The distribution of bitcoin and cryptocurrency wealth is more concentrated than global wealth – and always has been – according to new research.
Blockchain monitoring platform PARSIQ says that bitcoin is almost 50 times more concentrated in the hands of the few than global wealth. Ether’s distribution, meanwhile, is 300 times more concentrated.
This means, according ot research shared with CryptoGlobe, that to enter the top 50% of bitcoin wealth, a person would need to own 347 bitcoins – worth at current prices $3.6 million. This 50% of bitcoin wealth is controlled by 0.023% of wallet addresses. By comparison, 50.1% of global wealth is controlled by 1% of the world’s population.
PARSIQ research shows that 1,805 wallet addresses control half of all bitcoins in circulation. Expanded to the top five cryptocurrencies by market capitalization, just 6,457 individual wallets addresses control all assets.
The largest such holders of cryptocurrency – particuarly bitcoin – are know colloquially as “whales”, and with such concentrated holdings of assets by relatively few investors raises the danger of price volatility should any whale decide to sell a large slice of their holdings.
Such large transactions are often completed undercover – perhaps by special arrangement with crypto exchanges – so that prices remain relatively stable. It is the goal of any trader, however, to buy low and sell high, and it remains totally within the whale’s power to manipulate the market in its favour. Such strategies are the staple diets of hedge funds.
It is thought the major holders of this concentration of bitcoin and crypto wealth are founders, early adopters and institutions such as hedge funds and investment houses.
Indeed, PARSIQ’s co-founder Andre Kalinowski said:
Cryptocurrencies were created with the desire to create a more egalitarian society away from government manipulation and centralized control. However, the latest research has found that cryptocurrency wealth is controlled by a small number of early adopter and exchange-owned whale wallets.
Among the top five cryptocurrencies by market cap, XRP is the most concentrated, with just 14 wallets controlling 50% of the market. Ether comes next with 50% of all digital tokens held by 346 wallets.
The research found that much hadn’t changed in years. Kalinowski added that although mass media interest during the crypto-market’s peak between December 2017-February 2018 brought significant interest from retail investors, very little has changed under the surface. The whales still hold cryptocurrencies long-term and still have the ability to move the markets. He concluded:
The fact is, the transparency that’s part of the DNA of cryptocurrencies has been clouded by the size and complexity involved in analysing these cryptocurrencies. It’s time to open up the blockchain to everyone, to encourage fairer wealth distribution, or at least ensure the whales are more accountable through better monitoring.