Chainalysis Research:Only 20% of Bitcoin (BTC) Addresses are Economically Active

[Ozark]

The Bitcoin infrastructure is complex, and obscures the fact that Bitcoin in its current state is not used for peer-to-peer payments.

The Bitcoin (BTC) network reports more than 800,000 transactions in a day, but most of those transactions and transfers are not economically relevant, shows a Chainalysis report. Initially, the idea of Bitcoin was to serve as peer-to-peer electronic cash. But the days of transactions between peers are gone. Currently, more than 86% of the active addresses that hold BTC are a kind of service wallet, for payment services or exchanges.

The entire network has 460 million addresses, but a small fraction of them contain coins. Some were used as “change addresses”, due to the way of accounting for the spending of coins. Others are short-term throwaway addresses. To compare, the world may have as much as 4.6 billion emails - about a thousandfold the Bitcoin addresses.

Of those total addresses, 172 million are in use, but just 27 million addresses store actual coins. Out of the 172 million addresses in use, 147 million belong to exchanges and marketplaces, including dark markets. This leaves just 25 million addresses of economically active individuals.

It is difficult to map all transactions, but currently, BTC is mostly used for moving between exchanges, and more rarely as an outright means of payment. This supports the thesis that BTC is a tool for speculation and potentially money laundering.

The Lightning Network is another structure that reveals something about the economic usage of BTC. Currently, the network carries just around 490 BTC, presumably for a form of economic activity and peer-to-peer payments.

The real-world use of Bitcoin as a means of payment has been a matter of discussion for years, in search for the utility of the network. The discovery that a widespread, complex network only carries a small amount of economic value may be seen as a setback for Bitcoin.

Competing coins are attempting to return to being used as electronic cash. Bitcoin Cash (BCH), and most recently, Bitcoin SV (BSV) have tried to displace Bitcoin as the leading digital coin for payments. So far, however, their networks carry a fraction of the transactions of Bitcoin.

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