Coinbase: The number of Bitcoin users worldwide has exceeded 10 million

A joint survey by investment management company ARK Invest and Coinbase shows that there are more than 1000万人Bitcoin users worldwide. This data is based on Coinbase user activity and is used to estimate the number of users in the entire Bitcoin community.

The report was co-authored by Adam White, vice president of business development at Coinbase, and Chris Burniske, head of blockchain products at ARK Invest. In addition to estimating the number of Bitcoin users, the report also involves a discussion about the use of Bitcoin: a store of value and a medium of exchange. Although most Coinbase users use Bitcoin for a store of value, the use of Bitcoin as a medium of exchange has increased significantly in 2016, at least among Coinbase users.

10 million holders

This survey's estimate of the number of Bitcoin users is believed to attract a lot of attention. After all, the specific number of users is difficult to calculate and requires strong evidence to support it.

White said:

It is difficult to estimate the number of Bitcoin users based solely on public addresses on the blockchain. Bitcoin addresses (regardless of whether they contain coins) are not representative because services such as blockchain.info can create addresses dynamically. Addresses with coins are also not a good basis for estimating the number of users because a single address containing a large number of Bitcoins could be held by numerous users (such as Coinbase's cold wallet address).

It’s difficult to get valid user data from the blockchain, so White and Burniske turned to Coinbase’s user data. They calculated a rough number by dividing the total market value of Bitcoin by the average balance of a Coinbase user.

First, we require that users must hold a certain amount of Bitcoin to be considered users. This prevents users with only a few Satoshis from dragging down the average balance of other users. Once we calculated the average Bitcoin balance of a Coinbase user, we divided this average by the total market value of Bitcoin and finally inferred the number of Bitcoin users in the world.

White said:

This is only a rough estimate and we acknowledge that this process involves a lot of assumptions and subjective decisions.

Investment or preservation is the main goal

In addition to estimating the number of Bitcoin users, another noteworthy point in this survey report is the use of Bitcoin.

Since 2013, more than half of Coinbase users have used Bitcoin solely for investment or preservation. Like the number of users, this data is only a rough estimate.

White explained:

When a Coinbase user sends coins from his account to a Bitcoin address, we do not know the motivation of this transaction. In fact, in most cases, it is likely that consumers transfer coins to their own wallets after buying coins on Coinbase (still with investment nature). Since we cannot define the reason for each transaction, we classify all similar behaviors into the category of "transaction purpose" because such transactions involve the transfer of value on the Bitcoin network.

Some people may think that this number is not representative, but the opposite is also true. For example, many people like to use Bitcoin because of its censorship resistance mechanism. With Bitcoin, they can trade freely in the darknet market. Therefore, they are likely to avoid using platforms such as Coinbase that comply with KYC (know your customer) regulations.

Towards a medium of exchange?

Although most Coinbase users still view Bitcoin as an investment, user data shows that Bitcoin is increasingly being used as a medium of exchange in 2016. The report states:

From 2012 to 2015, Coinbase wallet and retail service users only used Bitcoin for investment or long-term storage. In 2016, this trend declined, perhaps driven by the emergence of new use cases and reduced price volatility.

Of course, this kind of data is difficult to track, but Coinbase does have ample data to support it: merchant payments.

White said:

Coinbase currently provides Bitcoin payment processing services for 43,000 merchants, and by observing the trends in merchant payment activity, we can see the application of Bitcoin in transactions. We are happy to see that the number of payment processing submissions from merchants has more than doubled compared to a year ago. I think this is a good sign that the Bitcoin network is continuing to grow and explore real real-world use cases.

In short, looking at the number of investors and traders in 2016, the increase in traders was significantly higher than that in investors.

In addition, the Bitcoin network has recently reached a new high in daily on-chain transactions: on January 5, the number of Bitcoin transaction confirmations reached 346,405笔.