Only 14 percent of BTC addresses belong to private individuals

20 Dec, 2018
by David Robb
Analysis
Only 14 percent of BTC addresses belong to private individuals

A recent report from Chainalysis sheds some light on the scale of Bitcoin (BTC) usage and adoption. Of the Bitcoin addresses that are "economically relevant", only 14 percent belong to individuals. 

The study found that there are nearly half a billion BTC addresses. However, of these 460 million, only 172 million are worth considering. This is because the others "are typically single use and hold bitcoin for only a short time. For instance, three-quarters have held bitcoin for less than a day. The majority of these addresses are either change addresses or ‘connective tissue’, meaning they hold bitcoin for a short time to facilitate payments between people and services."

Out of these remaining 172 million, 147 miillion addresses actually belong to crypto services. This includes things like exchanges, trading platforms and brokerages, as well as merchants and other services. Just 25 million of the total number of BTC addresses are for wallets belonging to individuals who are holding or trading Bitcoin. Chainalysis also notes that an estimated "20% of the bitcoin transaction value is economic, in that it is a final transfer between different people via economically relevant addresses. The remaining 80% is returned as change...some $41 billion of transactions were executed (between August and October 2018), and only $9 billion had real economic value."

The study concludes that, while "publicly available metrics like number of addresses and transaction volume provide some information about the bitcoin network, they don’t go far enough to capture the complexity of a network in which only a fraction of accounts hold bitcoin and only a small proportion of transactions have economic value." This is worth considering next time you see data about Bitcoin usage or trading volume being used to back up an argument in the crypto space..

Read more: Most top exchanges are inflating their volume; wash tradingBinance vs Coinbase: Who has the most users?

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