Only 3.5 million bitcoin or 19% of the total current supply is traded
actively around the world, while the rest is in the hands of long-term investors
deadline, according to a new report from cryptanalysis company Chainalysis.
Bitcoin as digital gold
Before looking at why only 19% of Bitcoin is used, we need to explain why
Bitcoin is known as digital gold. Throughout the centuries, gold has been considered as a valuable object by many different groups of people around the world, gold has certain characteristics that make it so valuable.
For one thing, it's rare, which means you have a limited supply, if it were too much
abundant everyone would have it and then it would have no value. It is malleable, it can be cast and converted into smaller units, for example coins, and most importantly the value per unit does not change when you break it into smaller pieces. It is stable and does not degrade, it is easy to recognize and very important, difficult to counterfeit.
It turns out that Bitcoin has all these same characteristics, and much more. Have a
limited supply (only a specific amount of Bitcoin exists and will be produced). It can be converted into smaller units without losing the value of the unit. Its technology makes it very stable, does not degrade and is impossible to counterfeit. Also, and unlike gold, you can move Bitcoin anywhere on earth in a matter of minutes, regardless of how big or small the amount is.
This is why many people say that Bitcoin is not just digital gold, but a better version of gold.
Also, Bitcoin has value as a payment system in itself, giving you even more
importance. Many of the online casinos, especially those in New Zealand, such as PlayAmo NZ, already use and offer Bitcoin as a payment method. It really revolutionized online gaming activities. Additionally, the more people use Bitcoin for payments, the more valuable this system becomes.
Most Bitcoin is held for long-term investment
According to the report, in June 2020 almost 18.6 million bitcoin had been mined. Of this amount, approximately 60% of BTC is held by entities, be they individuals or companies, that have never sold more than 25% of the bitcoin they have received. Chainalysis labeled this BTC supply as "held for long-term investment."
Another 20% of the existing bitcoin supply has not moved from its current set of
addresses in five years or more, what Chainalysis called “lost bitcoin”. The rest, 3.5 million of all mined BTC, is used for trading, mainly between exchanges.
"The data shows that most of the bitcoin is in the hands of those who treat it as digital gold: an asset that remains long-term," Chainalysis said in the report released this week. "But this digital gold is backed by an active trading market for those who prefer to buy and sell frequently," he added.
The report noted that bitcoin that is held for long-term investments is
It will become a major source of liquidity as more people are looking to trade the top cryptocurrency, which is becoming tight after the recent offer cut on May 11.
The chain analysis found that during 2020, a total of 340,000 people are
actively trading with BTC every week. There are two types of merchants, retailers and professionals, he said. Retailers are those who deposit less than $ 10,000 of coins into exchanges at one time. However, they represent 96% of all bag entries per week.
Professional traders make up only 4% of active traders, or about 39,000 weekly transfers. However, they control the liquidity of the market, being responsible for 85% of the value in US dollars of the coins sent to the exchanges, according to the report.
Because of this, professional operators are the most significant contributors to
big market movements, like those seen during the dramatic drop in bitcoin prices in March, when the Covid-19 crisis intensified in North America, ”said Chainalysis.
On average, approximately 1.8 million BTC, with a value of 14.4 billion
dollars, have been transferred through the exchanges per week so far this year.