What Is Cointime Economics For Bitcoin Value?
Cointime Economics is a new on-chain framework developed by Glassnode and ARK Invest to determine the value of Bitcoin. It aims to provide a new way of representing Bitcoin’s tokenomics based on the tokens in circulation, complementing the traditional Unspent Transaction Output (UXTO) model. The Cointime Economics framework is highly consistent and provides a better understanding of Bitcoin’s economic state.
Key Points:
– Cointime Economics introduces “Coinblocks” as a new measure to determine the economic weight of each Bitcoin token on the network.
– Coinblocks capture the real economic weight of each token and help investors understand Bitcoin’s fundamentals.
– The value of each Bitcoin token should vary based on the last time it was transacted, with tokens held for a longer period gaining more attention.
– Coins held for a longer period can be used to identify those who are most bullish on the token, as they are known to control the market.
– Lost tokens are not considered part of the outstanding supply or market cost basis under this new model.
How Coinblocks Work
Coinblocks are calculated by multiplying the number of Bitcoin by the number of blocks produced when those tokens remain unmoved. Each Bitcoin token generates one coinblock, and the Bitcoin network produces a block every 10 minutes on average. Coinblocks can also be destroyed, measuring the number of Bitcoin held in a given period and how long it was held before being transacted. Cointime Economics assigns weight to each Bitcoin token based on the Coinblocks created and destroyed, unlike the UXTO models that weigh each token equally.
Hot Take:
Cointime Economics presents a new and more nuanced approach to understanding the value of Bitcoin. By considering the economic weight of each token and the activity surrounding its transactions, investors can gain a better understanding of the market. This framework has the potential to bring more transparency and accuracy to the evaluation of Bitcoin’s value, providing valuable insights for crypto readers.
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