A few analyses concluded that there are hundreds of millions of Bitcoin users, but after taking a closer look at various data sources we believe this number is significantly overestimated.
Below we will show you why we believe the real number of Bitcoin users is closer to around 81.7 million users as of June 2023, or 1% of the global population.
First, we look into what hard data we can gather from the Bitcoin blockchain itself.
How Many People Are Using the Blockchain?
Despite the transparency of Bitcoin’s public blockchain, it is not possible to retrieve a precise number of how many people are using Bitcoin in any timeframe. The number of active addresses can be analyzed, which hovers around 800k per day over the past year.
However, an address is not representative of an individual, and the number of active addresses also does not represent an upper or lower bound. One individual can use many addresses in the same or even several wallets. On the other hand, many individuals can use one address, such as one belonging to an exchange or other custodial service. There is no way to accurately distinguish how many people interact with Bitcoin at any given time using public data; at best, people can estimate.
Active Entities on the Blockchain
Various analytic approaches try to approximate the number of active entities, such as the approach Glassnode first used in 2020. Based on their analysis, the number of entities holding bitcoin was approximately 23.1 million as of January 2020, which was 18.7% less than the number of Bitcoin addresses with a balance above zero (~28.4 million). Note that there is a large disparity within the UTXO set, as the majority of addresses have a balance under the “dust” limit, which is lower than the cost to spend it. In total these add up to less than a thousand BTC in value.
In March 2023, Glassnode repeated the methodology and arrived at 32.9 million entities, which was 25.9% less than the number of bitcoin addresses with a balance above zero (~44.4 million)
If Glassnode’s results are accurate, it would mean that the average Bitcoin entity holds its bitcoin on 1.18-1.34 addresses at any given time. Or in other words, only one in five or six entities would have bitcoin on two addresses. At face value, this number seems unlikely, given that power users will typically have dozens of addresses with balances on them.
As stated in Glassnode’s methodology, they did not dive deeper into how many users are storing their bitcoin on exchanges. They only track the total amount of bitcoin this adds up to. Exchanges only disclose their aggregate user numbers, which does not clarify how many of them have bitcoin on their account balance. It is not in their best interest to talk about the number of Bitcoin users, as their business model relies on total trading volumes across various coins, and thus a narrative of “crypto” being top of mind.
How Many People are Using Bitcoin?
We believe there are roughly 80 million people holding bitcoin both on exchanges and in cold storage as of June 2023, or 1% of the global population. Below we will break down how we arrived at this estimation.
Without data from the exchanges themselves on the exact number of users holding bitcoin, at best we can use public data points and assumptions to get an approximation of Bitcoin users on major exchanges.
We know from public data how much bitcoin is held by major exchanges. Glassnode tracks 20 exchanges, which hold an aggregate of around 2.34 million bitcoin as of June 2023. This number excludes any holdings in custodial services they may offer.
Below we look at two of the largest exchanges with public user counts, and cross-reference them with Bitcoin ownership numbers to estimate how much bitcoin an average exchange user owns.
|Bitcoin held as of June 2023||500k btc (Coinbase Pro)||630k btc|
|Monthly active users||8.4 million (Q1 2023)||20 million (Q2 2023, estimate*)|
|Bitcoin ownership penetration||73% of all US users||65% of all global users|
|Estimated monthly active bitcoin users||6.1 million||13 million|
|Monthly website visitors (Similarweb)||32 million||66.7 million|
|BTC/user if 100% was held by active users||0.082 BTC ($2,213)||0.048 BTC ($1,296)|
|BTC/user if 50% was held by active users||0.041 BTC ($1,107)||0.024 BTC ($648)|
*The Binance estimate is based on a previously reported 29 million active user number but website traffic has dropped roughly 31% since to 66.7 million monthly visits per SimilarWeb data, which would indicate the active user number may be closer to 20 million.
Given that Binance has a more global user base, using their numbers and extrapolating them to the 2.34 million bitcoin held by exchanges would mean there could be somewhere around 48.8 - 97.5 million bitcoin holders on exchanges.
There is a stark contrast with how much bitcoin is held by the average entity—excluding exchanges and miners. The total supply held by participants outside of these two groups is around 15.16 million bitcoin or 78.8% of all outstanding supply.
At approximately 32.9 million active entities, this would mean the average non-exchange, non-miner entity owns 0.46 BTC, or around $12,420. The median is significantly less, at 1.34 addresses per user and the median address holding roughly 0.005 BTC, the median entity would have roughly 0.0067 BTC, or around $180.90.
Adding up the active entities and estimated exchange users holding bitcoin, we would arrive at a range of 81.7 - 130.4 million entities holding bitcoin. However, it is important to keep in mind that these two groups have a significant overlap as some users will hold bitcoin both on an exchange and outside of it.
Overlap Between Bitcoin Users On- and Off-Exchanges
Based on public sales numbers by two of the largest hardware wallet manufacturers, Ledger and Trezor, we know that less than 10 million hardware wallets have been sold. However, we have no data on how many desktop and mobile wallets are being used.
Based on a CoinGecko survey of a relatively low 421 respondents, 33.5% of users store cryptocurrency in a cold wallet, 70.6% leave it on exchanges, and 80.1% use hot wallets which are on an internet-connected device. There are overlaps between these groups.
Given the number of hardware wallet sales highlighted above, we believe it is unlikely that most survey respondents understood the difference between a cold and a hot wallet. If their data were accurate, then there would be less than 30 million people who own bitcoin today including on exchanges. However, the huge overlap between people who hold their bitcoin on an exchange and a mobile or desktop wallet is interesting. It likely skews the unique number of entities holding bitcoin to well under 100 million today. It could even be down to 50 million if half of the users on an exchange also held Bitcoin off the exchange.
It is worth noting the possibility that some exchanges are not solvent. Some funds could be lent out or even lost, resulting in more users who think they are holding bitcoin than there are in reality. This would not be unprecedented in the industry, nor finance in general.
There are several compounded assumptions in our approach to arrive at this range of 81.7 - 130.4 million Bitcoin holders. We do not claim these estimates are correct, but we believe this is an interesting approach to estimate a range of the number of people holding bitcoin, and we believe that it is likely a more accurate estimate than other estimates we have seen.
- There are an estimated 81.7 million people holding Bitcoin as of June 2023.
- Most analyses tend to overestimate the number of users.
- It is impossible to obtain an exact user number due to the technical set up of the protocol.