• Bitcoin
  • Blockchain
  • Crypto
  • Metaverse
  • AltCoins
  • Business
  • Investment
  • Upcoming
What's Hot

A Most Ridiculous World : The Politicization Of Energy

October 2, 2023

Cypherpunk Icon Adam Back: Bitcoin Is 'Digital Gold for the Next Millennia'

October 2, 2023

Bitcoin Asset Management to Grow to $650 Billion Industry: Alliance Bernstein

October 1, 2023
Facebook Twitter Instagram
  • Bitcoin

    A Most Ridiculous World : The Politicization Of Energy

    October 2, 2023

    Cypherpunk Icon Adam Back: Bitcoin Is 'Digital Gold for the Next Millennia'

    October 2, 2023

    Bitcoin Asset Management to Grow to $650 Billion Industry: Alliance Bernstein

    October 1, 2023

    Why the Next US President Needs to Pardon Bitcoin Pioneer Ross Ulbricht

    October 1, 2023

    Human Rights Foundation Donates $500,000 to 15 Bitcoin Projects

    October 1, 2023
  • Blockchain

    BlockJoy raises $12M to help cut operating costs for businesses running blockchain nodes • TechCrunch

    February 2, 2023

    Blockchain Futurist Conference — Canada’s biggest crypto conference returns for fifth year

    February 2, 2023

    WEMADE and Metagravity Sign Strategic Alliance MOU to Collaborate on Blockchain Games for the Metaverse

    February 2, 2023

    Will Polkadot’s [DOT] new parachain fix the blockchain?

    February 1, 2023

    BNB Chain Unveils 3rd Blockchain in BNB Ecosystem, Tether ‘Never Borrowed from Celsius’, Ripple Sold $226M Worth of XRP in Q4

    February 1, 2023
  • Crypto

    Crypto Donations Now Need An Appraisal

    February 2, 2023

    Bitcoin Shrugs Off Fed Rate Hike to Hit Six-Month High

    February 2, 2023

    Stock and Share Market News, Economy and Finance News, Sensex, Nifty, Global Market, NSE, BSE Live IPO News

    February 2, 2023

    Yates County cryptocurrency miner completes debt restructuring deal

    February 1, 2023

    How ‘King of Instagram’ Dan Bilzerian ‘made millions’ from cryptocurrency after bizarre poker deal

    February 1, 2023
  • Metaverse

    Facebook’s Metaverse Division Lost Nearly $14 Billion Dollars Last Year

    February 2, 2023

    Samsung Hints Metaverse Ambitions At Product Launch Event, Eyes Integrating Different Realities Into Premium Smartphones

    February 2, 2023

    Sanlam makes history with SA’s first media launch in the metaverse

    February 2, 2023

    Meta’s plans to expand metaverse are up and running again: Here’ how

    February 2, 2023

    RFOX VALT Launches AI-Enabled Metaverse Apartments for Sale

    February 1, 2023
  • AltCoins

    Altcoins Lead Post-Fed Crypto Rally as Risk Appetite Increases

    February 2, 2023

    CAKE, SHIB And These Alt-Coins Are Trending

    February 2, 2023

    Elon Musk Wants McDonald’s to Accept Crypto Payments. Dogecoin (DOGE), Bitcoin (BTC), and Snowfall Protocol (SNW) Benefit

    February 2, 2023

    Crypto Analysts are Saying These Altcoins Have Huge Potential – Here’s Why

    February 2, 2023

    Are Cryptos Bound to Retrace Amid Recent Pump?

    February 1, 2023
  • Business

    Ray Dalio Warns Money Is in Jeopardy, Favors Inflation-Linked Crypto

    February 2, 2023

    BIT Mining Limited Regains Compliance with NYSE Continued Listing Standards

    February 2, 2023

    Bithumb’s de facto owner arrested over alleged embezzlement

    February 2, 2023

    Crypto Custody Firm Copper Alerted to Security ‘Incident’ Over Christmas

    February 1, 2023

    Cathie Wood’s Ark Invest Says Bitcoin Could Hit $1.5 Million by 2030

    February 1, 2023
  • Investment

    The Investor’s Guide to Crypto Options Trading

    February 2, 2023

    Pune software engineer loses Rs 13 lakh to crypto investment fraud

    February 2, 2023

    Crypto Investment Products’ AUM Surges as Investor Confidence Returns: CryptoCompare Report

    February 2, 2023

    Crypto Investors Can Purchase Bankruptcy Put Options to Protect Funds on Binance, Coinbase, Kraken Crypto Exchanges

    February 1, 2023

    Ethereum price forecast for February, including Morgan Stanley comments By Investing.com

    February 1, 2023
  • Upcoming

    S&P 500 rises to the highest level in five months Thursday as Meta leads a tech comeback

    February 2, 2023

    Looking For Something Different From Nubank and C6 Bank? Try Lanistar! – Sponsored Content

    February 2, 2023

    NYDFS Releases Guidance For BitLicensees And Limited Purpose Trust Companies On Asset Custody In The Wake Of Cryptocurrency Insolvencies – Financial Services

    February 2, 2023

    This Supreme Court Case Will Reverberate Throughout the Compliance and ESG World | NAVEX

    February 2, 2023

    Ethereum (ETH) Could Reclaim $2,000, Trader Says

    February 1, 2023
investorstoday.press
investorstoday.press
Home»Bitcoin»You’re Still Early: An Objective Look At Bitcoin Adoption
Bitcoin

You’re Still Early: An Objective Look At Bitcoin Adoption

maikdezana@icloud.comBy maikdezana@icloud.comFebruary 6, 2023No Comments7 Mins Read
Share
Facebook Twitter LinkedIn Pinterest Email

How many bitcoin users are there? How should we define a bitcoin user? An analysis for categorizing and tracking user growth compared to other estimates.

The below is an excerpt from a recent edition of Bitcoin Magazine PRO, Bitcoin Magazine’s premium markets newsletter. To be among the first to receive these insights and other on-chain bitcoin market analysis straight to your inbox, subscribe now.


Note: This article does not include all the data and analysis. The whole piece can be found here.

Bitcoin User Adoption

One of the strongest cases for bitcoin is its growing network effects. For bitcoin to continue to grow in the future, it needs adoption and demand. That demand comes from either growth in more capital flowing into the network and/or growth in its number of users.

Yet, defining someone who uses the Bitcoin network or is a user of bitcoin the asset is incredibly difficult and can have many definitions depending on whom you ask. This piece aims to aggregate and analyze the various definitions and estimates for bitcoin users, define our preferred view of bitcoin adoption and make our own estimations for current bitcoin users.

How Do You Define A Bitcoin User?

There’s no “right” answer in defining a bitcoin user but we considered the following questions when coming up with our definition:

  • Is someone who is storing bitcoin on an exchange considered a user or should we only count those who have some form of self custody?
  • What’s the nuance between counting on-chain addresses versus accounts or entities?
  • Is there a threshold of bitcoin ownership that we should consider for adoption? Is that threshold denominated in bitcoin, fiat currency or as a share of net wealth?
  • Is a user defined as someone who just holds bitcoin or do they need to actively transact on-chain or on Lightning?
  • Would a merchant who uses the Lightning Network payment rails because of the cheaper fees but elects to immediately convert funds to fiat currency be a user?
  • Does a user need to run a node?

It’s likely best to think about bitcoin user adoption in stages or as different buckets. Some rough categories to think about different user types:

  1. Casually Interested: User owning any amount of bitcoin or bitcoin-related product. This could be someone with $5 in an old wallet, a share of GBTC or someone who dabbled with buying a small amount of bitcoin once on Coinbase.
  2. Allocator/Investor: User who purchases bitcoin or bitcoin-related products on a recurring basis. Primarily interested in making financial gain on bitcoin’s potential price appreciation. May or may not self custody or use a custodial solution. Likely has 1-5% allocation of their net worth in bitcoin/bitcoin products.
  3. Heavy User: User who stores a significant portion of net worth in bitcoin through self custody and/or actively engages in on-chain or Lightning transactions. Someone primarily interested in using a separate form of money and monetary network. Likely has more than 5% allocation of their net worth in bitcoin.

Many of the eye-popping adoption numbers that we see today tend to track these categories together. Maybe that’s the right approach for a high-level view of potential adoption and the first touchpoint, but it doesn’t tell us much about the number of users using bitcoin for its primary purpose: decentralized peer-to-peer cash where users can store and transact value on a separate monetary network. Ideally, we want to track the growth of heavy users to reflect meaningful adoption of bitcoin.

The below table aggregates some of the key bitcoin user estimates that have been published over the last six years to give you an idea of how varying these estimates can be. Looking at casually interested users, numbers from 2022 range from 200 to 800 million users. These are counts from survey samples, data from on-chain analytics and includes exchange users. All of these studies have different definitions and methodologies for calculating adoption, showing how difficult it is to compare estimates out there today. 

Aggregated data from various surveys and user estimates

Technology Adoption S-Curve: Internet Versus Bitcoin

New technologies typically go through an S-curve cycle as they gain market share. Adoption by the population falls into a typical statistical bell curve. An S-curve just reflects the typical adoption path for innovative technologies over time.

Source

Many of the classic projections for S-curve adoption use a more high-level view of the casually interested users to track bitcoin growth compared to internet adoption. Basically, these estimates track interested users of all types: those who have had any touch points with bitcoin from buying a little bit on an exchange, having a wallet with $5 worth of bitcoin to the bitcoin user storing greater than 50% of their net worth in self custody.

Tracking casually interested users would give people a ballpark estimate of around the same adoption curve as the internet. However, if we’re really interested in tracking meaningful, lasting bitcoin adoption then we would argue that tracking the number of heavy users is a better measure for the current state of bitcoin adoption and emphasizes just how early in Bitcoin’s lifecycle we are. When looking at the more popular analysis comparisons that have previously circulated (included below), they paint a picture that bitcoin adoption is much further along than we calculate it to be. 

One comparison of the rate of internet adoption overlaid with the bitcoin price
Comparing internet and crypto adoption

In 2020, Croseus wrote a thread that analyzes bitcoin adoption in a similar way that we set out to do in this piece. His conclusions show a similar view to our own: Significant bitcoin adoption is much lower than the estimates of 10-15% penetration or roughly 500 million users that are commonly thrown around today. In fact, he suggests that bitcoin adoption by what we would consider “heavy users” is at 0.01% penetration of the global population.

Source

Addresses

The easiest place to start with estimating users is on-chain addresses. Addresses don’t translate to the number of users, but can act as a rough proxy for overall growth. Unique addresses with bitcoin amounts can be growing as new users acquire bitcoin or as current bitcoin holders use many unique addresses to spread out their holdings — a common privacy practice.

We’ve seen an explosion in address growth since 2012 from just under 1 million to nearly 42 million unique addresses today. Let’s say we use an assumption for average addresses per person to be 10 — which is just a rough guess — then the ceiling of bitcoin users who have their own addresses is around 4.2 million. 

Number of addresses with a non-zero bitcoin balance

From a USD perspective, there are only 5.3 million addresses holding at least $1,000 worth of bitcoin. Using our rough assumption of 10 addresses per person again then we’re under 1 million users with $1,000 worth of bitcoin. With a global median wealth per adult of $8,360, a bitcoin allocation of $1,000 would make up a significant share of nearly 12%. A relatively small allocation for some, but considering bitcoin is global and has higher adoption rates in less wealthy countries, the benchmark seems fitting. 

Unique bitcoin addresses holding at least x amount ($)

Using our definition of “heavy user” to calculate, if we use addresses with a certain threshold of BTC or USD and make some rough assumptions around addresses per person along with not counting exchange users or addresses holding bitcoin on the behalf of others, then this approach estimates only 593,000 bitcoin users.

We go into more detail about other ways to analyze bitcoin users in an article on Substack. No matter which way you cut the data, there is not a large amount of the worldwide population who would be considered heavy users who self-custody a significant threshold of bitcoin.

Conclusion

The analysis in this article is meant to highlight how difficult it is to define and track bitcoin user growth in a reliable way.

We are highlighting a lower penetration of adoption not to dissuade readers from the growth of bitcoin’s network effects so far, but rather to highlight the substantial opportunity of its potential growth in the future. 


Like this content? Subscribe now to receive PRO articles directly in your inbox.

Relevant Articles:

  • BM Pro Market Dashboard Release!
  • Bitcoin Rips To $21,000, Shorts Demolished In Biggest Squeeze Since 2021
  • Bitcoin Sellers Exhausted, Accumulators HODL The Line
  • Time-Based Capitulation: Bitcoin Volatility Hits Historic Lows Amid Market Apathy
  • 2022 Year In Review

Share. Facebook Twitter Pinterest LinkedIn Tumblr Email
maikdezana@icloud.com
  • Website

Related Posts

A Most Ridiculous World : The Politicization Of Energy

October 2, 2023

Cypherpunk Icon Adam Back: Bitcoin Is 'Digital Gold for the Next Millennia'

October 2, 2023

Bitcoin Asset Management to Grow to $650 Billion Industry: Alliance Bernstein

October 1, 2023

Why the Next US President Needs to Pardon Bitcoin Pioneer Ross Ulbricht

October 1, 2023
Add A Comment

Leave A Reply Cancel Reply

Top Posts

Subscribe to Updates

Get the latest crypto news

Advertisement
Demo
Top Insights

A Most Ridiculous World : The Politicization Of Energy

October 2, 2023

Cypherpunk Icon Adam Back: Bitcoin Is 'Digital Gold for the Next Millennia'

October 2, 2023

Bitcoin Asset Management to Grow to $650 Billion Industry: Alliance Bernstein

October 1, 2023
Get Informed

Subscribe to Updates

Get the latest creative news from FooBar about art, design and business.

Categories
  • AltCoins (1,399)
  • Bitcoin (2,053)
  • Blockchain (1,384)
  • Business (1,378)
  • Crypto (1,365)
  • Investment (1,383)
  • Metaverse (1,361)
  • Upcoming (1,319)
Facebook Instagram
  • Contact Us
  • privacy policy
  • about us
© 2023 Designed by investorstoday.

Type above and press Enter to search. Press Esc to cancel.