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 is reaching new all-time highs.
Bitcoin is seeing growth in adoption among retail and institutional investors
According to Coin Metrics, a cryptocurrency market and data analysis company, the number of active Bitcoin addresses increased by 105% in 2020.
While many have celebrated the tripling of Bitcoin’s price this year, other important steps have gone largely unnoticed.
Aggregated in Coin Metric’s State of the Network 2020 report , this price growth revealed a similar trend in terms of exposure and use.
Active Bitcoin wallets more than doubled, a metric that shows continued adoption by users. 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 COVID-19 pandemic has caused massive economic uncertainty, inflation and other problems.
Following the 2008 financial crisis, Satoshi Nakomoto created Bitcoin so that governments no longer had singular control over the monetary system. Maybe a year like 2020 highlights why this matters.
There are a variety of factors that have helped solidify Bitcoin as a store and transfer of value, as well as a hedge against inflation. One example is the huge amount of money printed by the US government.
The US 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, increasing spending and other factors, the Federal Reserve has embarked on a dollar printing frenzy, printing more than a third of all U.S. dollars that have ever existed in 2020.
Some companies that hold US dollars as the majority of their reserves took note and decided it was time to act and branch out into other assets.
With the predetermined supply of Bitcoin and the amount of coins 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 that way, with characteristics of money 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 wallet. That said, the fact that so many new addresses have been created indicates more widespread adoption.
While it is possible to create unique wallet addresses to anonymize holdings, many users are probably creating and using these wallets for the first time. This is a strong signal of the fundamental growth of Bitcoin.