Bitcoin’s Wealth Inequality Improved in 2019, Ethereum Worse

  • Bitcoin's wealth inequality improved in 2019, while Ethereum got worse.
  • The top ten wealthiest wallets hold 10.36 percent of all Litecoin.

Bitcoin’s wealth inequality declined over the course of the year while major altcoins such as Ethereum and Litecoin remain relatively uneven. 

According to research by Clovr, which examined the holdings of whale investors in various cryptoassets, bitcoin’s distribution became more even across wallets in 2019. The report compared the wealth distribution among 140,000 non-exchange addresses from four major cryptocurrencies and the top 100 Ethereum tokens. 

Clovr found that “surprisingly few” accounts are needed in most cryptocurrency to form majority ownership for the coin. The report notes in its methodology that addresses known to be owned by crypto exchanges were removed, as these aggregate the funds of thousands of individuals, which aren't wned by the exhcnage itself.

The report states, 

Some whales are so rich that small groups can collaborate to own a majority of a currency, which, when done maliciously, is known as a “51% attack.” Theoretically, organizations like the Chinese government could mount a 51% attack on bitcoin, although it’s highly unlikely. But smaller currencies are more vulnerable to majority owners controlling the blockchain, as Bitcoin Gold most notably discovered in 2018.

Litecoin had the greatest wealth disparity, with only 189 accounts needed to form a majority ownership and 2.58% of total LTC held in the richest account. In addition, the ten wealthiest accounts hold 10.36% of total LTC. 

Ethereum ranked second, with 1.96% of ETH in the richest account and 7.27% of total ETH locked in the top 10 richest wallets. Likewise, the richest Bitcoin Cash wallet holds 2.79% of all BCH, with the top ten accounts controlling 9.38%. 

In comparison, Bitcoin requires 4,545 minimum accounts in order to form majority ownership in the cryptocurrency. The richest bitcoin wallet also controls 0.62% of total BTC, with the top ten wallets accounting for 3.84%. As reported, some dormant bitcoin whales have so many funds analysts believe they could crash the market if they were to try and sell all their holdings right away.

Using the “Gini Index,” a tool for measuring wealth distribution, Clovr found that Ethereums’s inequality rose 13% in 2019 (0.69 vs 0.78), while bitcoin’s fell from 0.66 to 0.64. While not a direct comparison, the United States’ income inequality for 2018 was measured at 0.49. 

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