What Happens in a Bitcoin Blockchain?

(November 2018 Report Continued)

Introduction

My team designed and created a powerful bitcoin blockchain parser that gives us new insight into the inner world of the #1 cryptocurrency. This parser analyzes every new block, every tiny transaction within it, and prepares a detailed monthly summary of each wallet receiving/sending the total amount exceeding 100 bitcoins.

Unlike other tools that are only capable of catching single big transactions, we collect and sum up all of them! And by doing so we may detect hidden activities of large owners buying and/or selling bitcoins through multiple little wallets via sets of tiny transactions.

This is my second public article dedicated to the analysis of bitcoin circulation in November 2018 (the first article can be found by following this link).

Research steps

1. First, we parsed all blocks (from 548214 to 552083) and every single transaction within them. Identifying not only receivers (outputs) but also the source wallets (inputs), we prepared a detailed list of every wallet mentioned and we totaled all receiving and sending transactions for them.

2. Second, we split all wallets into 3 address formats (not giving many technical details here):

·      Starting with 1 (e.g. 16rCmCmbuWDhPjWTrpQGaU3EPdZF7MTdUk) – “Pay to public key hash”, the most common address type. If you’ve ever played with bitcoin it’s most likely you had this type of wallet.

·      Starting with 3 (e.g. 3D2oetdNuZUqQHPJmcMDDHYoqkyNVsFk9r) – “Pay to script hash”, a secured address, normally these are multi-signature wallets used by big exchanges and trading entities (where more than one person is responsible for controlling funds).

·      Starting with bc1 (e.g. bc1q9sh6544xls87x7skjzyfhkty4wq7z76vn7qzq9) – segwit addresses, which are not that common yet though there have been some implementations since December 2017.

Essentially, wallets that begin with 1 are mostly general traders and wallets starting with 3 are most likely big players (for ease I will refer to these as 1x and 3x.)

3. And finally, we summed up the total amount of bitcoin (Total), summed up all wallets that only collected or only sent money (One way), summed up wallets that sent away all money received (Transit), and summed up the remaining (workers).

Below you can see the results of our research.

Our findings

Those of you who are not familiar with the applied terms TOTAL, WORKERS, ONE WAY and TRANSIT, I recommend you read my previous article, where I explain these terms in more detail.

At this point, we have a lot of numbers, and some of our readers may already have an idea of what has happened in November 2018. Here, I would like to make a quick summary of what has happened. I invite you to focus your attention on the “difference” values for WORKERS and ONE WAY at 1x and 3x wallets:

We can see that in November, owners of 1x wallets (having a single owner) sent out a total of 168969btc, while owners of 3x wallets (multiple owners, big players, and most likely institutional investors) received 209147btc (remaining difference of 40178 is the amount of newly mined bitcoins in November).

What we may assume here is that some owners of 1x wallets simply decided to secure their funds by transferring them to multi-signature (or otherwise secured) 3x wallets, and there were no real deals behind that movement. Let’s ignore this ONE WAY figure of 40192btc. But where does this huge value of 74121btc (114313-40192) that bag holders of 3x wallets collected and never sent a single bitcoin out come from? This “one way” transfer of big sums looks suspicious.

I see that the falling price resulted in enormous panic among the majority of normal traders (mostly average, not-so-wealthy individuals testing their luck with crypto) having 1x wallets. They heavily sold their assets. At the same time, big investors (3x wallets) bought a lot of bitcoins at a reasonably low price (50% cheaper than the price in the first part of November). And our research revealed these final figures!

One more thing

In one of my previous articles “Minimize risks - don’t borrow!” I warned newbie traders to stay away from margin-trading. I now want to take a quick look on Bitmex and their activity in blockchain. Bitmex is a recent Peer-to-Peer Trading Platform offering up to 100x leverage on some of its products. 100x is simply incredible and it immediately attracted thousands of traders, someone correctly said: “it’s Lambo or nothing.”

When working on this article I noticed a lot of wallets starting with “3BMEX”, these are addresses used by Bitmex. Most likely they have a separate address for every user account and I find this approach effective because we can audit the total holdings of this platform (unlike other markets). I extracted all the November transactions for these addresses and summed them up. There were 83448 unique addresses, and Bitmex received 190672btc and sent 159379btc, leaving a difference of 31292btc.

If you like my research, please don't hesitate to share your opinion by commenting, your thoughts will motivate me for writing new research articles.

 Commercial Offer:

We prepare detailed monthly lists of all wallets receiving/sending a total amount exceeding 100 bitcoins. We sell these lists for 1000chf/1month. For all inquiries please contact us at https://lazgroup.com/3-Contact-Us