ECB paper on Bitcoin and virtual currencies

[flix]

That number is flawed. Very flawed. Let me run up some real numbers for you.

Unique (by IP) Bitcoin nodes in late 2011 (3 month period) = 800 000
Bitcoin Reference Client downloads in 2012 = Over 600 000
Mt. Gox userbase = Over 200 000
Bitcointalk.org userbase = 70 000
Blockchain.info My Wallet userbase = Over 30 000
Reddit Bitcoin subscribers = Over 11 000

Heck, our Finnish Bitcoin portal (Bittiraha.fi) has had over 1000 people buying and selling coins through our site within the last 6 months. And our site is only for the Finns (a country of 5,5 million people).

The conclusion is that the larger Bitcoin userbase has to be a 6 figure number. I can provide the sources for all that data btw if you guys are interested.

I am very interested. I would really like to see a good estimate of how many Bitcoin users there are worldwide.

IMHO 10 million users is the key threshold to pass before going totally mass market.

My own rule-of-thumb guesstimate is to multiply the forum members (68k) x10 = 680k active users.

[1714996709]

1714996709

[1714996709]

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[sunnankar]

I am very interested. I would really like to see a good estimate of how many Bitcoin users there are worldwide.

The Bitcoin Magazine #2 had a very in-depth article about that. Around 700,000 estimated.

[molecular]

That number is flawed. Very flawed. Let me run up some real numbers for you.

your numbers are inflated:

Unique (by IP) Bitcoin nodes in late 2011 (3 month period) = 800 000

I am probably responsible for about 512 of these. (dynamic IP address)

Bitcoin Reference Client downloads in 2012 = Over 600 000

I never downloaded, but "git pulled" probably 20 times.

Mt. Gox userbase = Over 200 000

I have 2 accounts, probably many deceased.

Bitcointalk.org userbase = 70 000

also: many puppets, forgotten pws, people that left without ever getting coins,...

Blockchain.info My Wallet userbase = Over 30 000

I made about 5 of these

Reddit Bitcoin subscribers = Over 11 000

that one, I don't know. It might not be so heavily inflated.

Still, 10,000 is way too low. Probably 30-50,000

[Realpra]

So, if Bitcoin appears to be working better than the rest of the financial system, it might "accidentally" go viral? What kind of incident?

Bitcoin is there waiting for an opportunity, their ENTIRE fancy plan for 2010-2020 (and beyond perhaps) is adding a more centralized and corporatized EU to their control through the ECB and their printing press first.

They can't control the EU through the euro if people start running to bitcoin.

A "flash crash" is what they fear where overnight fiat currency is obliterated. ONE wrong story goes viral, one case of hyperinflation where Bitcoin is accepted (ANY country) and their power is GONE.


I LUVE this thread!

[fivemileshigh]

Don't see it particurarly costly for a central bank: 30% of every mined bitcoin at today is near 25 Milion euro, 0.005% of the 526 billion of total reserve of the ECB. Even if the bitcoin value jumps of a 100X for that is still only the 0.5%

I can't wait for the ECB to try to buy 3,000,000 btc  

Of course, some teenager in Ukraine is going to hack their wallet the next day and steal all that loot back  

[Technomage]

Good points molecular. Remember that with the node count the numbers go both ways. One node can actually represent thousands of users in some cases. My best guess for the userbase is something like 100 000, anyways. 10 000 is way too low, we can all agree on that.

Here are the sources for my earlier data, for those who are interested.

Unique (by IP) Bitcoin nodes in late 2011 (3 month period) = 800 000
http://blogs.umb.edu/williamfleurant001/2012/01/13/bitcoin/

Bitcoin Reference Client downloads in 2012 = Over 600 000
http://sourceforge.net/projects/bitcoin/files/stats/timeline?dates=2012-01-01+to+2012-10-30

Mt. Gox userbase = Over 200 000 (by now)
https://mtgox.com/press_release_20120831.html

Bitcointalk.org userbase = 70 000
https://bitcointalk.org/index.php?action=stats

Blockchain.info My Wallet userbase = Over 30 000
http://blockchain.info/about

Reddit Bitcoin subscribers = Over 11 000
http://www.reddit.com/r/Bitcoin/

If you can find any other good ways of trying to estimate the userbase, please inform me.

[molecular]

It can be concluded that, in the current situation, virtual currency schemes:
−− do not pose a risk to price stability, provided that money creation continues to stay at a low
level;

Am I understanding this correctly as: "If these guys would print more serious amounts of money, that would inflate the EUR money supply, because these linden dollars / bitcoins are being used a tokens for Euros, yet used directly as if they where "real money" (similarly to when back in the days receipts of gold deposits where used as money)?

I mean, if merchants accept both bitcoin and EUR for payment, then bitcoin actually _does_ inflate the FIAT money supply, right? For example: let's say there €100 money supply. Now one bitcoin is mined and people value it at €10 for whatever reason and all merchants accept it as payment just like a €10 bill. Didn't we then just effectively inflate the money supply to €110?

Could this be the "reputational danger" they're talking about? People see price inflation as a result of money supply inflation (this will be the case anyhow, I think) and will then blame it on the central bank, even if they didn't do all the inflating themselves? After all, part of their job is to "regulate the money supply". This would also explain why they consider virtual currencies to fall into their domain. Will they then even try to blame the price inflation on the "issuance" and use of virtual currencies?

[molecular]

If you can find any other good ways of trying to estimate the userbase, please inform me.

I will inform everyone here in BIG LETTERS .

One the one hand it's pretty sad for comunity to not even be able to determine its own size. One the other hand, of course, this is a feature, not a bug.

[Realpra]

I think about 1 million people are using Bitcoin based on the valuation that would be 200$ on average which seems plausible.

Some have a lot, others just change from free outlets, but most perhaps 200$ as experimentation or for buying a few drugs.

Myself I have ~10 times that. Even 100k users would mean an average of that (2.000$) which I find hard to believe as many still see this as experimentation and I am from a richer country than most.
An average of 20.000$ as would be implied by 10k users would be crazy. Most of us are normal guys with costs, wives and stuff - we might be able to access that kind of money, but not for an experiment our wives/family don't get/hate

Likewise an average of 20$ is too low as it is troublesome to get so few BTC through a wire transfer without huge percentage costs.

1 mil also kinda fits with the various numbers of users here and there put together and corrected for a couple of double accounts etc..

Also BTC value comes from its usage - 100k or 10k hoarders would not be worth 200 million dollars or generate so much activity I'm guessing.

[Technomage]

Realpra,

Bitcoin holders and active Bitcoin users are a totally different statistic. We were talking about the relatively active userbase which probably is somewhere between 50 000 and 150 000.

I agree with you that the amount of people who own bitcoins is much larger. Most definitely over 1 million. I know so many people around me who own at least some coins. Some of the people I know have even invested significant amounts. But they have literally never used Bitcoin, some of them perhaps once or twice.

So there are different types of users, some Bitcoin holders have simply tried it out and hold some bitcoins and some have invested in bitcoins and hold a lot of bitcoins. Neither of these user groups actually use Bitcoin for transacting with it. So these are different demographics entirely.

I think it's smart to separate Bitcoin holders and Bitcoin users since there are probably ten times more holders compared to those that use Bitcoin occasionally or regularly.

[marcus_of_augustus]

Technomage

This paper has really got the community talking and thinking.

Are you following the debate over here:

https://bitcointalk.org/index.php?topic=121186.msg1307004#msg1307004

I think this a great opportunity for us as a community to more clearly define our term for the general public, refine our position and make clear how we see bitcoin fitting into the fiat financial system.

I think the more clarity we bring to the discussion as a community NOW the less regulation we'll have imposed upon us when regulators catch up to figuring out what this bitcoin thing is all about.

My approach would be ... tell them nothing, let them do the leg work to figure it out.

Central Banks are past masters at keeping their servants (the public) in the dark and bull-shitting them for decades ..... what goes around, comes around.

Kind of surprised the ECB hasn't got it's too hands full with the massive cock-up they have wrought on the 400 million minions of Europe with the Euro centralised currency rort ... to be writing fluff pieces about virtual currencies threatening their system ... they seem a little panicked, like they are losing legitimacy.

[molecular]

I have to speak more of my mind on this paper. The reception has been too positive (I do agree it's well researched):

They got it all backwards with the naming concept. I think the connotations of the terms they use are quite misleading.

They contrast "virtual" vs. "real" (bitcoin: virtual (not really real), EUR: real, money of the "real economy").

In my mind, bitcoin is way more real than FIAT money. I wouldn't use "virtual" at all, because it implies "not really existing, just hot air". As for the terms they use for the Euro, they're very unfitting: it's neither "real" nor is it "money".

I'd suggest to use the following terms:

bitcoin and precious metals are "real money" or "commodity money" (bitcoin being a "digital commodity money", while FIAT currencies are, well, "virtual currencies" or just "currencies": mere units of account, unfit for storing wealth in the long run.

Since I know the above is controversial, here's a categorization of types of money taken from "The Creature from Jekyll Island" which I like:

• commodity money
• receipt money
• fractional money
• fiat money

The characterizations of these are much more relevant to the functioning of a money and the implications of its use in society than wether or not a money scheme has in-/outflow to/from a certain FIAT currency.

Again: I don't think calling it a "virtual currency scheme" does bitcoin justice. It's a money for heavens sake!

[BCB]

molecular

I've been arguing that bitcoin is a virtual currency and that fiat is not a virtual currency but I like you point.  If fiat is actually the virtual what is bitcoin it can't also be a virtual currency as it implies they are both the same thing which they are not.


Digital - yes.   a commodity - yes.   money  - in what sense?  is stores value?  it has value, it certainly has a perceived value.

a digital comedity money ?   too much  too academic.  

Needs to be more clear.   But you are on to something!

[Grinder]

In my mind, bitcoin is way more real than FIAT money. I wouldn't use "virtual" at all, because it implies "not really existing, just hot air". As for the terms they use for the Euro, they're very unfitting: it's neither "real" nor is it "money".

There is no way you're going to be able to convice average Joe about this, though, and it's not really important at all. Nitpicking on issues like this will make Bitcoin supporters look unnecessarily nerdy, and lower the chances of convincing the public that Bitcoin is a good idea.

Instead we should just use terms like this in the way other people are most likely to understand, and focus on what Bitcoin can do better than other currencies. The paper actually mentions some things, and it would be much more beneficial to discuss how to use this to promote Bitcoin.

[BCB]

Grinder

Can you be specific?

[yoyoceramic]

[evoorhees]

Here's how money should be categorized:

Physical Money
-Gold/Silver/PMs

Digital Money
-Fiat currencies
-Gaming currencies (WoW gold, Linden$, etc)
-Crypto-currencies (Bitcoin)

If you don't think fiat currencies belong in Digital Money category, see this

One might ask where "cash" falls in this organization. Cash is a physical bearer bond for digital fiat currency stored at your bank. It is no different than Casascius Coins which are bearer bonds for digital BTC.

[Realpra]

Bitcoin holders and active Bitcoin users are a totally different statistic. We were talking about the relatively active userbase which probably is somewhere between 50 000 and 150 000.

Oh if we are talking regular users I think the 10K would be spot on. I would like to buy my groceries with BTC, but its not happening yet.

50-150k would likely include users who have used it now and then, but not weekly by any means. The estimation becomes very difficult if you include degree of "user".

Even savings/hoarding is a kind of use and the other reason I include them is because they make up sleeper-bitcoiners: In the event of high inflation or other crisis they would be likely to switch to BTC since they know about it and have a client etc..


Also; it may actually be bad the ECB is noticing us so soon. We could be set back a year or two if they crack down hard right now. Dunno.

[molecular]

Here's how money should be categorized:

Physical Money
-Gold/Silver/PMs

Digital Money
-Fiat currencies
-Gaming currencies (WoW gold, Linden$, etc)
-Crypto-currencies (Bitcoin)

If you don't think fiat currencies belong in Digital Money category, see this

One might ask where "cash" falls in this organization. Cash is a physical bearer bond for digital fiat currency stored at your bank. It is no different than Casascius Coins which are bearer bonds for digital BTC.

well, except the legal tender status fiat-cash has.

I think we'd need to use at least 3 dimensions to have a meaningful system of categorization for money/currency.

[grishnakh]

Well, I never liked the term they called Bitcoin a 'virtual currency scheme'. Somehow I thought it had a bit of a negative connotation.