RESEARCH: The Origins of the World's Oldest Bitcoin Metric, Explained

Bitcoin days destroyed (BDD) was first introduced as a concept back in 2011. At the time, it had only been two years since the creation of the world’s first cryptocurrency, bitcoin. Individuals were already beginning to innovate ways to measure on-chain transaction activity and value.

This episode is sponsored by Bitstamp and Crypto.com.

As the first cryptocurrency metric to be created, BDD was quickly followed by a plethora of other unique metrics including unspent transaction output (UTXO), market value to realized value (MVRV) and spent output profit ratio (SOPR). Despite the sophistication of cryptocurrency data and analysis since 2011, BDD remains a fundamental metric to understanding and valuing bitcoin.

See also: Coin Days Destroyed: Giving Meaning to Transaction Volumes

“[BDD] is a metric that reflects the collective action of long-term [BTC] holders,” said CoinDesk senior research analyst Galen Moore on a special podcast episode about the metric. “What’s the psychology of the long-term holder? You can see that in a collective way [through BDD] in a way I don’t think is possible in other asset categories.”

Moore interviewed Coin Metrics’ Lucas Nuzzi on Tuesday, July 7, to learn more about the use cases for and limitations against BDD. In a follow-up discussion about the interview recorded Thursday, July 9, Moore noted no other financial asset enables traders and investors to see the activity of long-term asset holders as transparently as bitcoin.

To this, CoinDesk research intern Duy Nguyen noted the motivations behind why long-term holders are moving funds at any given time is still largely a guessing game that requires further off-chain analysis beyond the scope of BDD.

For more information about BDD, you can watch the 30-minute webinar featuring an exclusive presentation on the metric by Nuzzi on the CoinDesk Research Hub.