A couple weeks ago, in Issue #306, we discussed the first in a four-part series by our boy Laurent from OXT.me in which he described a new way we should measure the value secured by Proof of Work. In parts 2 & 3 of the series, Laurent jumps into two other metrics that he believes we should all be paying attention to; the price-performance ratio of Bitcoin's Proof of Work and "Satoshi's cliff". Both measures help us reach a better gauge of how efficient Bitcoin is becoming over time as a network for facilitating economic activity.
The price-performance ratio is a metric that is typically used to measure the ratio of the price of a product to its performance (performance metrics differ from product to product) and is used to illustrate the difference between old and new products. Laurent believes, that we should apply this ratio to the Bitcoin Network and track the UTXO set after each block that is mined (each treated as a "new product") and measure its performance by using the number of bitcoin.days secured a block has accumulated. Once you run the numbers, an observable "Yin/Yang" is discovered between miners and HODLers that has helped to make the Bitcoin network more efficient over time. As you dig deeper into this dataset an interesting insight is discovered, HODLing, in particular, has played an active role in the increased efficiency of the network. At the end of the day, price has a big impact on the efficiency of the network as more people are likely to move + spend bitcoin when the price is higher.
In the third part of his series, Laurent raises more questions than answers as he dives into the concept of Satoshi's Cliff, which attempts to measure the cumulative effect of PoW and the effect of an increasing hashrate on old blocks. At the end of the day, Laurent would like to explore the idea of an optimal age of UTXOs to help determine how far the system is from running at peak optimization.
As always, go read the articles, as Laurent is far more articulate and detailed than I am in this here rag.
Watched Logan last night. Wolverine is the GOAT.