Quote from: notaek on November 12, 2015, 01:51:07 PM

Quote from: Magnesium Coin on November 07, 2015, 09:00:43 PM

Does this price inflation and deflation depend fully on Bitcoin days destroyed? I guess it also plays an important role because one may send his own coins between different addresses trying to show the network that several transactions are being made?

Good question! Bitcoin days destroyed are a better indication of how much real economic activity is occurring on the bitcoin network since it was realized that total transaction volume per day might be an inappropriate measure of the level of economic activity in Bitcoin as someone could be sending the same money back and forth between their own addresses repeatedly. So, if a person hoards some bitcoins for a year or more, the value of bitcoin days destroyed will be more. Similarly in the case of those wallets, whose owner lost his/her private key(s) and are unable to withdraw them anymore! This will lead to the gradual price rise. But if everyone starts selling bitcoins sooner, then the total number of bitcoin days will also reduce leading to lowering of BTC/USD price. This eventually influences in the inflation and deflation towards total monetary (=bitcoin) supply.

Thanks for the explanation