Less Than 1% of Bitcoin Addresses Control Nearly 87% of BTC's Supply

We bitcoin enthusiasts and crypto lovers are a rare breed. There are only a few of us out of the entire planetary population of over 7 billion that are interested or have invested in bitcoin or any of the altcoins. Cryptocurrency is still a relatively new concept to the mass of people, either because their country bans it – like China and India, half the planet already – or they are unaware of its revolutionary qualities and have just never bothered to investigate, or they are not economically able, educated or interested. That leaves just a few million of us – not a big group at all. 

The difficult bitcoin onramp

In fact the onramp is not that easy. I live in South Africa and the vast majority of Africans here have limited resources, limited wifi connectivity, and limited bank facilities and cash to invest. As a result they really want to make a profit and when hearing of this amazing product that can grow your money, they want in. But the KYC (know your customer) details may be a bridge too far for them to overcome. As a result they hear about it via being swamped by advertising, but have little idea how to buy any bitcoin to begin with because it involves EFT (electronic funds transfer) or online banking and few have that luxury.  

A rare subculture

That leaves just a few of us to reap the benefits of investing long term or day trading bitcoin and there are potentially huge rewards on offer. And that’s ok, just give it time and there will be a Dapp to assist the unbanked and the no-coiners. In the mean time how many of us bitcoiners are there actually in the world? Well, according to data from btc.com there are 22.65 million bitcoin addresses in existence. Now considering that many of us may have more than one wallet address, and that some of them are defunct or useless, we can speculate that there are less than 20 million bitcoin holders in the world. That is just a rough guess, though probably a valid ballpark figure if the ballpark is Olympic sized.  

Coin capture by the elites

Well that sounds promising, since there are only ever going to be 21 million bitcoin in existence, according to the original protocol coded in by Satoshi Nakamoto. However, the reality is less inspiring because it turns out that of the 20 or so million of us who own bitcoin, 0,7% own a whopping 87% of it. It’s no use putting a dollar figure or value onto just how much that is because, as you know, the price fluctuates like a tidal swell all day long, and is never the same from one day to the next, or especially one month to the next. We can only really look at these stats in relation to the total bitcoin supply in general and figure out the ratio and proportions of bitcoin ownership. And that will still be a vague estimate.  

What if our decentralised becomes centralised?

Nevertheless, when China’s state-run National Business Daily financial publication analysed the stats and revealed the alarming truth, it was a bit of a letdown. The main reason is because bitcoin and blockchain technology was lauded as the revolution that has finally taken the power away from the elite and put it into the hands of the many via the decentralised system, which removed a single central power figure to lord it over all the rest. But now it appears that this is simply not happening and even in bitcoin, elites and super rich are controlling the market and bringing a degree of centralised wealth back into the equation. 

When the whales have more power

The figures show that at present 97% of the 20 odd million bitcoin wallet addresses have less than 1 bitcoin. Only 0,7% have more than 10 bitcoin in their possession. So 97% of us have less than 5% of the current circulating supply in the world. It appears as if the very wealthy have already captured the bitcoin market and have taken control of it. This is not what bitcoin was invented for, in my opinion. Of course, we can’t deny reality. Obviously the wealthy are going to buy more and profit more on the price rise. It’s an uneven playing field. If you are already wealthy, it favours you proportionately. Such is the nature of the economics of it. Unfortunately though, it does create whales who can manipulate the price and cause waves for all the rest of us plankton. 

Where is this heading?

Obviously the biggest wallet addresses will belong to exchanges like Binance and Bitfinex, and that’s fine. They hold a lot of our coin as we trade it, as do all the other numerous exchanges out there. But if a whale can come along with 2000 bitcoin and place it on the exchange as a sell order, it would immediately push the price down by 10% for all the rest of us. This figure is of course dependent on the current price of bitcoin, which at today’s deflated level, makes it even easier, especially considering the low volume currently on the exchanges in this extended bear market near the bottom of the cycle. Last year when a whale moved over $100 million worth of bitcoin, the price was seen to drop over $400 in less than two hours. That’s what a large sell order can do. Now I’m ever the optimist because I believe that we are what we think, like attracts like, etc, but here I have been sobered a bit by the stats on who owns all the bitcoin supply, and I’m left wondering where this will lead to. Any ideas? What does it mean if only 37% of all bitcoin addresses are “economically relevant”? Or only 14% belong to private investors, according to Chainalysis? What does this say for the future of crypto? Let us know in the comments below.  

ref: https://www.cryptoglobe.com/latest/2019/01/less-than-1-of-bitcoin-addresses-control-nearly-87-of-btc-s-supply-analysis-finds/