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I would like to know what are the most sophisticated ways to estimate the amount of bitcoin that has been bought globally with various fiat currencies. Exchange data is only one source, and may well cover a large percentage of value that has been transferred but I can't help thinking there must be a lot of "off exchange" trades going on which may well account for a lot of value. I would also consider fiat money spent on mining investments including implied energy costs as a transfer of value.

I'm wondering what is the opinion of the community on the best way to measure how quickly fiat value is being transferred into bitcoin?

To put it another way, what is the shared "stake" in bitcoin?

  • And then I discover, fiatleak.com real time transfer of fiat into BTC! – barrymac Nov 11 '13 at 22:33
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I'm pretty sure you'll never get an accurate number. I'm not even clear what you mean by transferred into the bitcoin economy.

  • If I bought $100 worth of bitcoins 3 years ago, do we count that as $100 or the value of the BTC now?

  • If I buy a bitcoin for $100 cash (using localbitcoins), send it to my friend (who immediately converts it to $100 USD), how do we account for that? If I do that transfer millions of times, can we say that BTC has "Millions in cash invested" even though there was only ever $100 at a time?

Your best bet is to just add up the aggregate transfers on all the exchanges, and call that "GDP" (and you may never be able to account for non-public transactions like localbitcoin or private exchanges). Just like GDP, you will necessarily over-count what's really happening. (For example, my transaction "I buy shoes" is actually counted as "I buy shoes, the shoe seller buys the shoes, the shoe maker buys leather, the leather maker buys a cow, the farmer buys cow food, etc."

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Another factor to include when considering the "shared stake" is the hardware cost involved in mining.

For example, the 65nm ASICs released by Butterfly Labs in 2012-2013 are probably worth more than 1.5 million in orders (by my last estimate).

You should then include the hardware cost of FPGAs, and dedicated GPU mining rigs though that has a better depreciation because they can be reused.

  • Very true, but I do not think we will ever know how much is spent in mining gear – Joe White Oct 18 '13 at 16:34
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One idea would be to take the historical data from Mt. Gox. Once the list is done downloading parse/import the historical data databases, and also parse the Bitcoin block chain (use two different SQL tables unless you have a strong database server).

From here, check how many transactions occurred on the exchange during the block and how many occured on the network ws that time. Throw out any dupes and useless data. I'm sure this is not perfect data that will match up perfectly. Also for each time you are calculating the market depth, only take the value from the current round of Mt. Gox transactions and the unique Bitcoin transactions on the synetwork for the current block.

As you have the historical data, you should get at least a generalization of prices pretty easily.

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    honestly I've almost disregarded mtgox data, although there's a lot of volume, that signal is so distorted by their regulatory issues – barrymac Oct 19 '13 at 2:00
  • It sure is... But that's actualyl the gold standard that most places used for years... Even SR up until its demise used it. For a while it was the exchange to price at. I guess you can go back and try to find other historical databases. But short of asking for every trade order history you will just have to make a broad ranged guess... I guess you could try bitcoincharts.com/charts/mtgoxUSD go for a time period of "all time" see what that brings you up with EDIT: btc-e.com is a big one, bitstamp, bitmarket, and bitfloor. – Joe White Oct 19 '13 at 2:03
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    don't mention gold! – barrymac Oct 19 '13 at 2:12

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