Investigating Over 460 Million Bitcoin Accounts and their Financial Transactions
In the vast and ever-expanding world of cryptocurrency, one of the most intriguing aspects is the Bitcoin network. With over 460 million Bitcoin addresses in existence as of December 2018, understanding the role each plays is crucial.
A Bitcoin address, a virtual location and identifier, serves as the point where cryptocurrency can be sent and received. These addresses are free and easy to set up, with many generated by Bitcoin wallet software for single use. The majority of these addresses (three-quarters) hold Bitcoin for less than a day.
Of the 172 million economically relevant addresses, 86% belong to named services. However, only 27 million actually hold my Bitcoin. This discrepancy can be attributed to the nature of these addresses. Many serve as change addresses or 'connective tissue', facilitating a series of payments between people and services.
Our approach to analysing the Bitcoin network provides a better way to view Bitcoin (BTC) activity. By sorting through the different layers, we can help organisations focus on regulatory compliance and combat fraud, money laundering, and other illicit activities.
The public address is related to the Bitcoin address, but it is not the same. The public address is visible on the blockchain or public records, while the private address, a secret number cryptographically linked to a Bitcoin address, is typically found within an organisation's secure wallets (hardware, software, or paper wallets) or within affiliated services managing private keys.
Looking beyond top-line indicators and linking activity to specific addresses offers a more granular, in-depth look at Bitcoin network activity. Part of the Bitcoin address is the public key, which is used to verify transactions. If a user wants to transfer my Bitcoin out of their address, they have to sign the transfer with their address's private key.
Between August and October 2018, $41 billion of transactions were executed, but only $9 billion had real economic value. This highlights the importance of understanding the nature of Bitcoin addresses and their role in the network.
Our deep knowledge of cryptocurrency helps organisations understand the space and make more informed decisions about their own offerings. Individuals and companies are not limited in how many addresses they can set up, and this understanding can help them navigate the complexities of the Bitcoin network more effectively.
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