The number of active Bitcoin addresses increased by 105% in 2020.
This is part of a historic year for the price of Bitcoin as it reaches new and unprecedented highs.
Bitcoin is experiencing growth in adoption among retail and institutional investors.
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According to Coin Metrics, a data analysis and cryptomarketing company, the number of active Bitcoin Trader software addresses increased by 105% in 2020.
While many celebrated the three-fold increase in Bitcoin’s share price this year, other important measures went largely unnoticed.
Aggregated in Coin Metric’s „State of the Network 2020“ report, this price growth revealed a similar trend in exposure and usage.
Active Bitcoin portfolios more than doubled, a measure that shows continued user adoption. This number of new addresses used may indicate that new users are getting involved, as returning Bitcoin buyers do not necessarily need to create a new address.
Bitcoin’s Flagship Year
2020 has been a difficult year globally. The VIDOC-19 pandemic caused massive economic uncertainty, inflation and other problems.
Following the financial crisis of 2008, Satoshi Nakomoto created Bitcoin so that governments would no longer have singular control over the monetary system. Perhaps a year like 2020 highlights why this is important.
There are a variety of factors that have contributed to the solidification of Bitcoin as a reserve and transfer of value, as well as a hedge against inflation. One example is the enormous amount of money printed by the U.S. government.
The U.S. dollar is the world’s reserve currency, which means that many central banks around the world hold USD in their reserves. Due to economic uncertainty, increased spending and other factors, the Federal Reserve has embarked on a dollar printing frenzy, printing more than one-third of all U.S. dollars that ever existed in 2020.
Some companies that hold U.S. dollars as the majority of their reserves took note and decided it was time to act and diversify into other assets.
With Bitcoin’s predetermined supply and the amount of corners in circulation, many users, both commercial and institutional, began to view Bitcoin as a more common hedge against inflation.
Traditionally, companies would invest in precious metals or real estate to hedge against inflation, but Bitcoin has many principles that can make it a superior store of value in many ways.
Bitcoin was designed to act this way, with characteristics of silver such as durability, portability, divisibility, uniformity and limited incorporation to make Bitcoin a healthier currency than its contemporaries.
It is undeniable that the drastic increase in Bitcoin prices has a major impact on the number of users who create and use their new Bitcoin portfolio. That said, the fact that so many new addresses have been created indicates a more widespread adoption.
While it is possible to create unique portfolio addresses to anonymize holdings, many users are probably creating and using these portfolios for the first time. This is a strong signal of Bitcoin’s fundamental growth.