ARK Invest and Glassnode have jointly released a white paper outlining a novel framework for assessing Bitcoin metrics on its blockchain. This innovative approach, called Cointime Economics, introduces a new metric known as "coinblock," which represents the state of the Bit coin network. Unlike Existing valuation metrics that focus solely on outstanding supply, Cointime Economics seeks to evaluate the economics of Bitcoin.
David Puell from ARK Invest and James Check from Glassnode suggest that adopting this new system could enhance valuation metrics and provide a fresh analytical tool for measuring Bitcoin activity. They argue that the value of an individual bitcoin should be contextually influenced by the duration since its last movement. For instance, bitcoins untouched for years are considered to hold more informational value than those untouched for just a week, as they represent the behavior of long-term investors.
This perspective is rooted in the rationale that long-term holders reflect the market's most knowledgeable and astute participants, such as whales and hoarders. Therefore, when dormant bitcoins are eventually transacted, it holds greater significance than newly mined ones. Lost bitcoin ins are not factored into this equation. Coinblocks, the new unit introduced by Cointime Economics, are based on the number of bitcoins and blocks produced while those bitcoins remained inactive. As an average block is created every 10 minutes, approximately 144 coinblocks are produced per day.
The burning of coinblocks is determined by the duration of bitcoin inactivity. For instance, if two bitcoins remain dormant for seven blocks before being transacted, it results in the burning of 14 Coinblocks. The lengthier the inactivity period, the higher the number of burned blocks , indicating more active participation by holders. This method contrasts with the traditional unspent transaction output (UTXO) model, which treats all bitcoins equally. Cointime Economics provides a new perspective on the market and its participants, demonstrating a more nuance d approach to Bitcoin valuation and analysis.
