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Topic: Bitcoin’s unspent transaction outputs (UTXO) and its long-term implications - page 2. (Read 393 times)

legendary
Activity: 3472
Merit: 10611
The fundamental flaw with this type of argument is the fact that coins moved is not equal to coins sold. So when you say something like "We can also consider situations where longer-term holders moving “cold” coins to sell them should correlate with lower prices." you have no way of knowing whether the coins that were moved were actually sold or simply moved to another address. For example I have had old coins that I moved to a new wallet simply because I wanted to dump the shitcoin airdrops by importing the empty key into the shitcoin wallet like BCH for example, but that didn't mean I sold those bitcoins that I moved after many years.
legendary
Activity: 3472
Merit: 4801
EDIT: corrected an oversight in my description of total inputs and outputs for a block (thanks for catching that o_e_l_e_o).

every Bitcoin transaction browser and wallet however, will immediately divide this number by 100,000,000 and convert it to BTC.

This is not entirely true.  There are many services now that will display the value in Satoshis, or millibitcoin, or microbitcoin. Some even attempt to look up a reasonable current exchange rate and then show the equivalent local government fiat currency value.

Also, in Bitcoin, inputs and outputs do not have to be equal. In other words, outputs can be less than the inputs, and the difference is the actual transaction fee.

This is true, however, the outputs can never be greater than the inputs. Furthermore, if you add up the value of all the inputs in a block and all the outputs in a block, the sum of the inputs plus the current block subsidy (6.25 BTC today) will almost always be equal to the sum of the outputs. This is because the method miners (or mining pools) use to receive the transaction fees is to add them to an output in the generation transaction along with the current block subsidy.

It is possible for a miners (or mining pools) to NOT add the full value of the fees into the generation transaction. If they do that, then the missing amount permanently vanishes from the global bitcoin supply.  This is a very dumb thing for a miner (or pool) to do. Why would they put all that time and money into mining, and then burn the value that they could have earned? It has happened a few times in the past though (likely due to bugs in the software that the miner (or mining pool) was using.
member
Activity: 142
Merit: 48
Dear esteemed bitcoin community,

 I have read some interesting articles focused on Bitcoin’s unspent transaction outputs (UTXO) accounting system and public timestamping of transactions and would like to share it for your comments.

https://medium.com/galaxy-digital-research/price-implications-of-bitcoin-utxo-age-changes-6ec8e1dd6a62

"...increases in the warmer bands suggest that coins that were previously held are now on the move and indicate a higher velocity of the monetary base.
According to traditional economic theory, higher velocity, ceteris paribus, leads to higher prices of a monetary base. We can also consider situations where longer-term holders moving “cold” coins to sell them should correlate with lower prices. Conversely, there should be a positive relationship between changes in older age bands and price: an increase in older bands suggest that individuals are holding more Bitcoin and therefore should correlate to higher prices."

A couple of additions: Remember that every UTXO amount is written as a binary number in Satoshis. In other words, for example, instead of UTXO with .5999 BTC, you actually have 59,990,000 sats. But every Bitcoin transaction browser and wallet however, will immediately divide this number by 100,000,000 and convert it to BTC.

Also, in Bitcoin, inputs and outputs do not have to be equal. In other words, outputs can be less than the inputs, and the difference is the actual transaction fee. Many miners reluctant to accept zero-fee transactions, so in effect no transaction's inputs and outputs are equal anymore and still getting into the blockchain.
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