Bitcoin, the original cryptocurrency, continues to change. Yet it goes through great turbulence in its size of blockchain, participants, and virtual assets overall movement. According to recent data, its blockchain is growing at a blistering pace. It sheds light on the distribution of holdings, the age profile of users, and the volatility of activity in the market. These factors combined, little glimpse what the current state of Bitcoin is, and where it may be headed.
The numbers clearly indicate that people are turning to Bitcoin in unprecedented ways. More importantly, it reveals the challenges and truly awe-inspiring opportunities ahead of us as Bitcoin deploys itself deeper into the global financial landscape. Reading these statistics are important for investors, policymakers, and all other stakeholders who are concerned with the future of digital currency.
Blockchain Growth and Scalability
Bitcoin’s blockchain is a public distributed ledger that records every single transaction on the network. It has experienced incredible increases, showing the increase in movement and acceptance of the cryptographic currency. In 2024, Bitcoin’s blockchain was nearing 5,450 GB, a jump of over 2000% in just four years. This expansion is a testament to the increasing demand for Bitcoin and its ability to facilitate both large and small transactions alike.
The blockchain’s growth rate is around 1 GB every two days, demonstrating a binary increase of new information at a consistent clip. This ongoing growth creates drawbacks for the network’s scalability, since every node in the network must maintain and validate a constantly growing sum of data. Developers are already hard at work solving these challenges by building layer-two solutions. One obvious case is the Lightning Network allowing faster and cheaper transactions off-chain, reducing the burden on the primary blockchain.
Of course, the growing size of the blockchain has other impacts beyond accessibility. As the blockchain technology evolves, operating a full node requires more resources. This raise might reduce the number of users able to independently verify transactions. This centralization risk is arguably the most primo concern among the Bitcoin community, whose appreciation for the benefits of decentralization and peer-to-peer verification runs deep.
Concentration of Bitcoin Holdings
Perhaps the most famous feature of Bitcoin’s distribution is its concentration in a few hands. Just a few large investors, sometimes referred to as “whales,” hold enough of the market to affect it. According to the current data, around 2% of Bitcoin addresses control a staggering 95% of the supply. In fact, they have already gained over 92% of all Bitcoin that is drowned! This heavy concentration opens up questions about market manipulation and threats from a large-scale sell off to the value of Bitcoin.
Though concerning, the concentration of Bitcoin holdings continues a pattern we are familiar with across other asset classes. The same inequality of access is true for traditional assets like stocks and real estate. Bitcoin transactions are not completely anonymous. This anonymity, paired with the ability of the largest of market movers to greatly impact the market, raises the stakes even higher.
Attempts to address the centralization of Bitcoin’s wealth are met with harsh criticism. This was by design, as Bitcoin’s foundational code was meant to create a decentralized, permissionless system. Yet growing recognition of the dangers of over-concentration might help push for a fairer distribution in the long run. The Bitcoin market is expanding tremendously fast. For one, new entrants have started flooding the market, meaning whales may be less able to move markets themselves.
User Demographics in Europe
The demographic breakdown of Bitcoin users sheds light on the adoption of the cryptocurrency by different age demographics. In Europe, the largest group of Bitcoin users are millennials between the ages of 25 to 34 years old. They account for 38.2% of all Bitcoin in existence. This demographic, commonly called millennials, is characterized by their familiarity with technology and willingness to adopt new financial technologies.
The 35 to 44 age cohort is the second most active age group among Bitcoin users across Europe. They account for 25.5% of the overall users in this region. Since Generation X is typically well-established in their careers at this point, it’s no surprise that many from this group are moving to directly incorporate Bitcoin into their investment approaches. Combined, these two demographic segments make up a staggering 85%+ of Bitcoin adopters in Europe.
Younger users, specifically in the age group of 18 to 24 years, account for only 15.3% of Bitcoin’s overall user base. For Generation Z, growing up in a digital-first world has its pros and cons. Consequently, they are becoming much more at ease with respect to cryptocurrencies and other new technologies. As millennials enter the professional world and build greater financial freedom, their growing adoption of Bitcoin should follow.
A significant minority of older age groups, though fewer in number, are active in the Bitcoin community. Users between the ages of 45 to 54 years old make up 13.1% of Bitcoin’s user base. In comparison, 55 to 64 year olds only represent 5.6% of drivers. The 65+ age group is the smallest demographic, making up only 2.3% of Bitcoin users. As it stands, older age groups have been historically more risk averse adopting new technologies. Yet their growing participation is a sign that Bitcoin is becoming more widely accepted and is reaching a more diverse demographic.
Market Performance and Trends
Bitcoin’s market dynamics have been dominated by extreme volatility, with countless instances of parabolic bull phases immediately followed by 60-90% bear markets. In March 2024, Bitcoin reached a new peak price of US$73,000. This increased momentum was largely pumped up by the recent jubilation of the approval of Bitcoin ETFs in the USA. The launch of these ETFs unlocked a new path for institutional investors to get exposure to Bitcoin. Consequently, demand exploded, creating a lot of upward pressure on prices.
Another metric of Bitcoin’s market activity is the daily trading volume in Bitcoin. With an average daily trading volume of US$32.5 billion in October 2023, Bitcoin is one of the most liquid assets, reflecting strong investor interest. This volume literally represents every Bitcoin transaction happening nonstop around the world on thousands of exchanges and trading platforms.
Bitcoin’s hash rate, an estimate of the computation power employed to protect the network, has gone through a dramatic turbulence as well. On August 21, 2023, Bitcoin’s hash rate reached an all-time high of 419.33 EH/s. As of September 26, 2023 the hash rate has dipped a bit to 392.33 EH/s. Despite this exodus, by October 26, 2023, the hash rate hit an all-time high of 486.49 EH/s. These ups and downs represent the shifting incentives for Bitcoin miners and the dynamic strength of Bitcoin’s network.
Future Adoption in the U.S.
Looking into the future, Bitcoin adoption is likely to continue increasing — especially amongst younger demographics. By 2025, an estimated 55% of Americans aged 18-34 will have made Bitcoin investments. This rapid adoption rate is a direct reflection of the growing awareness and adoption of Bitcoin as a legitimate investment asset.
There are a number of factors pushing the adoption of Bitcoin. These factors include improved access to the cryptocurrency through several exchanges and investment platforms, increasing institutional interest, and the increasing perception of Bitcoin as a hedge against inflation and economic turmoil. With each new person educated on the attributes and advantages Bitcoin offers, the adoption will only compound and grow from there.
There are still big hurdles like regulatory uncertainty, security issues and market volatility. Addressing these challenges will be key to ensuring that the Bitcoin ecosystem remains sustainable and continues to grow in the long-term. Reducing confusion and frustration through better design is imperative to creating an online experience that serves all users. It’ll open up Bitcoin to many more users.
