Cointime Economics: A Unique Framework for Analyzing Bitcoin
Researchers from Glassnode and Ark Invest have collaborated to develop a new economic model for analyzing Bitcoin’s onchain metrics called “Cointime Economics.” The framework offers an alternative way to measure the economic activity and value of bitcoin based on “coinblocks” rather than the standard accounting method of unspent transaction outputs, or UTXOs.
Key Points:
- Cointime Economics introduces the concept of “coinblocks,” which measure the economic weight and importance of each bitcoin based on the time it remains dormant.
- Metric ratios such as “liveliness” and “vaultedness” are proposed to describe Bitcoin’s economic state over time.
- The framework distinguishes between active supply and vaulted supply to assess true inflation and other factors.
- Cointime Economics can enhance existing valuation models, such as the Market Value to Realized Value ratio, by substituting active value and investor value.
- The framework enables new onchain analytics to measure Bitcoin’s volume- and time-weighted cost basis.
The researchers believe that Cointime Economics offers a consistent way to quantify Bitcoin’s economic activity and importance by considering the time coins are stored. They argue that metrics based on coinblocks and cointime might provide significant advantages over models relying only on traditional UTXOs and blockchain data.
Hot Take:
The introduction of Cointime Economics provides analysts with more robust tools for evaluating Bitcoin’s onchain fundamentals, allowing for a deeper understanding of its economic activity and value. This framework has the potential to enhance existing valuation models and provide valuable insights into Bitcoin’s true inflation and market dynamics.
Benito Cormi, the brilliant crypto analyst who has made waves in the world of cryptocurrency. With his razor-sharp analytical skills and deep understanding of the digital asset landscape, Benito has become a trusted figure in the industry and remains at the forefront, tirelessly researching and analyzing market trends to help individuals and businesses make informed decisions in this dynamic landscape.