Report warns of concentration of Bitcoins in the hands of whales2 min read
A report from the Wall Street Journal shed light on a possible concentration of wealth in the BTC network (BTC). According to the document, about 1% of the top BTC holders control more wealth than most wealthy families in the United States.
However, the main statistic concerns the control of the total BTC offer. According to the report, only 0.01% of large investors control 27% of the currency in circulation. In fact, a study of the National Bureau of Economic Research revealed that the top 10,000 BTC addresses hold 5 million coins.
It did not specify whether these addresses belonged to exchanges, escrow companies or personal investors, however.
By comparison, if these investors were a single person, they would be the richest in the world, ahead of Jeff Bezos and Elon Musk. Both are the first and second richest men in the world, respectively.
The study was conducted by finance professors Antoinette Schoar from MIT Sloan School of Management and Igor Makarov from London School of Economics. According to the WSJ, the survey mapped and analyzed all transactions in BTC’s history.
BTC Whales Increase Wealth
The survey also illustrated global data on BTC adoption. According to the data in the report, about 114 million people have BTC worldwide.
Although it did not specify who owned most of the wallets, some were identified. For example, BitInfoCharts list, Binance offline wallets are the two main addresses. Both have a combined value of 433,490 BTC.
The numbers reflect the current status of the traditional US wealth disparity. According to data from the Federal Reserve, 1% of the families that occupy the top hold about 33% of all the wealth in the country.
Finally, the article also exposes what it considers to be risks of this concentration. First, the entire network is more susceptible to systemic risk. In other words, the document warns that the network runs the risk of being under the control of these large investors.
Second, the wealth of this new network of financial freedom is being concentrated in a very small number of entities.
“Although it has been around for 14 years and there is great interest in BTC, it is still the case that it is a very concentrated ecosystem,” said Schoar.
The WSJ went on to say that BTC mining is also centralized as it is controlled by a small number of companies and pools. Consequently, costs increased, making individual mining unfeasible.
However, mining is no longer concentrated in macro terms, with the expulsion of miners from China. As a result, countries like the US and Kazakhstan have increased their stakes and reduced the risk of activity with the ban.
Regulatory overview: Prohibition or Legalization: What to Do with Crypto?