Is Bitcoin Days Destroyed a measure of hoarding? Also, is it possible to derive velocity of money (i.e. bitcoin) from Bitcoin Days Destroyed?

2 Answers 2


Are Bitcoin Days Destroyed a measure of hoarding?

Sometimes. But just because bitcoins changed addresses doesn't mean they changed hands.

Is it also possible to derive velocity of bitcoin (money) from bitcoin days destroyed?

Not directly. Although velocity of money and BDD are related, they are not entirely the same. velocity of money is based on a legal definition, whereas BDD is based on a technical definition. Also, BDD weighs the movement of old, rarely used coins as more important than frequently traded ones.

Two differences:


BDD is based on transactions in the bitcoin network, whereas velocity of money is based on money changing ownership. A transaction doesn't mean that money changed hands. Examples:

  • Change. I send you 10 BTC, 5 BTC comes back to my address as change. The bitcoin network sees 15 BTC move, but only 10 BTC really changed ownership.
  • Laundering. The best example. Lots of bitcoins move around, but at the end, you still have the same amount.
  • I move my bitcoins from Mt Gox to blockchain.info. Again, there was a transaction, but no money changed hands.

Because of this, a velocity of money estimate based on total transaction volume will be wildly inaccurate.

Also, even if no bitcoin transaction has happened, money can still change hands. Lots of e-wallets support the ability to instantly transfer money between accounts.


Because total transaction volume is such a bad measure of how quickly bitcoins change ownership, BDD was created. It's different from velocity of money in that you can't game it by sending money back and forth because it is much more significant to spend 100 BTC that last moved a week ago than it is to spend 1 BTC a thousand times.

  • Also not present in BDD are Account-To-Account transactions that are handled internally, such as BTC transfers from one Mt. Gox account to another. Those never hit the blockchain, unless the "Open Transaction" feature is marked during withdrawal through Mt. Gox, for instance. Feb 6, 2013 at 10:56
  • @StephenGornick True, but I feel that this is a very small percentage of total transactions
    – Nick ODell
    Feb 6, 2013 at 16:09
  • Velocity of money is calculated w.r.t. to GDP, thus it can't be gamed (except by the government's official statistics office). There is no way to calculate the goods & services sold in an anonymous P2P currency, so don't conflate the speed or volume rate of transactions with velocity of money. Mar 23, 2013 at 18:34
  • @ShelbyMooreIII GDP can be gamed, so I don't know what your point is.
    – Nick ODell
    Mar 23, 2013 at 19:18
  • @NickODell I said the official stats agency can game it, but no one else individually who is actually doing the transactions in the economy can alter the entire stat (they do collectively in cohoots with the reporting agency in China bcz told to from top-down). Your link does not refute my factual statement. The relevance of my fact is that there is no central authority in Bitcoin, thus there is no parallel to gaming the GDP centrally. Mar 23, 2013 at 19:49


Bitcoin Days Destroyed can tell us the percent of total coins are trading over any period of time, to the granularity (resolution) of a day. So for example, we can ask what percent of total coins have traded within the past day, or a specific day, week, month, year, or any period in the past.

So it can give us an indication of lower-bound percent of hoarding and duration of hoarding, but it will always understate the actual hoarding and duration, because due the anonymity there is no way to know if a Bitcoin transaction was a transfer to self.

Velocity of Money

Velocity of money is calculated w.r.t. to a measure of total goods and services transacted (e.g. GDP), and due to anonymity there is no way to know in a P2P currency which transactions were for goods and services. Thus Days Destroyed is an upper-bound on the velocity of money, and will always overstate the actual economic activity.

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service and acknowledge you have read our privacy policy.

Not the answer you're looking for? Browse other questions tagged or ask your own question.