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Bitcoin The Almighty Buck

Bitcoin's 'One Percent' Controls 27% of All Circulating Coins, Study Finds (cointelegraph.com) 73

Posted by BeauHD from the not-so-decentralized-after-all dept.
An anonymous reader quotes a report from Cointelegraph: Less than 1% of the biggest Bitcoin (BTC) hodlers allegedly control more than a quarter of all BTC in circulation, according to a new study. The National Bureau of Economic Research, an American private nonprofit research organization, released a study claiming that 10,000 Bitcoin investors, or 0.01% of all BTC holders, own 5 million BTC, or 27% of all 18.9 million coins in circulation. The amount of BTC held by the "one percent" is equivalent to approximately $232 billion, the Wall Street Journal reported on Monday.

The study, which was conducted by finance professors Antoinette Schoar at the MIT Sloan School of Management and Igor Makarov at the London School of Economics, aims to demonstrate that Bitcoin is not as decentralized as one might think. "Despite having been around for 14 years and the hype it has ratcheted up, it's still the case that it's a very concentrated ecosystem," Schoar said. According to the WSJ report, the top hodlers control a bigger share of BTC than the richest American households control in dollars. Citing data from the United States Federal Reserve, the report notes that the top 1% of U.S. households hold about a third of all wealth. The new report may sound alarming for the crypto community, as major Bitcoin advocates have been promoting decentralization as one of the Bitcoin network's biggest principles.

According to Quantum Economics founder Mati Greenspan, much of the circulating BTC supply is controlled by Satoshi Nakamoto, the pseudonymous creator of Bitcoin. "Satoshi's coins alone make up for more than 5%," Greenspan told Cointelegraph, adding: "Over time, the ownership of Bitcoin is designed to get more distributed. For fiat, the opposite tends to happen." It's worth noting that much of BTC's circulating supply is also apparently not controlled by anyone and is likely to be lost forever. According to crypto-insurance firm Coincover, around 4 million BTC is out of circulation due to lost access.
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Bitcoin's 'One Percent' Controls 27% of All Circulating Coins, Study Finds More

Bitcoin's 'One Percent' Controls 27% of All Circulating Coins, Study Finds

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  • Wouldn't that be ... (Score:3)

    by WoodstockJeff ( 568111 ) on Monday December 20, 2021 @03:53PM (#62100533) Homepage

    ... the massive amount of Bitcoin NOT in circulation?

    • If you are using it as a store of value VS a transactional currency, then I don't think it matters. It's also better if private keys are permanently lost since it reduces the overall float of the bitcoins too. In the past gold was used, and some gold was lost in shipwrecks, buried and forgot, etc.. So it's the same idea, but digital. The one interesting thing about bitcoin VS gold is that you can easily take possession of the bitcoin and store it yourself. This has the unintended benifit of making a bi

      • Re: Wouldn't that be ... (Score:4, Funny)

        by Dictator For Life ( 8829 ) on Monday December 20, 2021 @04:20PM (#62100653) Homepage

        You can't do that with gold..

        *Looks at the gold coins sitting on his desk* Actually, you can.

        • I'm talking about institutional investors and retail investors taking possession of the physical metals on the bullion exchanges. Not individual retail gold coins / bars. As far as I know, it's pretty hard to take a 4000 Oz good delivery gold bar out of the system. Then if you want to put it back into the system it needs to go to a certified refiner, remelt the bar into good delivery. As a result almost all the future and derivative contracts are settled in cash and not taking possession.

          • Re: (Score:2)

            by tekram ( 8023518 )
            Very few retail gold holders will take delivery on $7 million worth of gold coins, bars and bullions.
            • My point is that the whole bullion exchange is setup to encourage cash settlement. At least with bitcoin, people can take possession very easily. So if you are paranoid about price manipulation in the precious metals paper markets - - bitcoin is at least a little more immune to those types of tricks. If BTC crashed 50% tonight, I'd buy with both hands and put it in my offline wallet. Gold and silver not so much. (physical premiums would go through the roof if I went to the local Greasy coin dealer)

      • Re: (Score:2)

        by GlennC ( 96879 )

        The thing is that if some gold were lost at sea or buried and forgotten then someone else could find or retrieve the gold and have it.

        What happens when someone loses a Bitcoin? Can it ever be retrieved?

        • Re: (Score:3, Informative)

          by Powercntrl ( 458442 )

          What happens when someone loses a Bitcoin? Can it ever be retrieved?

          The coins themselves are still on the blockchain. What becomes lost is the wallet’s associated private key, which is required to “spend” (which in the context of cryptocurrency means instructing the Bitcoin network to transfer coins from that wallet into a different one) the Bitcoin.

          If you could figure out a wallet’s associated private key, congratulations, you’ve just fundamentally broken public key encryption for all of computing.

          • Re: (Score:1)

            by rgmoore ( 133276 )

            The coins themselves are still on the blockchain. What becomes lost is the walletâ(TM)s associated private key, which is required to âoespendâ (which in the context of cryptocurrency means instructing the Bitcoin network to transfer coins from that wallet into a different one) the Bitcoin.

            This is a distinction without a difference. It doesn't matter if the coins exist if it's impossible to spend them. It's like saying that gold in a shipwreck isn't gone because the physical gold still exist

            • A difference from the gold in shipwrecks is that you can at least have some confidence in your understanding of the difficulty of recovering that gold. If the gold is sunk in some trench where it's uneconomical to retrieve, it'll stay there (ignoring the possibility of long term factors changing the economics, like improvements in salvage technology or increasing gold prices).

              With Bitcoin there's no such guarantee that the coins stay "under the sea". Satoshi's coins are an extreme example. There's no wa

          • So, no, it cannot.

        • Depends on your ability to sift through a landfill to find a thumb drive. That seems a bit harder than diving for shipwrecks.

  • The king is dead! (Score:3)

    by klipclop ( 6724090 ) on Monday December 20, 2021 @03:54PM (#62100535)
    All hail the new king! So basically crypto advocates are really just looking to replace the old banking cabal with the (new?) defi crypto cabal. The only thing that I know about crypto is that I didn't get rich from it...
    • I admit I was disappointed when I learned that early miners could find bitcoins much more readily than later adopters. So yeah, a bit like a scam in my opinion.

      • I admit I was disappointed when I learned that early miners could find bitcoins much more readily than later adopters. So yeah, a bit like a scam in my opinion.

        I imagine those "early miners" are the ones who keep pushing all the bitcoin / altcoin stories we see here on Slashdot day after day, week after week. They're really hoping they can turn all that wasted electricity from past years into large amounts of real money someday.

      • well I mean... what investment doesn't have that problem. Was also a lot easier to get noteworthy share of amazon, google, facebook etc... when they first went publicly traded than now that they are the top of their markets.
    • If you think the old cabals can't just step in anytime they want and take control of cryptocurrencies you haven't been paying attention. The complete lack of regulation makes a child's play for a large player like Goldman Sachs to manipulate the market and seize control of it.

      That's the real dirty secret of cryptocurrencies. They don't actually create any New freedom. As the saying goes new boss same as the old boss, only in this case it's the exact same boss.

      • Re: (Score:2)

        by N1AK ( 864906 )
        I'm not a Crypto advocate but what you're saying is only so true; and although I agree with a lot of it it's hardly surprising that people who have no real investment in or feeling they benefit from the traditional financial system that they look favourably on an alternative (even if the alternative shares many of the flaws and has some new ones of its own). Regulation on traditional investments didn't stop banks betting against its customers or regulators/legislators holding investments that benefit from

  • If you need money to buy Bitcoin (which has been the case for several years now), then the people who have the most money in the real world are going to have the most money in the Bitcoin world.

    • If you need money to buy Bitcoin (which has been the case for several years now), then the people who have the most money in the real world are going to have the most money in the Bitcoin world.

      Actually, I suspect that the 1% is mostly the people who got in at the beginning when they were cheap. Also, if it is true that 4 million are out of circulation and lost the real amount available is 14.9 which means that 5 million is actually about 35%. Of course, Bitcoins have no real value, since you cannot force someone to take them, in payment of a debt unlike US dollars for example. This is just another tulip mania, and the people who get rich are the ones who will get out before the crash.

      • This is just another tulip mania, and the people who get rich are the ones who will get out before the crash.

        People keep saying that but I don't see any reason in particular that Bitcoin will crash. It has too many practical uses. (NFTs on the other hand...)

        • Re: (Score:2)

          by N1AK ( 864906 )
          Bitcoin has virtually no pratical use; and I say that as someone who holds some BTC. I can trade it for other Crypto, I can lend it or perform some other form of financial transaction relating to Crypto with it, or I can transact in it directly and that can be cost effective for large values but effectively everything will be priced based on a fiat conversion rate so I'm effectively just trading BTC for USD/GBP/EUR etc and spending fiat.

          If you're holding BTC it's basically because you think it will be wo

  • According to the summary, between the large holders and lost access around 50% of bitcoin is locked up.

  • ... levels of wealth distribution are somehow surprising?

  • The amount of BTC held by the "one percent" is equivalent to approximately $232 billion,

    If would be worth that much if they sold them very slowly and very discreetly, so as to not collapse the value of the Bitcoin. So slowly that the only thing they can do to keep the pretend "value" of their pretend currency up is to not use it.

    • Indeed. Someone sold 500 coins the other week and the price tanked before several billion Tether printed out of thin air pumped it back again.

      Crypto markets are desperately illiquid and even the miners are choosing to hodl right now rather than risk selling and killing their golden goose.

      • This has happened at least three times over the past month: every time BTC is about to dip in price, Tether just mints $500m - $1bn out of thin air and pumps the price back up again.

        How can anyone still put money in such an obviously rigged game, is beyond me.

  • Less than 1% of the biggest Bitcoin (BTC) hodlers allegedly control more than a quarter of all BTC in circulation

    1% : 27% is surprisingly flat compared to the wealth distribution of, say, USD$.

    0.01% of all BTC holders, own 5 million BTC, or 27% of all 18.9 million coins in circulation.

    Oh

    • Re: (Score:2)

      by ceoyoyo ( 59147 )

      The distribution of US dollars may be more flat than you might expect too. The usual stat is given for *wealth* but the vast majority of that wealth is in non-currency assets.

  • I admit I follow crypto a bit, but not enough to know; what can you buy with Bitcoin? That is legitimate I mean, not dark web transfers.

    Because if Bitcoin really can be used as a medium of exchange (which frankly until i can pay a mortgage, taxes, gas or food with it, it isn't IMO), then it's just propped up by faith that it will eventually pay for those things. Which means, those guys holding that $232B in Bitcoin don't really have it, because they can't sell it without crashing the BC/dollar exchang

  • The big, swinging dciks of the crypto-currency realm.
  • It's one hundred times worse than the title says. It's the 0.01% of BTC holders that control 27% of all BTC in circulation.

  • More than 10% of human live on the planet earth.

    Less than 50% of cars spontaneously explode.

    More than 82.6% of single family households are NOT currently falling out of an airplane.

    And less than 1% of people on the planet are me!

  • 0.01% of Bitcoin holders control 27% of all circulating coins as pointed out by a few comments: Study Bitcoinâ(TM)s âoeone percentâ reportedly controls a greater share of BTC than the richest U.S. households control in dollars. The article is from Wall St Journal.

  • Decentralized money is just win after win!

  • Is it 1% or 0.01% that hold 27%? (Score:3)

    by Vegan Cyclist ( 1650427 ) on Monday December 20, 2021 @07:26PM (#62101201) Homepage

    Subject says 1%.

    Body says 0.01%. Which is quite a bit less than 1%.

  • "Over time, the ownership of Bitcoin is designed to get more distributed."

    How is bitcoin different from little green slips of paper (or more accurately these days, other digital ones and zeros on computers) in regards to concentrating or diluting wealth?

  • Whales (Score:2)

    by Xenna ( 37238 )

    A problem with these 'whales' accounts is that they're often trading accounts belonging to exchanges. Many people don't hold their own keys, but leave their coins on an exchange where they may all be locked in a big wallet.

    On the other side, many BTC holders have multiple wallets.

    Chain analysis is not that simple...

  • Bitcoin is supposed to be decentralised in the sense that the processing is done in distributed locations. That's not true either, because most of it is done in mining farms in China, but it's still not the same thing.

    In any case, it's obvious that anything that has to do with money will have its value concentrated with a few people. The main problem with crypto is that if you think that those with most money aren't the greatest of people (which is often true), this is doubly true for crypto.

  • Maybe it's in the study, but if a bitcoin address has been holding many coins for close to a decade and had no transactions since, wouldn't it be safe to see that account is probably lost or burned?
    There's no way someone with thousands of bitcoins would have at least cashed some at a particular price point (100$, 500$ 1000$, 3000$, 5000$, 20000$, 50000$) just to diversify the investment portfolio.

  • Huh. So Bitcoin really is a real currency just like fiat then.

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