii6Kafmu6oXrH4dSkVF
Eligius Payouts/CPPSRB Explained  I am not associated with Eligius in any way.  I just think that it is a good pool with a cool payment system Smiley
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September 17, 2014, 02:32:25 PM
 #7

Keep in mind that exchanges generally do off-blockchain transactions.  They usually give you an account with "play money" and actual transactions only take place when you transfer in and out.  The "days destroyed" will not take into account trades made on exchanges.  This is unlike stocks where a "stock certificate days destroyed" could be measured because they trade actual stocks once they complete your order.  Bitcoin could not be measured the same way because nobody has access to all the data on exchanges and private sales.

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johnnyrocket
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September 18, 2014, 09:22:40 AM
 #8

Keep in mind that exchanges generally do off-blockchain transactions.  They usually give you an account with "play money" and actual transactions only take place when you transfer in and out.  The "days destroyed" will not take into account trades made on exchanges.  This is unlike stocks where a "stock certificate days destroyed" could be measured because they trade actual stocks once they complete your order.  Bitcoin could not be measured the same way because nobody has access to all the data on exchanges and private sales.

This is a key point that many people may fail to realize. Not every transaction will hit the blockchain, and in fact one could argue that the vast majority of Bitcoin-related transactions do not show up on the blockchain.
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