The analytical company Glassnode, together with the Ark Invest investment fund, presented an economic model called Cointime Economics to decrypt Bitcoin (BTC) on-chain metrics.
The new system offers an alternative way to measure BTC economic activity and value based on “coin blocks” rather than the standard method of accounting for unspent transaction outputs (UTXO).
The Cointime Economics description explains that coin blocks are the product of the amount of BTC multiplied by the number of blocks they hold without moving. For example, one bitcoin in ten blocks will be equal to 10 coin blocks. The method aims to determine the real economic weight and importance of each bitcoin over time.
Cointime Economics will replace existing metrics
Cointime Economics introduces metrics such as the number of created, destroyed, and stored coin blocks to describe the economic health of BTC over time. It also offers ratios that measure network activity and inactivity. When applied to the Bitcoin supply, this concept distinguishes between an active supply and a vaulted supply to assess true inflation and other factors.
The authors of the development argue that Cointime Economics can improve existing models for valuing bitcoins, such as the market value to realized value ratio or the MVRV (fair value assessment) ratio. This will replace the traditional market capitalization and realized capitalization.
The new structure will also allow the value of BTC to be measured, weighted by volume and time. As an example, the paper lists “Cointime Price” as a metric that takes into account both transaction volume and holding duration.
BTC price predictions will become more accurate
Cointime Economics authors James Check and David Puell stated that the introduction of this new conceptual framework will provide analysts with more robust tools to assess BTC fundamentals.
According to them, analysts and market researchers now have access to a complex set of tools that can provide insight into the economic behavior of bitcoin. This, in turn, allows for more accurate forecasts and risk assessments.
Source: Cryptocurrency
I am an experienced journalist and writer with a career in the news industry. My focus is on covering Top News stories for World Stock Market, where I provide comprehensive analysis and commentary on markets around the world. I have expertise in writing both long-form articles and shorter pieces that deliver timely, relevant updates to readers.
