Total bitcoin holders: Flaws in the methodologies

Analytics firm Glassnode recently released a report which provided the data related to the total bitcoin holders across the world. According to the report, there are 23 million different entities that are bitcoin holders. The traditional method to find such data was easy. Since the bitcoin is designed as an open ledger, the transactions made by bitcoin are publicly visible and thus it becomes easy to map the number of total bitcoin holders.

However, the method above has some flaws. The first and basic is that a person or a single user can have multiple bitcoin addresses and there is no way to get that data. It is also possible that a single account is run by multiple individuals too. They should be counted as multiple bitcoin holders but there are counted as just one because of one address.

Glassnode’s methodology to determine total bitcoin holders

To determine the actual number of entities, Glassnode used a combination of algorithms and industry standards.

At Glassnode, we have been working on this problem by applying a combination of industry-standard heuristics, proprietary clustering algorithms, and advanced data science methods on top of raw on-chain data.

Glassnode, in its medium.com post, explained that there are two ways in which the problem can be solved. One was to identify the accounts that are run by different individuals. The other was to map multiple bitcoin addressed to a single entity (for individuals holding more than one address).

23M Bitcoin holding entities versus 28.4M addresses

Glassnode has worked with the latter way to tackle the problem. Naturally, the number of entities will be less than the number of bitcoin addresses. According to Glassnode’s data, the number of bitcoin holding entities was around 23 million while the total addresses were 28.4 million.

The number of entities holding more than 1000 BTC is 75. There are 7 entities that hold more than 100,000 bitcoin. All of these are popular bitcoin exchanges with Coinbase leading with 983,800 BTC. 

The number of total bitcoin holders using the first way is pretty much difficult but Glassnode’s data has given a lot of new information that points straight to the continuous growth of BTC.

 

Featured image from Pixabay