With the advancement in technology, people want everything to be digital so that it can be easily accessible, fast, and transparent. In the case of the banking system, we are heading towards digital banking and making our payments through mobile phones or net banking. But we are still using the same mode of currency for transaction purposes. The sole purpose of the development of bitcoins was to provide a substitute for the traditional currency and to revolutionize the traditional banking and transaction process. Create an account on this page if you intend to trade or mine Bitcoin.
The main pillar for the structure of all kinds of cryptocurrency is blockchain. Blockchain is the kind of ledger in which all the transactions of bitcoins and other cryptocurrencies takes place. It provides more transparency to the people using crypto as a transaction method. To maintain that transparency and clarity, the software developers are working to improve crypto assets and creating numerous tools for it. One of the most famous tools which enable a person to know all the transactions related to bitcoin is Bitcoin Days Destroyed. Some people might know about the term Bitcoin Days Destroyed or simply abbreviated as BDD, and there could be some people who don’t know about it. So in this article, we will discuss BDD and how it works.
Bitcoin Days Destroyed
To get some information about the transaction of bitcoin, the volume of daily transactions of bitcoin should be studied first, and for this purpose, BDD or Bitcoin Days Destroyed is developed. With the help of Bitcoin Days Destroyed, we can know how many transactions are done in the day by calculating the total volume of transactions made. The idea of the destroyed Bitcoin Days was developed in 2011, and after that, it turned out to be very helpful in maintaining the transparency of the blockchain.
The main objective of creating bitcoin days destroyed was that helps identify how many bitcoins are considered in usage on a daily basis. The calculation of the bitcoin days destroyed is done by multiplying the no. of bitcoins with the no. of days since the last transaction of that bitcoin. It is a very simple calculation formula, and the word destroyed in the Bitcoin Days destroyed does not mean that the bitcoins are destroyed it means that the particular no. of days are destroyed since the last transaction. If the number of BDD is less, then it is considered that the bitcoins are being saved or lost, but if the number is high, it indicates that many coins are in use. It also provides the advantage of figuring out those transactions to manipulate the price or value of assets.
For example, while calculating the volume, it figures out those transactions in which the bitcoin is sent from one address to another and vice versa continuously to increase the volume. It shows the precise data of the volume of transactions made per day. However, it is not 100% accurate as there could be users who transfer their assets to their same address but obtain a high BDD value based on the bitcoins’ storage days.
Is using BDD reliable?
Everything comes with an exception, and there is no question of BDD being an exception. The sole purpose of inventing BDD was to make the proposals more accurate and nearer to the exact values. BDD works in only those environments where coins are stored and not for those platforms where coins are not stored at all. Thus, its reliability depends upon the problem’s nature, and no metric is set for this purpose.
DISCLAIMER: This article is sponsored and does not substitute for professional advice or help. Any action you take upon the information presented in this article is strictly at your own risk and responsibility.