How Big is Bitcoin?

Recently Bitcoin.com reported on the release of a comprehensive cryptocurrency study by the University of Cambridge. One area discussed in this report is the number of users of cryptocurrencies and wallets. This article explores how the study derives the number of active Bitcoin users and holders. Also read: Lots of Data in Cambridge University’s First ‘Global Cryptocurrency

The post How Big is Bitcoin? appeared first on Bitcoin News.

Recently Bitcoin.com reported on the release of a comprehensive cryptocurrency study by the University of Cambridge. One area discussed in this report is the number of users of cryptocurrencies and wallets. This article explores how the study derives the number of active Bitcoin users and holders.

Also read: Lots of Data in Cambridge University’s First ‘Global Cryptocurrency Benchmarking Study’

Total Number of Cryptocurrency Wallets

How Big is Bitcoin?Twenty-six wallet providers participated in the survey, including Airbitz, Armory, Bitgo, Blockchain, Coinbase, Greenaddress, Ledger, Jaxx, Mycelium, Samourai, and Xapo. The study defines a wallet provider as “any volunteer project or company that provides a standalone wallet that anyone can use.”

First, the total number of wallets is estimated using data collected from study participants, in addition to “the number of software downloads of major wallet providers and Bitcoin’s reference implementation.” The estimate represents all cryptocurrency wallets, not just Bitcoin.

While citing “a potentially infinite number of wallets could be created from a single software download,” the study uses a conservative assumption that one software download equals one wallet created. Some numbers are unavailable and therefore omitted such as the number of downloads for some open-source wallets, resulting in a “lower bound” estimate. Overall, the report’s authors wrote:

It is estimated that the total number of wallets has increased more than 4x from 8.2 million in 2013 to nearly 35 million in 2016.

Number of Active Cryptocurrency Wallets

Second, the number of active cryptocurrency wallets is calculated from the total number of wallets. The report notes that estimating the number of active wallets poses a challenge, since publicly reported wallet numbers do not reflect whether or not they are active. In addition, the definition of “active” varies for different wallet providers.

The study, therefore, uses data obtained from survey participants to estimate the number of active wallets instead. This data “suggests that the number of active wallets ranges from 7.5% to 30.9% of the total number of wallets,” the report reveals, adding that:

The number of active wallets is thus estimated to have increased from between 0.6 million and 2.6 million in 2013 to currently between 5.8 million and 11.5 million in 2017.

How Big is Bitcoin?

Number of Unique Users of Cryptocurrency Wallets

Third, the study conservatively derives the number of cryptocurrency wallet users from the number of active wallets, using the assumption that a user holds two wallets on average. Some types of wallet users are also unaccounted for in the study, such as those using exchange accounts as their de facto wallet, or those using payment service providers or platforms that can store cryptocurrencies.

“The total number of active cryptocurrency users is likely considerably higher than our estimate of unique active wallet users,” the report’s authors wrote, noting that:

We estimate that currently there are between 2.9 million and 5.8 million unique users actively using a cryptocurrency wallet.

How Big is Bitcoin?

Number of Bitcoin Holders

How Big is Bitcoin?

Finally, the researchers attempt to find the number of cryptocurrency users and holders. However, they admit that “estimating both the number of cryptocurrency holders and users is a difficult endeavor as individuals can use multiple wallets from several providers at the same time.” In addition, the authors explain how one user may also use different wallets for different cryptocurrencies and be counted multiple times. “Many individuals are using centralised wallet, exchange or payment platforms that pool funds together into a limited number of large wallets or addresses, which further complicates the picture,” they further detail. “It is impossible to know precisely how many people use cryptocurrency.”

Without deriving their own numbers, the authors reference external estimates. The first, but a rather outdated one, is by the Boston Federal Reserve in a 2016 report. It states that 0.87% of U.S. consumers had adopted cryptocurrencies in 2015, which “amounts to around 2.8 million people in the US alone,” the Cambridge authors relay.

A more recent estimate mentioned is an independent research by Coinbase and ARK Invest Research, which covers only bitcoin instead of all cryptocurrencies. In their January report, they wrote:

More than ten million people around the world hold a material amount of bitcoin.

What do you think of these estimates? Let us know in the comments section below.


Images courtesy of Shutterstock and University of Cambridge


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Lots of Data in Cambridge University’s First ‘Global Cryptocurrency Benchmarking Study’

The University of Cambridge recently published an in-depth, 114-page report entitled “Global Cryptocurrency Benchmarking Study.” It extensively discusses four cryptocurrency sectors, providing an array of interesting observations and statistics. Also read: Bitcoin in Numbers – a Collection of Interesting and Recent Charts ‘The First Study of Its Kind’ Sponsored by Visa, the research is conducted by

The post Lots of Data in Cambridge University’s First ‘Global Cryptocurrency Benchmarking Study’ appeared first on Bitcoin News.

The University of Cambridge recently published an in-depth, 114-page report entitled “Global Cryptocurrency Benchmarking Study.” It extensively discusses four cryptocurrency sectors, providing an array of interesting observations and statistics.

Also read: Bitcoin in Numbers – a Collection of Interesting and Recent Charts

‘The First Study of Its Kind’

Cambridge University Unveils the First Global Cryptocurrency Benchmarking StudySponsored by Visa, the research is conducted by Cambridge University Judge Business School’s Centre for Alternative Finance. Even though there are over 300 academic articles published on Bitcoin and other cryptocurrencies over the past few years, the report claims that they “tend to take a narrow focus.” This study is the center’s “inaugural research focused on alternative payment systems and digital assets,” the report reads. “It is the first study of its kind to holistically examine the burgeoning global cryptocurrency industry and its key constituents, which include exchanges, wallets, payments and mining.”

The research is based on non-public data from 114 cryptocurrency organizations and individual miners in 38 countries globally. Four surveys were conducted online, from September 2016 to January 2017. Report authors, Dr. Garrick Hileman and Michael Rauchs, wrote:

We estimate that our benchmarking study captured more than 75% of the four cryptocurrency industry sectors covered in this report.

Below are just some highlights of the report’s findings.

Exchanges

Data was collected from 51 exchanges in 27 countries globally, with most of them in Europe and Asia-Pacific. Among other findings, the study reveals that 52% of small Cambridge University Unveils the First Global Cryptocurrency Benchmarking Studyexchanges hold a formal government license while only 35% of large exchanges do. In addition, “85% of all exchanges based in Asia-Pacific do not have a license, whereas 78% of North American-based exchanges hold a formal government license or authorisaton,” the report reads.

“73% of exchanges control customers’ private keys, making them a potentially attractive ‘honeypot’ for hackers,” the report further details, citing how “these exchanges have possession of user funds denominated in cryptocurrency”. On the other hand, 23% of exchanges do not control customers’ private keys, which prevents them from accessing customer funds.

For security reasons, 92% of exchanges use cold-storage systems, with 87% of funds kept in cold storage on average. Multi-signature addresses are also employed by 86% of large exchanges and 76% of small exchanges.

Cambridge University Unveils the First Global Cryptocurrency Benchmarking Study

Wallets

Twenty-six different wallets, including wallet services and projects, participated in the survey. The number of active wallets in use today is estimated to be between 5.8 million and 11.5 million; between 2.9 million and 5.8 million of which are unique, active Cambridge University Unveils the First Global Cryptocurrency Benchmarking Studyusers. The report notes that 96% of all wallets sampled support Bitcoin.

Companies in North America and Europe provide 81% of the wallets globally, yet only 61% of their users are based in these two regions. As for giving their users control over their private keys, 73% of wallets surveyed do not. 12% let users decide whether to have full control over their private keys, and 32% of wallets polled have closed-source code.

Furthermore, 24% of wallet services hold some sort of formal government license. All wallets surveyed that provide centralized national-fiat-to-cryptocurrency conversion perform KYC/AML checks of some kind, typically done in-house.

Cambridge University Unveils the First Global Cryptocurrency Benchmarking Study

Payments

The study polled 48 companies from 27 countries that provide some kind of payment service using cryptocurrencies. The findings show that 79% of payment companies already have banking relationships and other types of payment networks. They unanimously agree that their sector’s biggest Cambridge University Unveils the First Global Cryptocurrency Benchmarking Studychallenge to overcome is the difficulty obtaining and maintaining these relationships.

The offerings in this sector are diverse. Merchant services are the most popular type of payment service, offered by 52% of companies surveyed. Only 21% of payment companies have been set up to exclusively process national fiat at both ends of the transaction, with cryptocurrency-rails in the middle. Half of the payment companies polled do not process any of this type of payments at all. The report notes that the Bitcoin network is by far the most popular payment rail, used by 86% of the companies as the main payment rail for cross-border transactions.

Licensing is more common than not, with 54% of the companies surveyed having a formal government license. Meanwhile, 83% of all payment activities and platforms providing business-to-business (B2B) payment services have obtained their license. In addition, 86% of payment companies perform KYC/AML checks.

Cambridge University Unveils the First Global Cryptocurrency Benchmarking Study

Mining

Bitcoin miners were thoroughly surveyed and categorized as either a large or a small mining organizations. Out of 48 miners that participated, 18 (38%) were organizations Cambridge University Unveils the First Global Cryptocurrency Benchmarking Studyand 30 (62%) were individuals. Only 11 of the largest organizations were designated as “large” miners.

The report notes that the sector has grown from a desktop hobby to a major industry with its own supply chain in just a few short years. Miners have collectively earned the equivalent of over $2 billion to date.

70% of large miners polled believe that they have a “high or very high” level of ability to influence protocol development, while only 51% of small miners do.

Legal and regulatory risk factors are not particularly concerning for most miners, large or small. The biggest concern for small, individual miners is the prospect of mining fees drying up, despite all data showing a significant uptick in the proportion of transaction fees to total Bitcoin mining revenues during 2016. They are also more worried about the prospect of centralization of hashing power than large miners are.

Cambridge University Unveils the First Global Cryptocurrency Benchmarking Study
Global mining operations, accounting for temperature, internet speeds, and cheap electricity.

The full report can be viewed here.

What do you think of Cambridge University’s study? Let us know in the comments section below.


Images courtesy of Shutterstock and Cambridge University


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New Alliances at Bitcoin Wallet Standards Initiative Roundtable Meetings

This past weekend on April 1-2 in Berlin, Germany, a group of various bitcoin developers met to discuss industry-wide wallet standards. The “Bitcoin Wallet Standards Initiative” had some of the most popular and leading wallet representatives within the cryptocurrency ecosystem. Also read: Fifty Developers Hack With Bitcoin for Two Days in San Francisco The First Annual

The post New Alliances at Bitcoin Wallet Standards Initiative Roundtable Meetings appeared first on Bitcoin News.

This past weekend on April 1-2 in Berlin, Germany, a group of various bitcoin developers met to discuss industry-wide wallet standards. The “Bitcoin Wallet Standards Initiative” had some of the most popular and leading wallet representatives within the cryptocurrency ecosystem.

Also read: Fifty Developers Hack With Bitcoin for Two Days in San Francisco

The First Annual Bitcoin Wallet Standards Initiative

Bitcoin wallets developers share a mutual interest when building the cryptocurrency wallets we all use today. Lots of companies use similar industry standards within the bitcoin wallet environment like deterministic wallet infrastructure, security features and more. This weekend a large group of bitcoin wallet developers met at the popular bitcoin-accepting bar in Berlin, Room 77. The Bitcoin Wallet Standards Initiative (S3ND) had wallet representatives from fifteen different platforms attend among other industry developers.

Various Bitcoin Software Developers Launch Wallet Standards Initiative

S3ND included representatives from popular bitcoin wallet companies such as Ledger, Trezor, Green Address, Bitgo, Armory, Electrum, Mycelium and many more. Furthermore, the meeting also included bitcoin proponents such as the Lighting Network developer Olaoluwa Osuntokun (Roasbeef) and core developers Luke-jr, Jonas Schnelli, and Matt Corallo attended as well. The S3ND initiative’s road map also plans to host more wallet standards round table meetings in the future to create better wallet interoperability.

“Developing a common language and the best-practices for wallet design, without preventing competition and the freedom of wallet designers to innovate, is critical to users,” explains the  S3ND founding principles. “Bitcoin must be interoperable. Users must be able to choose the wallet software and hardware they want, with the freedom to migrate when they see fit.”

Other Wallet Developers Express Interest

Various Bitcoin Software Developers Launch Wallet Standards Initiative
Berlin’s popular bitcoin-accepting bar Room 77 hosts the first annual Bitcoin Wallet Standards Initiative (S3ND).

The meeting at Room 77 discussed subjects such as wallet migration, Segwit, Bitcoin Proposal discussions (BIP), multi-sig standards and more. “As the organization matures, working groups will continue to develop standards independently, which will be discussed and ratified at annual meetings,” details S3ND organizers. Furthermore, attendees focused a lot of attention towards privacy standards such as private transaction relays, and common transaction formats. While a significant amount of wallet companies are members of the organization other digital currency programmers are welcome to attend.

Other bitcoin wallet representatives who could not attend expressed their interest in the wallet standards roundtable.

“We would have loved to attend this,” said the developers of Samourai Wallet. “Unfortunately we didn’t see any advanced notice of this event taking place. Looking forward to the outcome of this event.

“I would love to attend (Breeze Tumblebit Wallet), but unfortunately it’s the other end of the world,” explained Adam Ficsor, a contributor to the Tumblebit research paper.

S3ND Summarization and Github Organization

One of the organizers of the event, Lightning developer Roasbeef, explained to wallet developers who could not attend that a summary of the event would be created in the near future. “We will likely prepare a summarization document to be published after the event which goes over the topics discussed, action items, and follow-up work. Keep on eye on this Github org,” Roasbeef detailed.

Organizers seemed pleased with the first annual S3ND and the creation of a forum for wallet standards. Members believe the meeting will lead to better wallet design and “more efficient and applicable standards processes can be developed.”

What do you think about the Bitcoin Wallet Standards Initiative (S3ND) roundtable meetings? Let us know in the comments below.


Images via Shutterstock, S3ND, and Room 77. 


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