Understanding the Bitcoin Economy: A New Framework
Amid a bear market, a whitepaper titled “Cointime Economics: A New Framework For Bitcoin On-chain Analysis” was launched by David Puell and James Check. The whitepaper offers a new perspective on the economic realities of Bitcoin by introducing the concept of cointime economics. Here are the key points:
1. Cointime economics focuses on the time-based perspective of Bitcoin, considering the last time a coin moved as an indicator of its importance.
2. The model introduces the concept of “coinblocks,” which multiplies the number of Bitcoin by the number of blocks produced while the Bitcoin remains unmoved.
3. Heavy coinblock destruction suggests that long-term holders are selling, indicating the presence of “smart money” that generates higher profits.
4. The framework introduces two new metrics: “liveliness” measures how active the network is, while “vaultedness” refers to inactive coins stored in the protocol.
5. Cointime economics provides a macro view of Bitcoin’s economic state and offers a simple and replicable calculation method.
In conclusion, the Cointime framework offers a mathematical toolkit for measuring the economic importance of each Bitcoin through time. It provides a new lens to assess the market and has the potential to inspire new ideas for on-chain analysts and attract institutional investors looking for simpler models with higher signal.
Hot Take: A New Lens for Bitcoin Analysis
The Cointime Economics framework presents a revolutionary approach to understanding the Bitcoin economy. By considering the time-based perspective and introducing the concept of coinblocks, this framework offers a fresh way to evaluate Bitcoin’s economic state. It simplifies the analysis process, making it accessible to a broader audience. Additionally, the framework uncovers the true cost basis of the market, indicating that we are still below the expected value. Overall, Cointime Economics has the potential to reshape how we perceive and analyze Bitcoin, providing more accurate economic and valuation models.
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