Analysts Propose New Economic Framework for Bitcoin

In the midst of a prolonged bearish market, on Thursday they launched A new conceptual framework for understanding the bitcoin economy.

david puelResearch Associate at ARK Invest, and james checkPrincipal Analyst at Glassnode co-wrote A whitepaper titled “Cointime Economics: A New Framework for Bitcoin On-Chain Analysis”.

“It provides a set of tools to properly understand the economic realities of bitcoin,” Czech explained. decryptElaborating that it “adds a fresh perspective to assessing the market.”

He white paper Provides insight into the difference between current unspent transactions (UTXOs) and a new “Cointime” model to understand what the authors call “the true economic weight of bitcoin”.

cointime economics Looking at bitcoin from a time-based perspective, proposing its importance Bitcoin It is based on the last flip of a coin. The model introduces a new concept called “Coinblock”, which basically multiplies the number of bitcoins and the number of blocks produced while bitcoin remains immobile.

For example, holding 10 coins represents 100 coinblocks for the time it takes to produce 10 blocks.

The report states, “Intensified Coinblock destruction suggests long-term holders are selling.” Bitcoin’s “smart money,” in other words, and they “generally have large bitcoin balances and operate on a low-cost basis, leading to higher profits.”

According to the document, two new metrics can also be used to analyze the economic health of bitcoin.

“Liveliness” refers to how active or alive the network is, or how often coins are “destroyed” or transferred. “Vaultedness” measures the coins stored, indicating how “passive” the protocol is.

“We believe that the Cointime Framework provides a highly consistent mathematical framework for measuring the economic importance of each bitcoin over time,” says reports,

For Czechs, in contrast to traditional analysis UTXO (unspent transaction output) which they say is “highly granular and requires custom data engineering”, Cointime provides a “macro view”.

explained to decrypt that “it’s easy to calculate and replicate without proprietary data science.”

James Check, Co-Author and Principal Analyst glassnodeThey told decrypt Under this view, “the bearish market is much worse than expected.”

In Cointime’s model, “since the lost coins were largely in the early years, they have huge unrealized profits (over $35 billion),” Czech said. “However, when we use the ‘basis cost’ model as the actual value, the losses that active investors suffer are overshadowed by the gains on lost coins.”

“Under this framework, the true market basis cost is actually about $32,000, which is still a low,” Check said.

pull and check Stand out Various value propositions of the coin time economy, including revaluation of the bitcoin inflation rate and valuation of the network. Check suggested that there are two possible areas of use for Cointime in the economy.

“On-chain analysts deeply involved in the sector will use it to inspire new ideas,” and “institutional investors looking for simple models with high signals,” he said.

The co-authors concluded that “underneath, we have a set of simple mathematical tools to derive improved economic and valuation models that account for both the supply and demand sides of the market.”

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