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Cryptocurrency wallets offer a safe and efficient cryptocurrency storage solution. Being a necessity for crypto users, wallets development, and growth is a strong indication of the cryptocurrency growth rate. Bitcoin’s enormous growth is evident through the rapid upsurge in the number of Bitcoin wallets since the virtual currency’s creation in 2009.
Spikes in crypto wallets usually coincide with rising cryptocurrency prices during optimistic periods. However, it’s worth noting that the general trend in the growth of crypto wallets has always been positive, and there has never been a drop in the number of crypto wallets.
While wallet growth is not an accurate measure of growth or adoption of cryptocurrencies, it is a valid metric for crypto growth traction. Below is research on the growth of Bitcoin wallets since 2017.
Bitcoin Wallets Before 2017
The first Bitcoin wallet was released at the same time as the Bitcoin protocol in February 2009. The wallet was known as the Bitcoin-Qt wallet and was developed by Satoshi Nakamoto. The wallet’s private keys were stored in a file on the user’s desktop titled “wallet.dat.”
The First Bitcoin Wallet – Qt Wallet
Qt wallet was a full client wallet meaning that users have to download the entire blockchain history for it to synchronize to their devices. It allowed users to send and receive coins as well as integrate an address book.
Bitcoin-Qt wallet upgraded to version 0.90 and came to be known as the Bitcoin Core wallet following a proposal by Gavin Andresen. Until 2013, the Qt wallet was the only Bitcoin wallet.
Bitcoin Wallets Growth in 2013
In 2013, Bitcoin wallets’ history changed significantly with the launch of hardware wallets, including Trezor, Xapo, Ledger, and KeepKey. At the same time, there was a significant increase in the number of Bitcoin wallets in exchanges.
Coinbase announced in 2013 that it had 13 000 Bitcoin addresses and, on February 27, 2014, announced that Bitcoin wallets had reached 1 million addresses. Similarly, Blockchain.info had roughly 13 000 Bitcoin addresses in August 2012 and reached 1 million in January 2014.
On April 14, 2020, Blockchain.info announced that it had reached 1.5 million Bitcoin addresses.
Growth of Bitcoin Wallets in 2015 and 2016
By the end of Q4 2015, over 4 million Bitcoin wallets were representing 21% growth in quarter-over-quarter for that year. In Q1 2016, there were over 6.7 million Bitcoin wallets, which increased to 10.98 million by the end of Q4 2016.
Bitcoin Wallets Growth from 2017 Onwards
From 2017 onwards, there has been exponential growth in the number of Bitcoin users. A report by Chainalysis revealed that active Bitcoin users make around a third of the total bitcoin owners.
Growth of Bitcoin Wallets in 2018
The study by Chainalysis used data collected until August 2018. It established that 2.3 million people use bitcoin to make payments, while 4.8 million users hold bitcoin to facilitate speculative trade of the cryptocurrency to make profits.
Moreover, the report established an 11% increase in the use of bitcoin for payments and a 23% increase in Bitcoin speculators. Payments and speculation involve wallets; thus, there was a certain increase in the number of Bitcoin wallets.
Growth of Bitcoin Wallets in 2019
A report by Statista revealed that the number of Bitcoin wallets reached over 40 million at the end of the first half of 2019. This represented an enormous increase from less than 8 million Bitcoin wallets in the second quarter of 2016.
Growth of Bitcoin Wallets in 2020
The growth in Bitcoin wallets from 2017 to Q4 2020 has been enormous. A report by Statista indicates that there are over 54 million cryptocurrency wallets as of September 2020, out of which 42 million are Bitcoin wallets. However, there could be discrepancies in this value since most Bitcoin users have several bitcoin wallets and use multiple wallet addresses to enhance their privacy when transacting in bitcoin.
From the graph indicating the rise in Bitcoin wallets since Q3 2017, it’s noted that the two pronounced spikes in the number of Bitcoin wallets occurred in the third and fourth quarters of 2017. The spike in the number of Bitcoin wallets coincided with the rise in Bitcoin price at that time. The second spike in Bitcoin wallets occurred in Q2 of 2019, where Bitcoin wallet users increased by about 6 million.
Data on Bitcoin wallet growth by Blockchain.com shows an exponential growth of Bitcoin wallets starting in 2016 with a five-fold increase in the wallets.
Bitcoin Wallets Growth in Exchanges
From 2017 to 2020, crypto exchanges also reported an increase in Bitcoin wallet addresses. Leading cryptocurrency exchange Coinbase currently has 30 million Bitcoin wallet addresses than the 13 million Bitcoin wallet addresses in 2017.
Why Corona Pandemic has Spiked Growth of Bitcoin Wallets in 2020
The COVID-19 pandemic has significantly impacted financial markets across the globe; crypto markets included. The pandemic’s start saw Bitcoin prices fall below $4, 000 with the S&P Index displayed a sharp decrease. However, the drop in Bitcoin prices is because there was a sudden flight to liquidity. Furthermore, numerous Bitcoin investors owned margin calls in Equity that had to be covered by liquidating other assets like Bitcoins into cash.
The pandemic brought about increased usage of Bitcoin and other cryptocurrencies as they were considered a safe haven to hedge risks. On April 5, COVID-19 caused a rise in Bitcoin prices attributed to increasing usage of the coin.
The increased demand for Bitcoin during the COVID-19 pandemic saw increased growth in the number of Bitcoin wallets. For instance, Bitcoin wallet BRD reported that it added one million users every two months during the pandemic after taking over four years to hit the one million users mark. The wallet attributes the significant growth of users to the increased use of Bitcoin during the pandemic.
Bitcoin wallets have witnessed considerable growth since the launch of the first Bitcoin wallet, Qt wallet, in February 2009. The positive growth in Bitcoin wallets has primarily been attributed to Bitcoin’s increased mainstream adoption and its related technology. As such, there are currently 58 million cryptocurrency wallets, of which 42 million are Bitcoin wallets.
The coronavirus pandemic has also been instrumental in the growth of Bitcoin wallets thanks to Bitcoin’s increased usage to hedge risks.