Bitcoin

A look at Bitcoin’s ‘Coin Days Destroyed’

Quick Take

  • Coin Days Destroyed is a metric that gives more weight to bitcoin transactions based on how long they’ve been held
  • It is calculated by taking the number of bitcoins in a transaction and multiplying by the number of days since those coins were last spent
  • A transaction of 10 bitcoins that were received a week ago destroys 70 Coin Days (10BTC * 7 days/week)

History of Coin Days Destroyed

The concept of Coin Days Destroyed (CDD) was introduced in a 2011 Bitcoin Forum thread by user “ByteCoin” as an alternative to transaction volume. The logic behind the proposal was that CDD was a more appropriate measure of the economic activity in Bitcoin.

Instead of measuring the transaction volume, which can be manipulated by one individual moving the same coins back and forth multiple times, CDD gives more weight to coins that have captured more time prior to being moved.