Bitcoin Average Dormancy: A Measure of Turnover and Trading Activity

Authors

  • Reginald D. Smith Supreme Vinegar LLC

DOI:

https://doi.org/10.5195/ledger.2018.99

Keywords:

bitcoin, monetary velocity, days destroyed, Little's Law

Abstract

Attempts to accurately measure the monetary velocity or related properties of Bitcoin have often attempted to either directly apply definitions from traditional macroeconomic theory or to use specialized metrics relative to the properties of the Blockchain such as bitcoin-days destroyed. In this paper, it is demonstrated that beyond being a useful metric, bitcoin-days destroyed has mathematical properties that allow one to calculate the average dormancy (time since last use in a transaction) of the bitcoins used in transactions over a given time period. In addition, transaction volume and average dormancy are shown to have unexpected significance in helping estimate the average size of the pool of traded bitcoins by virtue of the expression Little's Law, though only under limited conditions.

Author Biography

Reginald D. Smith, Supreme Vinegar LLC

Independent Researcher

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Ledger Volume 3 (2018)

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Published

2018-11-20

How to Cite

Smith, R. D. (2018). Bitcoin Average Dormancy: A Measure of Turnover and Trading Activity. Ledger, 3. https://doi.org/10.5195/ledger.2018.99

Issue

Vol. 3 (2018)

Section

Research Articles

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