An analysis to categorize and track user growth compared to other estimates.
How many bitcoin users are there? How should we define a bitcoin user? The following is an excerpt from a recent issue of Bitcoin Magazine PRO, Bitcoin Magazine’s premium markets newsletter. This article is not inclusive of all data and analysis.
One of the strongest cases for bitcoin is its increasing network effect. For bitcoin to continue to grow in the future, it needs adoption and demand. That demand comes from the growth of more capital entering the network and/or from the growth in its number of users.
However, defining someone who uses the Bitcoin network or is a bitcoin user is incredibly difficult and can have many definitions depending on who you ask.
How is a Bitcoin user defined?
There is no “correct” answer to define a bitcoin user. It’s probably best to think of user adoption of bitcoin in stages or in different groups. Following are some rough categories to think about for different types of users: casual, allocator/investor, and heavy user.
Many of the amazing adoption numbers seen today tend to track these categories together. Maybe that’s the right approach for a high-level view of potential adoption and first point of contact. However, it doesn’t reveal much about the number of users using bitcoin for its primary purpose: peer-to-peer decentralized cash where users can store and carry out transactions of value in a separate monetary network. Ideally, it would be worth tracking heavy user growth to reflect meaningful bitcoin adoption.
According to the available data, looking at casually interested users, the 2022 numbers range from 200 million to 800 million users. These are survey sample counts, on-chain analytics data, and include exchange users. All of these studies have different definitions and methodologies for calculating adoption, which shows how difficult it is to compare the estimates that exist today.
Addresses
The easiest place to start estimating users is with address strings. Addresses do not translate into the number of users, but they can act as a rough indicator of overall growth. Unique addresses with bitcoin amounts can grow as new users acquire bitcoin or current bitcoin holders use many unique addresses to distribute their holdings, a common privacy practice.
From a USD perspective, there are only 5.3 million addresses that contain at least $1,000 worth of bitcoins. Using a rough assumption of 10 addresses per person, there are less than 1 million users with $1,000 worth of bitcoins. With a global median wealth per adult of $8,360, a bitcoin allocation of $1,000 would make up a significant portion of nearly 12%. A relatively small allowance for some, but considering that bitcoin is global and has higher adoption rates in less wealthy countries, the benchmark seems apt.
Based on the above, it is difficult to reliably define and track the growth of bitcoin users. Lower adoption penetration is made evident to highlight the substantial opportunity for bitcoin future growth potential.
By Audy Castaneda
