An examination of claims of BTC adoption based on coin distribution

This post is not meant only as a criticism of BTC, but since there've been a number of new commenters I encountered here recently, coming with claims of mass BTC adoption (even as a store of value!) during the latest bull run, I decided to look at these claims in the bigger picture. Much of the same applies to other cryptocurrencies right now - I am not exempting my favorite, Bitcoin Cash, in any way!

Similarly, it is likely to apply to non-Bitcoin-like crypto as well - until you see your local green grocer and most other shops around you accepting payment in crypto. I don't have the distribution numbers for all others though, neither do I know. Please respond with data in comments if you think your favorite crypto is in a much better position.

[Initially I made a comment reply which this post is based on, but it got caught in the auto-moderator, which is also why I decided to make a separate post.]

Here goes.

The following is based on the data from the bitinfocharts BTC address distribution linked in the comments. The calculations below are from ~ 2 days ago, I doubt much has changed, and the numbers will be rounded a bit - it doesn't affect my general conclusion.

1. The total number of BTC addresses listed there holding funds when I took a look are something like 55M (rounding up, the precise number at the time was 54,563,975).

2. Only ~23.4M (23,387,208) had more than $100 in bitcoins.

3. For more-than-$1000 and more-than-$10K, the number of addresses are 11.7M (11,715,381) and 4.2M (4,172,342) respectively.

4. These don't correspond 1-1 to users. More than one address can, and often does, belong to a single user. Meaning the number of real users actually holding coins are less than the number of addresses.

5. So the number of holder with substantial funds in BTC can assuredly be reckoned in the low millions. Probably significantly less than 5 million users. (ask yourself how many BTC UTXOs you hold, whether you're typical, and if so, divide by some similar number to approximate the real users which is going to be even lower).

6. The original poster I commented said that we should assume only half the world's population to be in a position to use Bitcoin at all - some are too young, some too old, some not in areas with necessary infrastructure. So I agreed we should be generous and not consider the total world population (~ 8B) , but we can halve it (~ 4B) to assess the state of BTC adoption.

7. If we take the 5 million users from point (5), then that gives us at best 5M / 4000M = 0.00125 = fraction of world's population that might hold substantial funds in BTC. i.e. Just over 0.1 percent. That is an upper bound on how much of "the masses" can possibly have adopted BTC (*) as a store of value as of this time. As we shall see, the amount of wealth stored by more users holding small amounts is very small, one might say insignificant in the global scheme of things.

8. Looking at the BTC distribution from bitinfocharts , around 4.1M addresses > $10K addresses accounted for 98.73% of all BTC held, as per the table, roughly (I took the 0.1 BTC line as approximately equiv. to $10K right now).

9. Less than 10% of all addresses hold almost 99% of all BTC.

10. Conclusion: No more (+) than 0.125% of half of the world's population are holding > 98% of the available BTC.

(*) I am not including those who think they hold BTC just because they hold "paper bitcoins" (IOUs) on some exchange without having ever taken the coins into their own custody

(+) because of the aforementioned possibility that multiple addresses are same holder, i.e. number of real holders is less than addresses

I think such an examination from the basic undeniable facts (number of loaded addresses and coin distribution) is well suited to challenging claims that BTC has seen "wide adoption" or "mass adoption". Even as a hypothetical store of value!

bitinfocharts link to the rich list data in comments, to reduce risk of post getting auto-modded away.

I will present more questions that this has raised for me in comments too.

Limitations of this examination:

• I have not counted those who hold their bitcoins on some exchange (where they might be fractionally reserved, i.e. effectively "paper bitcoins" or IOUs"), as really owning coins. "Not your keys, not your coins". Try to withdraw into your own custody to find out if you have really adoption bitcoins or if your exchange thinks you haven't.

• It is conceivable that some user hold their funds in cold storage with centralized custodians in order to protect them. There are such companies. I don't know how big their userbase is - would appreciate feedback. It is a fact that those bitcoins are at higher risk of finding new owners (through embezzlement, hacking of companies, government confiscation etc) than bitcoins held distributed across millions of self-custodial users.