There has been a lot of news lately surrounding a certain study funded by a third party. The study attempted an analysis of the Bitcoin blockchain for a number of purposes and came up with a few startling numbers that a lot of the “mainstream media” (if Bitcoin has such a thing as mainstream media) have been running wild with. The most commonly cited is that 78% of all coins are supposedly being stashed under the digital mattress. I think, however, that it’s fair to qualify the condition of that 78 % of coins as a bit more complicated than all that. The study fails to account for the fact that a huge portion of all coins ever mined was mined back when they were essentially worthless. 10,000 BTC bought a pizza, once upon a time, and CPU mining was the norm. Back then, losing several thousand coins to a hard disk failure or otherwise losing a wallet was like a $5 bill going missing from your wallet – annoying but not worth losing sleep over. So how many of that 78 % of coins are actually spendable but sitting idle and how many are lost to time? Like so many things with Bitcoin, the real problem is: we just don’t know.
People forget when dealing with Bitcoin that while it was designed with a certain kind of transparency in mind and it is infinitely more open and study-able than traditional currencies, it was also built with privacy in mind and to that end it’s very hard to get certain kinds of information about crypto signals and Bitcoin transactions. Of that 78%, we can certainly say that some are lost, some are savings and some are likely the cold storage accounts of large exchanges or merchant service companies – but we don’t know (and for the most part can’t know) which. All those stale coins are like Binion’s silver, clever financial analysis can certainly indicate that something’s missing, but the very nature of a thing being missing means we haven’t a clue where it actually is.
It goes beyond the design of Bitcoin, too. Bitcoiners themselves are often elusive beasts, difficult to track. Allow me to share a personal anecdote.
Now my example may be a bit long-winded and I apologize for that, but it does go a long way toward making my point: Bitcoiners, you are some of the hardest people to gather information about I’ve ever met. If I can’t even get a solid number to tell my sponsors how many of you are viewing my stuff in a given month, I find it unlikely that any analysis of this community or our behavior will even be close to accurate.