While Bitcoin is (almost) completely anonymous, it’s also completely transparent. It’s not always easy to know who owns a blockchain address. However, it is easy to know how many addresses their are.
A number of sites compile cryptocurrency data into handy charts. Charts on the number of active addresses are usually used to prove that one cryptocurrency is more popular than another. Leaving tribalism behind for a moment, we can all be happy that Bitcoin recently passed one million active addresses.
How Much Do We Know About Addresses?
Blockchain addresses store cryptocurrency and receive cryptocurrency during transactions. It’s another privacy measure. If cryptocurrency just went to an IP address or another account it would be easier to know where it was going and coming from.
Using these addresses was also a matter of necessity. After all, most payment companies, banks, etc. don’t work with cryptocurrency now. They certainly didn’t in the beginning.
To be clear, this discussion is about active addresses – addresses that are making cryptocurrency transactions. It’s impossible to determine how many active cryptocurrency users there actually are around the world. An individual person can have multiple addresses so the number of addresses isn’t necessarily the same as the number of users. Even if it were, there are so many platforms that host cryptocurrency addresses that it’s impossible to know how many addresses actually exist. Estimates on actual Bitcoin users vary but could be around 25 million.
However, because every time a transaction is made it is recorded in the blockchain, it is very easy to tell how many addresses are active.
So What’s the Big News?
The big news is that last week more than 1 million addresses were active on the Bitcoin blockchain in a single day.
This is good news but it isn’t a first. There were one million active addresses for the first time in around November 28 of 2017. Between then and January 6 of 2018, active addresses fell, reached a record high, fell again, and then reached one million for the last time. The last time until last week that is.
Those who have been following crypto for more than a couple of weeks know that this corresponds with the beginning of the “crypto winter” when the price of Bitcoin famously bottomed out. It’s very likely that most of those transactions were people dumping their Bitcoin as the price plummeted.
So, naturally, it’s exciting to see the number of active addresses in a single day go back up to over 1 million again. The numbers didn’t stay there for long – as of this writing they’re just over 800 thousand active users. However, this doesn’t mean a reversal. It’s part of a general rising trend in active addresses that has been going on since around the new year. For reference, the value of Bitcoin has been on a general up-trend since December of 2018.
Because Bitcoin is the most popular cryptocurrency, rising values and active addresses may mean the end of the “crypto winter” which some analysts have been forecasting for a while now. That’s good news for those who react quickly to such things. Most other people have just been hodling anyway.
What Does It All Mean for Bitcoin?
One million active addresses may sound like a lot at first. Then, it may not sound like a lot when you read that there may be as many as 25 million or more total users. So, why is the ratio of users to active users so low? There are a couple of reasons.
One of the reasons, we touched upon at the end of the last section. A lot of crypto die-hards are in it for the long haul. If they have crypto on principle, they might not have looked at their wallets in ages, let alone made a transaction. This is increasingly true as people use crypto as an investment. When you’re using it as a stock or a bond rather than as a currency, you probably aren’t buying and selling it or using it to make purchases every day. Even those who do use Bitcoin as a currency probably don’t use it every day. After all, some people don’t use cash or credit every single day – and there are a lot more places to use those forms of currency.
Some of the increase is also the result of new active users rather than just existing users being more active. When taken with other metrics, active addresses going over 1 million may be another sign of a crypto spring. However, it probably isn’t a sign of massive crypto adoption. Or at least, not yet.
Jon Jaehnig is an American freelance writer specializing in Technology and Health. Jon has degrees in Scientific and Technical Communication and Journalism from Michigan Technological University and lives in Michigan’s Upper Peninsula with his wife and cat. For more from Jon, you can follow him on LinkedIn and Twitter.