If you look at that and click on the destination, then do the same again you'll see someone pushing out 10s of thousands of very small transactions per day across the network. They do the same thing pretty much every day I've checked(the above is an old link since its the only one I had handy).
The days I've checked though these sorts of things have accounted for 30-50% of transaction volume.
They are odd not just because of the volume of transactions but the size of them and the fact that they pay a fee for every one. Ideally for the amounts and frequency they would be grouping many outputs into a single transaction to save on fees.
I think its safe you ignore transaction volume for the near future and recent past while this is going on unless you start accounting for it.
A few weeks ago I made a script to look for transaction chains like this in the blockchain, and it turned out they have been going on every day since mid-2010. Currently they account for 20-25% of tx volume but the percentage was much higher in the past (up to 50-60% for some days in 2012). For most of 2014 it was about 15%.
I'm not sure what the sender of these transactions is doing (trying to inflate tx volume? some badly written software?strange mixing algorithm?) though even if you discard those transactions from analysis it doesn't change the overall picture much.
They're just a wallet that's making lots of small payments. You're looking at a change address that gets used once.
I'm not sure why these sorts of transactions would be considered ignorable. If you have a large bank balance and most of your payments are for groceries, does that somehow make those payments irrelevant?
I'm talking about particularly large chains of transactions (like hundreds or even thousands of transactions within the same day, often with most of them included in just a few blocks).
If they actually need to pay to that many different addresses it would be far superior to make a single tx with multiple outputs.
My first theory was that someone is trying to inflate tx volume and the simplest idea they came up was scripting the Bitcoin client to make thousands of small payments in a row.
It can be just a popular service (hence the high number of transactions) with a standard wallet implementation, ie. one transaction per withdrawal. Yes this is inefficient, but I dont see a reason why to automatically assume that this is an effort to inflate transaction volumes.
For those speculating about what is going on here, what possible explanations hold the most weight in your mind?
It seems to me that if you have a person or persons in possession of a commodity and by using that commodity in a certain way, while expending just a very small fraction of their holdings they could potentially increase the market value of the commodity they are holding or perhaps just stem/slow the decline of its market value, that would seem to be something worthwhile to engage in, provided doing so did not require a large amount of time or resources that could be better spent.
In the case of bitcoin, creating a lot of dummy transactions to create an illusion of economic vitality in the interest of increasing the value of your stake in the economy requires little time, effort, or resources beyond the initial creation of a small program or two, and thus places it high on the list of explanations for what is going on here.
That feels a little circular though. If creating dummy transactions can increase Bitcoin adoption and/or market price, then that increase doesn't feel "fake" or "an illusion" at all.
I'm not sure I follow what you're saying exactly and you may have misinterpreted what I meant.
So you're saying if the ruse of creating dummy transactions is successful in attracting speculative interest[1] and driving up the price, that is no big deal because what attracted the speculative interest, the raw transaction count numbers, actually occurred in a kinda sorta way, if what those transaction numbers are often painted as, genuine utility, is not actually there, well then that's just like 'circular' man..., is that what you're saying?
Consider if a public company 'X,' conducted its finances in such a way that they set up a bunch of shell companies, transferred money to these companies in a non-visible way then had those shell companies send that money back to company X in exchange for some nominal goods or services. Then they repeated this process over and over such that the company's public filings showed a steady increase in revenue quarter after quarter, such an increase that they attracted considerable investor attention, resulting in a stock price that rose steadily on the back of these circular accounting tricks. As the stock continued to rise, the company's major stockholders cashed out their shares.
Would that be 'circular' or would that be illegal? Would that feel "fake" or feel like "an illusion" to you?
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[1] Yes, we are talking speculative interest here, this is a metric that is more interesting to a speculative investor than a non-speculative user/'adopter,' a non-speculative user is just going to use it for what they are going to use it for if they have a genuine use beyond speculating.
Consider if a public company 'X,' conducted its finances in such a way that they set up a bunch of shell companies, transferred money to these companies in a non-visible way then had those shell companies send that money back to company X in exchange for some nominal goods or services. Then they repeated this process over and over such that the company's public filings showed a steady increase in revenue quarter after quarter, such an increase that they attracted considerable investor attention, resulting in a stock price that rose steadily on the back of these circular accounting tricks. As the stock continued to rise, the company's major stockholders cashed out their shares.
What you describing here is dotcom IPO scheme.
Inflated revenues (instead of profits) were enough to be considered IPO-worthy.
Dummy transactions do nothing to the price directly. The theory is that, if other people are fooled into thinking dummy tx are real tx representing real usage and starting using/investing into Bitcoin more, then this increase will be real.
Couldn't this kind of thing just be spam? I created an account on https://bitcoinwallet.com/ which I've never even used, but I regularly get payments of a single satoshi with an advertising message attached. If so, I would say spam is part of the economy, however unwelcome.
No clue at all really. There are a lot of reasons I can think of as to why it could be happening and probably just as many good reasons that I can't think of.
I just know that it makes using the transaction volume as an indicator pointless.
If you look at that and click on the destination, then do the same again you'll see someone pushing out 10s of thousands of very small transactions per day across the network. They do the same thing pretty much every day I've checked(the above is an old link since its the only one I had handy).
The days I've checked though these sorts of things have accounted for 30-50% of transaction volume.
They are odd not just because of the volume of transactions but the size of them and the fact that they pay a fee for every one. Ideally for the amounts and frequency they would be grouping many outputs into a single transaction to save on fees.
I think its safe you ignore transaction volume for the near future and recent past while this is going on unless you start accounting for it.