Real Number of Cryptocurrency Users

As the industry evolves and more applications go live, we aim to understand how many individuals are actually using cryptocurrencies. This is a complex issue because the most obvious and easily quantifiable usage metric—active addresses—can be easily manipulated.

In traditional software, the concept of a "user" is clear-cut. Of course, there are numerous ways to measure the quality of users—in fact, the entire field of growth analysis is dedicated to this topic—but at its most basic level, users can be categorized as "Daily Active Users" (DAU), "Monthly Active Users" (MAU), and so on.

In cryptocurrencies, the situation is more complicated. This is because on the blockchain, user identities are pseudonymous. An individual can easily create and control what is known as a "Sybil"—a group of different identities, referred to as "public addresses"—on the blockchain. (There are many completely legitimate reasons for doing this, such as for privacy, security, or other purposes.) Therefore, it is difficult to know how many addresses a single person might use. (Conversely, multiple users can use a single address through multi-signature, public accounts, and various account abstraction protocols.)

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Until recently, the capacity of the most popular blockchains was very limited, leading to high transaction fees. This naturally created a barrier to creating and using hundreds or thousands of addresses, as doing so would be very expensive. But recently, crypto infrastructure has become more scalable—through L2 aggregation and new high-throughput L1—reducing the cost of transactions on many blockchains to near zero.

But is the cost of creating multiple identities also near zero in traditional internet applications? In most cases, yes. For example, it is quite easy for a person to create and use multiple email addresses. But the key difference is that in cryptocurrencies, there is a strong incentive for this behavior.

The crypto industry has a long history of rewarding early users of protocols with tokens. Today, new protocols often initiate their circulating supply of tokens through "airdrops"—a reward activity that provides token incentives to a predefined set of addresses. Typically, these address lists are derived by looking back at historical on-chain transaction records. Some individuals might manipulate the system by creating many different identities and transacting with them. This strategy is commonly referred to as "airdrop farming" within the industry.

Given these behaviors, it is clear that the 2.2 million unique monthly active addresses we measured in September 2024 do not directly translate into 2.2 million users. (Please note that active addresses on multiple EVM chains are only counted once in the total of 2.2 million.)

So, how many active users are there? 10 million? 50 million? 100 million? This is the question we set out to answer. Here is our research methodology.

Method 1: Filtering Active Addresses

One approach we took is to filter out addresses that are suspected to be controlled by bots or belong to Sybils. Through on-chain analysis and forensics, we explored various methods:Filter out addresses that obtain funding from decentralized contracts— Decentralized contracts are a type of smart contract whose sole purpose is to receive funds and automatically distribute them to many different addresses. While there may be some false positives, these activities suggest that the target addresses all receive funding from a single source and are therefore somewhat interconnected.

Filter out addresses that have a balance close to zero at the beginning and end of a specific time period. For instance, if you are looking for genuine monthly active users in September 2024, you might try to exclude addresses with a balance close to zero on September 1st and September 30th. This criterion implies that these addresses are of a transient nature. While bots and sybils may "clean up" their balances after taking action, real human users typically prefer to retain some balance in their wallets to cover future transaction fees.

Analyze the distribution of addresses with one, two, three, four, five, or more transactions during that period. Addresses with only one or two transactions during that period can at best be considered low-quality users, and in the worst-case scenario, they are bots or sybils. This method works best when aggregated over a longer time frame.

Filter out addresses that have many transactions in a very short period. Humans, when using wallets or application interfaces, can reasonably only handle a certain number of transactions within a specific time frame, while bots can transact at a higher frequency.

Optimistically include addresses associated with identity protocols that require a certain setup cost. For example, addresses with ENS names, Farcaster IDs, and other linked social identities are likely to be real human users.

These are just some patterns on the chain that may indicate bot behavior. This is by no means an exhaustive list, and we welcome suggestions based on the above.

Method 2: Inferring from Wallet Users

Another way to estimate monthly active users is to look at off-chain data sources. The most obvious starting point is wallet users.

In February 2024, the popular cryptocurrency wallet MetaMask reported 30 million monthly active users. They define monthly active users as "people who have loaded a page with the MetaMask extension or opened the mobile app at least once in any rolling 30-day period."

Assuming we want to estimate transactional users, the next step is to determine what proportion of MetaMask's users actually engage in transactions. In 2019, MetaMask reported that on a given day, about 30% of active users confirmed an on-chain transaction. (This is the most recent available estimate.) If we apply this proportion to MAU, we would arrive at approximately 9 million users conducting transactions through the MetaMask wallet product each month.Next, we need to understand MetaMask's total wallet market share across all blockchains. While this exact data is not readily available, we can make some reasonable guesses based on our existing knowledge. For instance, we can make a good estimate of MetaMask's market share in mobile wallets based on data from mobile analytics firm Sensor Tower. (Due to commercial service agreements, we cannot disclose specific numbers here.)

Once we have an estimate of MetaMask's market share, we can simply derive the total estimate of crypto users from the previously concluded figure of 9 million monthly active transacting users. We can then compare this with the results of Method #1 to see if they are at least in the same range.

We can further refine our estimates by analyzing data from other wallets and infrastructure providers who are willing to share their proprietary metrics with us, and then cross-verifying these numbers with the aforementioned figures.

Other Considerations

It is important to consider that some individuals use and transact through multiple addresses and wallets. This is unlikely to significantly inflate the user count (as there is a limit to the number of wallets a person can reasonably use, unlike bots and sybils), but further deduplication based on some reasonable assumptions may be worthwhile.

On the other hand, there are cases where a single address can be associated with multiple real users. Exchanges' public accounts are an example. By the way, as account abstraction protocols and smart contract wallets become more popular, all of this will become even more complex. We have not taken these factors into account in our analysis.

Result Estimate: 30 to 60 million real monthly transacting users

Based on our analysis using the various methods mentioned above, we estimate that there are currently between 30 and 60 million real monthly active crypto users. Clearly, this is a wide range, but it is the best estimate based on the available data.

Please note that this represents only 14% to 27% of the 220 million monthly active addresses we measured in September. It also represents only 5% to 10% of the 617 million global cryptocurrency holders reported by Crypto.com in June. (Global cryptocurrency holders are individuals who own cryptocurrency but do not necessarily transact on-chain.) This discrepancy suggests a huge opportunity to convert the existing primarily passive cryptocurrency holders into active users. As major infrastructure improvements make it possible for entirely new and engaging applications and user experiences, dormant crypto holders may become active on-chain users once again.