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Less than 40% of Bitcoin addresses are economically relevant

Alan Muli

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The number of addresses on the Bitcoin network is constantly growing but only 37% of them are “economically relevant”. This is according to a recent study by Chainalysis. The vast majority of them are controlled by service providers and the rest are used by private investors. Another key finding is that just 20% of Bitcoin transaction value is economic.

Blockchain surveillance company Chainalysis sets the total number of Bitcoin addresses at around 460 million as of December 2018. Only 27 million of these addresses actually hold Bitcoin.

Chainalysis goes on to further note that 86% -147 million- of the economically relevant addresses, belong to named services. These services are either cryptocurrency exchanges, merchants, gambling platforms or dark-net markets. The other 25 million addresses are associated with private wallets holding cryptocurrency.

The authors of the study explain that the non-economically relevant addresses are mostly single-use addresses that hold bitcoin for short periods of time. Three-quarters of them have held Bitcoin for less than a day. Currently, a total of 288 million addresses have limited economic value and hold no balance. 93 per cent of them have been used just once.

Only a Fifth of Bitcoin Transaction Value is ‘Economic’

In November, Chainalysis disclosed that the use of Bitcoin core for commercial payments had dropped significantly during the course of 2018. Its data showed that the value of Bitcoin transacted by major payment processors has decreased by almost 80 per cent between January and September.

The authors found that around $41 billion of transactions were carried out between August and October of this year. However, only $9 billion of the transactions had real economic value. The majority on non-economically relevant addresses were identified as either change addresses or connective tissue.

The digital forensics company emphasizes that only a fraction of all created addresses actually holds coins. It notes that a small percentage of the conducted transactions have economic value.

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