From the article... "Taking these three charts together, the relatively static USD transaction value per day metric in 2014 appears to be the result of the falling market price of bitcoin being offset by increased transaction volume."
...and then...
"Perhaps this is all just a coincidence, but it appears that 2014 was a year of relatively static demand for transacting value through bitcoin. Static demand implies that either 1) the number of people using bitcoin to transact value has been relatively stable, or 2) the number of people in the ecosystem using bitcoin to transact value is growing but offset by churn/decreased usage by other participants."
Am I being slow here? The graph showed the number of daily transactions was increasing over 2014, yet the conclusion being reached is that the demand for usage of Bitcoin is static. Perhaps I'm reading it wrong, but from where I'm currently standing it doesn't make sense.
One thing that needs to be understood about Bitcoin usage is that the transactions are not always for whole Bitcoins, it's increasingly common to see trades for fractions of a Bitcoin. The protocol explicitly allows this... https://en.bitcoin.it/wiki/FAQ#How_divisible_are_bitcoins.3F
If trades of fractions of a Bitcoin are being made frequently, then it does not mean there is a demand problem, but rather that prices are readjusting.
The transaction volume has gone up, but the value of a bitcoin (in USD) has gone down, so the total volume (not in bitcoin but in USD) is about the same.
Yes, I understand that, my issue is with the term "static demand". To me static demand implies that there is not growth in usage if Bitcoin as a currency, yet the opposite is true. Its price compared to USD is immaterial. Imagine a well used traditional state-led currency, traded with increased fluidity within that country, despite being devalued on currency exchanges. The internal demand has gone up, foreign exchange is of secondary concern, prices will continue to fluctuate as the market matures.
...and then...
"Perhaps this is all just a coincidence, but it appears that 2014 was a year of relatively static demand for transacting value through bitcoin. Static demand implies that either 1) the number of people using bitcoin to transact value has been relatively stable, or 2) the number of people in the ecosystem using bitcoin to transact value is growing but offset by churn/decreased usage by other participants."
Am I being slow here? The graph showed the number of daily transactions was increasing over 2014, yet the conclusion being reached is that the demand for usage of Bitcoin is static. Perhaps I'm reading it wrong, but from where I'm currently standing it doesn't make sense.
One thing that needs to be understood about Bitcoin usage is that the transactions are not always for whole Bitcoins, it's increasingly common to see trades for fractions of a Bitcoin. The protocol explicitly allows this... https://en.bitcoin.it/wiki/FAQ#How_divisible_are_bitcoins.3F
If trades of fractions of a Bitcoin are being made frequently, then it does not mean there is a demand problem, but rather that prices are readjusting.