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1/ After some quiet and restful Christmas days (I hope everyone had a wonderful break 🎅🎄), here comes Part 2 of my mini series highlighting the key findings of @CambridgeAltFin's new cryptoasset report.
Below is Part 1.
Below is Part 1.
2/ Today we'll have a look at ... users (see Section 2)!
Much has been written about and argued over the number of people using cryptoassets, but little consensus has been achieved so far.
Why?
Much has been written about and argued over the number of people using cryptoassets, but little consensus has been achieved so far.
Why?
3/ Well, there is no exact way of determining the number, nature, origin, and activity levels of users in a cryptoasset system.
Users can have multiple addresses, wallets, and accounts - all at several service providers while obfuscating origin and activity.
Users can have multiple addresses, wallets, and accounts - all at several service providers while obfuscating origin and activity.
4/ Educated guesses is the best you can get. A variety of studies conducted in different developed countries suggest that between 2-9% of the local population hold cryptoassets (references are available at p. 32 of the report: jbs.cam.ac.uk/faculty-resear…).
5/ A naive extrapolation of these figures to all developed countries on the planet results in between 28 and 126 million users worldwide - an estimate that completely neglects users from developing countries.
6/ A different approach consists in aggregating user account figures sourced directly from service providers (survey data + publicly available data sources). However, a reported "user" is often not equivalent to a unique user. 
7/ Since a growing number of service providers verify existing and new users, we get new data that helps distinguish between user accounts/wallets and unique users on that platform.
8/ Survey data indicates that there has been a substantial increase in the share of ID-verified accounts: from 10% of user accounts in 2016 to 25% in the first quarter of 2018.
9/ Combining public data and survey findings, we estimate that the total number of user accounts at service providers amounts to at least 139 million in late 2018, while there are at least 35 million verified users worldwide - up from 18 million in December 2017.
10/ The analysis reveals the continued growth in the number of user accounts at service providers throughout 2017 *and* 2018 Q1-Q3. It also shows that KYC’ed user growth has dwarfed total user account growth, suggesting that new users are more likely to get immediately verified.
11/ Removing the effect of the many new entrants shows that all incumbent firms reported significant growth in the number of user accounts. However, a consistently wide range of growth (from 24% to 2,900%) can be observed.
13/ While several limitations of the analysis above need to be taken into account (see image below), we believe that the figures represent a conservative lower-bound estimate of the current cryptoasset unique user base at a global level.
14/ Is this estimate realistic? Well, the actual number of cryptoasset users is likely higher.
But then again - what does a "user" even mean? A HODLer or long-term investor? An active trader, consumer, or cryptoasset-accepting merchant?
But then again - what does a "user" even mean? A HODLer or long-term investor? An active trader, consumer, or cryptoasset-accepting merchant?
15/ Comparing user activity levels across platforms and services is even more complicated: the definitions of activity vary widely – even within segments.
16/ For instance, weekly logins are the most popular criteria (supported by 28% of service providers), followed by monthly measures related to activities that can involve simple logins, deposits, trading, and withdrawals (26%).
Those are very different metrics.
Those are very different metrics.
17/ Ignoring the enormous differences in criteria for a second, figures reported by surveyed service providers suggest that the average share of "active" users has stagnated around 35% since 2016.
18/ Where do users come from?
That's a tough one, too - for all the same reasons!
Survey data can only show that companies predominately serve customers based in the region of their operational headquarters: over half of customers are based within the same region.
That's a tough one, too - for all the same reasons!
Survey data can only show that companies predominately serve customers based in the region of their operational headquarters: over half of customers are based within the same region.
19/ Overall, cryptoasset usage is a global phenomenon that involves users from all around the world. While some regions (e.g. North America, Central and Eastern Europe, South-East Asia, and parts of South America) seem to dominate, others are catching up.
20/ This applies at the country-level as well, with specific countries (e.g. in particular order the USA🇺🇸, Canada🇨🇦, Japan🇯🇵, South Korea🇰🇷, China 🇨🇳, UK🇬🇧, India🇮🇳, France🇫🇷) appearing to drive cryptoasset usage.
21/ What about user types, then?
According to survey data, most users (both established as well as new entrants) are individuals and not business clients. Individuals can be hobbyists, retail investors, consumers, or users seeking a better investment or payment alternative.
According to survey data, most users (both established as well as new entrants) are individuals and not business clients. Individuals can be hobbyists, retail investors, consumers, or users seeking a better investment or payment alternative.
22/ However, business clients comprise over one quarter of the users for payment-only and storage-only services, suggesting that these two segments in particular represent opportunities to provide specialised services specifically tailored for enterprises.
23/ That's it for today!
The main takeaway is that nobody knows for sure how many people are using cryptoassets worldwide, and that all estimates are speculation - despite being a fun exercise!
The main takeaway is that nobody knows for sure how many people are using cryptoassets worldwide, and that all estimates are speculation - despite being a fun exercise!
