ARK Invest and Glassnode have unveiled a new approach for evaluating Bitcoin’s on-chain activities, titled “Cointime Economics.” A novel unit of measurement, the “coinblock,” has been introduced to reflect Bitcoin’s BTC current price: $26,100 status.
This methodology offers an alternative to using Bitcoin’s outstanding supply as a representation of its economic condition. The newly proposed system may enhance Bitcoin’s valuation techniques and provide a unique tool for monitoring Bitcoin operations, suggest David Puell from ARK Invest and James Check from Glassnode. They believe the significance of a Bitcoin should change based on its last movement, stating that a Bitcoin untouched for a decade carries more informational value than one that’s been stationary for just a week.
A key rationale is that Bitcoins held for extensive durations likely indicate ownership by major, experienced players in the Bitcoin market. Consequently, when these long-static Bitcoins are shifted, it’s typically an indicator of significant market players’ actions.
The “coinblock” serves as the primary unit for these calculations. It’s determined by multiplying the number of Bitcoins by the count of blocks produced while those Bitcoins remain untouched. One significant aspect of this method is the idea of “coinblocks destroyed,” which provides insights into hodlers’ activities. This new metric offers a nuanced perspective compared to the traditional unspent transaction output (UTXO) model.
While the UTXO model treats all Bitcoins equally, Cointime Economics introduces the concept of “vaulted supply,” derived from the total created coinblocks versus those undestroyed. The white paper details three applications of Cointime Economics, with a more detailed version available for blockchain experts via Glassnode, which also offers an array of related metrics.
For context, ARK Invest is an investment management entity founded by Cathie Wood, and Glassnode is a market intelligence firm based in Switzerland.