Several analyses previously estimated the number of Bitcoin users to be in the hundreds of millions. However, upon closer examination of various data sources, we find this figure to be significantly overestimated. Our analysis suggests that the actual number of Bitcoin users is closer to approximately 81.7 million users as of June 2023, representing around 1% of the global population. To substantiate this claim, we delve into the available hard data derived from the Bitcoin blockchain itself.
Determining the precise number of individuals using Bitcoin within a specific timeframe proves challenging despite the transparency of its public blockchain. While analyses of active addresses offer insights, with around 800k per day over the past year, these figures don't provide an accurate count of users. An address doesn't necessarily equate to an individual, as one person can have multiple addresses across various wallets. Conversely, numerous individuals might transact through a single address, like those provided by exchanges or custodial services. Therefore, accurately discerning the user count remains elusive, with estimations being the best available approach.
Various analytical methodologies attempt to estimate the number of actively engaged entities, such as the approach pioneered by Glassnode in 2020. According to their analysis, as of January 2020, the number of entities holding Bitcoin was approximately 23.1 million, which marked an 18.7% decrease compared to the number of Bitcoin addresses with a balance above zero (~28.4 million). It's worth noting a significant divergence within the UTXO set, with the majority of addresses holding a balance below the "dust" limit, rendering them impractical to spend due to higher costs. Collectively, these holdings amount to less than a thousand BTC in value.
In March 2023, Glassnode revisited its methodology and found that approximately 32.9 million entities were holding Bitcoin. This figure represented a 25.9% decrease compared to the number of Bitcoin addresses with a balance above zero, which totaled around 44.4 million at that time.
If Glassnode's findings hold, it would imply that on average, each Bitcoin entity maintains its bitcoin holdings across 1.18 to 1.34 addresses concurrently. Alternatively, only about one in every five or six entities would have Bitcoin spread across two addresses. However, this figure may seem improbable at first glance, especially considering that experienced users often have numerous addresses containing balances.
Glassnode's methodology didn't extend to examining how many users store their Bitcoin on exchanges. Their focus was solely on tracking the total Bitcoin holdings across exchanges. Exchanges typically disclose aggregate user numbers, offering no insight into the specific number of users with Bitcoin balances. Disclosing the number of Bitcoin users isn't advantageous for exchanges, as their business model centers on trading volumes across multiple cryptocurrencies rather than emphasizing the number of users. Therefore, the narrative often revolves around the broader crypto market rather than specific user statistics.
We estimate around 80 million individuals hold Bitcoin as of June 2023, comprising 1% of the global population. Our estimation involves analyzing public data points and assumptions, given the lack of precise information from exchanges. For instance, Glassnode tracks 20 major exchanges holding approximately 2.34 million bitcoins, excluding custodial holdings. By examining the user counts and bitcoin ownership of prominent exchanges, we can gauge the average bitcoin holdings per user.
Coinbase (Coinbase Pro):
Bitcoin held as of June 2023: 500k BTC
Monthly active users (Q1 2023): 8.4 million
Bitcoin ownership penetration: 73% of all US users
Estimated monthly active Bitcoin users: 6.1 million
Monthly website visitors (Similarweb): 32 million
BTC per user if 100% was held by active users: 0.082 BTC ($2,213)
BTC per user if 50% was held by active users: 0.041 BTC ($1,107)
Binance:
Bitcoin held as of June 2023: 630k BTC
Monthly active users (Q2 2023, estimate*): 20 million
Bitcoin ownership penetration: 65% of all global users
Estimated monthly active Bitcoin users: 13 million
Monthly website visitors (Similarweb): 66.7 million
BTC per user if 100% was held by active users: 0.048 BTC ($1,296)
BTC per user if 50% was held by active users: 0.024 BTC ($648)
The estimate for Binance is derived from a previously reported active user count of 29 million, but recent data from SimilarWeb indicates a decrease of approximately 31% in monthly website traffic, suggesting that the active user count might be closer to 20 million.
Considering Binance's broader global user base, using their figures and extrapolating them to the 2.34 million bitcoins held by exchanges suggests there could be approximately 48.8 to 97.5 million bitcoin holders on exchanges.
A notable difference exists in the amount of bitcoin held by the average entity, excluding exchanges and miners. The total supply held by participants outside of these two groups is approximately 15.16 million bitcoins, which represents about 78.8% of all outstanding supply.
With approximately 32.9 million active entities, the average non-exchange, non-miner entity is estimated to own 0.46 BTC, equating to approximately $12,420. However, the median differs significantly. With an average of 1.34 addresses per user and a median address holding roughly 0.005 BTC, the median entity would possess approximately 0.0067 BTC, or around $180.90.
When considering both active entities and estimated exchange users holding Bitcoin, the total number of entities holding Bitcoin ranges from 81.7 million to 130.4 million. Nonetheless, it's crucial to note that these two groups significantly overlap, as some users hold Bitcoin both on an exchange and outside of it.
According to data from major hardware wallet manufacturers like Ledger and Trezor, fewer than 10 million hardware wallets have been sold. However, statistics regarding the usage of desktop and mobile wallets are unavailable. A CoinGecko survey of 421 respondents revealed that 33.5% store cryptocurrency in cold wallets, 70.6% keep it on exchanges, and 80.1% utilize hot wallets on internet-connected devices. It's important to note that there may be overlaps between these user groups.
Considering the relatively low number of hardware wallet sales, it's doubtful that most respondents in the survey understood the distinction between cold and hot wallets. If their responses were accurate, the total number of Bitcoin owners, including those on exchanges, would be less than 30 million. However, the significant overlap between users who hold Bitcoin on exchanges and those who use mobile or desktop wallets is noteworthy. This overlap likely skews the count of unique entities holding Bitcoin to well below 100 million. It could even be as low as 50 million if half of exchange users also hold Bitcoin off the exchange. It's essential to consider the possibility of exchanges not being solvent, with funds being lent out or lost, leading to more users believing they hold Bitcoin than do. Such occurrences are not uncommon in the industry or finance in general.
Our estimation of 81.7 - 130.4 million Bitcoin holders is based on several interdependent assumptions. While we don't assert the absolute accuracy of these estimates, we find this method intriguing for approximating the number of individuals holding Bitcoin. Moreover, we believe it provides a more reliable estimate compared to other methods we've encountered.
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