Life of Bitcoin Blockchain in 2022
About
Five years ago, my team designed and created a powerful parser for the blockchain of Bitcoin. This parser analyses every block and each transaction within it; informs us of potential anomalies, interesting transactions, and various ongoing blockchain statistics that are extremely useful in trading. Some of our findings are published here on LinkedIn and everyone may have a look at them in a dedicated catalog .
Since we collected details for every single transfer that took place in 2022, I decided to share some of our findings in the present yearly report.
Preparation
I took 53,188 blocks (from 716,599 to 769,786) mined in 2022 and analyzed every single of 93,106,323 transactions containing a total of 605,609,312 bitcoin address entries.
And if we classify those addresses into their formats we get:
And it already gives us an idea that Bech32 format addresses are the most popular ones.
But these numbers are not really representative, because these are not unique addresses. Some of them were used thousands of times in different transactions. On top of that, a single transaction may have multiple entries of the same address (as a sender and as a receiver of change for example).
Also, an attentive reader may notice a difference between the previous total count of entries and the sum of listed address formats. That is because there were 30895 entries with scripts that we were unable to decode into addresses, but since their total turnover is less than 10 Bitcoins, we decided to not investigate them further.??
Processing
To dive deeper into the hidden world of bitcoin transactions, I needed to perform a summation process - identifying and combining every transfer made per each unique address. As a result of this lengthy process, there is a list of addresses, with a count of incoming and outgoing transfers and a precise number of Bitcoins (Satoshis) sent and received.
Distribution by Address Format
Now the count of unique address entries looks significantly different:
With a total count of 160,854,145 unique bitcoin address entries.
From here it can already be concluded that the Bech32 format of addresses gained a lot of popularity (compare to my previous report for 2020) and are almost as popular as P2PKH and P2SH together. And legacy P2PKH addresses are now used much less, two times less than even P2SH.
Seems like in two years Bech32 and P2PKH have flipped their popularity.
Distribution by Volumes
Counts of addresses in use are large and impressive, but some of them do actually transfer a very minimum of Satoshis. There are addresses that simply spam the blockchain network with transactions of 0.00000546 BTC. Why they are doing so is outside the scope of the present paper. For us, it will be more useful to find out how many addresses have sent or received a total of 1 or more Bitcoins during the whole year. And my calculations are presented below:
So, with almost 160 million unique address entries in the blockchain, only 664 thousand have transferred more than one Bitcoin. In other words, more than 159 million unique addresses have transferred less than 1 Bitcoin during the year 2022. And there is only one address that transferred more than a million Bitcoins. I’m sure you’d be interested to know it - bc1qm34lsc65zpw79lxes69zkqmk6ee3ewf0j77s3h ! This address belongs to Binance and it was mentioned in their “Our Commitment to Transparency ” blog post. ?
Real Analysis
Once the list of unique addresses is prepared the real analysis can be performed. As was mentioned earlier, for each address we calculate 4 numbers that sum up the yearly activity: the total amount of Bitcoins received, the total amount sent, the number of incoming, and the number of outgoing transactions. As an example, I will take the Binance address mentioned above:
We prepare the similar brief report for every single address that appeared in the chain in 2022.
And from that list we can first calculate the total yearly turnover of Bitcoins.
Now, to make a more detailed picture of blockchain activity, I will split the whole list into different groups of addresses: Transit, Sellers, Buyers, and Traders.
TRANSIT?– these are addresses that received bitcoins (in one or many transactions) and later sent all of them somewhere else (in one or few transactions). The final balance by the end of the year is equal to zero. It is recommended to subtract this amount from the total turnover since it doesn’t affect final balances.
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transferred 514,290,234 BTC (91.54% of the total) through 203,024,546 addresses
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SELLERS aka DONORS?– these are addresses that have only sent bitcoins somewhere but never received anything back. Normally these are addresses that were created in previous years and in 2020 their owners decided to transfer some (or all) funds out.
sent 3,498,048 BTC (0.62%) from 9,939,752 addresses
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BUYERS aka HOLDERS?– exactly the opposite behavior to a previous group. These addresses have only collected bitcoins through the year but never sent out anything. We may also call them investors (or collectors).
received 4,266,965 (0.76%) to 16,768,570 addresses
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TRADERS and EXCHANGES?– these are normal addresses that sent money in and out (making at least one incoming and one outgoing transaction). It could be ordinary traders, exchanges, and various active individuals. In a healthy blockchain, they should make up the biggest portion of the total turnover. By focusing on the count of incoming and outgoing transactions it is easy to spot all major exchanges and OTC traders.
received 43588931 BTC (7.75%) to 50264493 addresses
sent 44025423 BTC (7.84%) from 42037511 addresses
difference = -436492.
Little extra
In a previous section, I shared figures for all addresses no matter how much in total they have transferred during the year.
For example, we can see that difference between Buyers and Sellers (note that we are talking about addresses that transferred money only in one direction) is positive and equal to 4266965 – 3498048 = +768,917 BTC.
But we may expect that addresses that transferred below 1 Bitcoin and addresses that transferred more than 1 thousand should behave differently. Let’s see how the difference between Buyers and Sellers varies depending on the total amount of Bitcoins that address transferred during 2022:
·??????+768,917 by addresses who transferred any number of Bitcoins.
Interesting that addresses who transferred between 100 and 10K bitcoin during 2022 were more into sending bitcoins, while other groups were mainly accumulating.
Here we may begin to speculate about possible reasons, but don’t forget that these figures are for the entire year. And a lot has happened during 2022 that might have affected the behavior of different groups of traders. Meaning that these figures should be viewed in dynamics…
Conclusion
1. The total turnover of blockchain in 2022 totals 562 million bitcoins, where 91.5% are transits that don’t have any impact on the final balances of bitcoin owners. This is an extremely high number for this type of transaction. That happened mainly because of some whale wallets that were kicking Bitcoins all over the chain.
2. The difference between Buyers and Sellers (4,266,965 – 3,498,048) is positive and equals 768,917 bitcoins. This isn’t really much. Compared to 2020, where buyers obtained 3.18 million bitcoins.?
3. At the same time, active traders and exchanges have a negative difference between incoming and outgoing transactions, which totals -436,492 BTC. There could be a simple explanation that some traders lost faith in storing their holding on Exchange deposits (consider FTX collapse) and decided to take them out into their own cold wallets. It means that some liquidity (436,492 BTC) has been taken out from exchanges and active traders. I find it extremely important. The fewer bitcoins in order books, the less the resistance for the price to climb.??
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4. Finally, it should be clear, that the source of bitcoins for Buyers is all that was mined plus all that was withdrawn from exchanges: 768,917 = 332,425 + 436,492
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5.?Since Bitcoin is pseudonymous, we don’t know the owners of most of the addresses and it would be fair to assume that a significant portion of those buying addresses is in fact new cold wallets of major exchanges. But still, they weren’t sending bitcoins even once during the whole year…
And the same time it was a Bearish year, where the price has fallen from almost 49000$ down to 17000$, so the results are not that bad at all – chain looks Bullish!
To me all that means that Bitcoin is still considered an attractive investment!
Thank you for making it to the end of this article!
Data provided in this report is only a peak of an iceberg – a rough yearly report. Through continuous development and improvement of the analytical tools of our parsers, we managed to collect and calculate a lot of extremely interesting data that won’t be made public for various reasons. Maybe in the recent future, I may reveal a few more findings, so stay tuned.