Chainalysis, a research firm, has recorded the happenings on the Bitcoin blockchain. The firm has noted that less than 40 percent, from a total of 460 million Bitcoin addresses, have an economic value.
According to the report, the current active addresses that are economically viable are under the control of entities that possess Bitcoin. These entities manage 172 million Bitcoin addresses or roughly 37 percent. Additionally, out of the 172 million addresses, just 27 million were found to own Bitcoin.
Chainalysis continued to note that out of those that are economically relevant:
86% of these belong to a named service [e.g an exchange]. The remaining addresses are largely used to facilitate payments, meaning that just 20% of transactions value on the Bitcoin network is an economic transfer, moving Bitcoin between two different parties.
The remaining more than 60 percent Bitcoin addresses that are not economically viable have been found to hold Bitcoin ‘for only a short time.’ More than half of these Bitcoin addresses even held Bitcoin for less than 24 hours.
These non-economically viable addresses:
Are either change addresses or connective tissue, meaning they hold Bitcoin for a short time to facilitate payments between people and services. Between August and October 2018, some $41 billion of transactions were executed – and only $9billion had real economic value.
On the Bitcoin blockchain, change is what a seller receives after sending Bitcoin. For example, if Mike wants to send 2 Bitcoins and his address holds 5, he will have to empty all the 5 Bitcoins from his address but 3 will be returned in change.
The research also noted that before the crypto prices started tumbling down, personal wallets were increasing their Bitcoin holding. This implied that Bitcoin traders and investors were taking advantage of the low Bitcoin prices and pilling up their Bitcoin stores.
Do you think a bullish momentum will increase the percentage of economically relevant Bitcoin addresses?
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