Bitcoin is largely controlled by a small group of investors and miners, study finds

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Shawn Knight

Posts: 13,601   +139
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Why it matters: Bitcoin and other popular cryptocurrencies are more easily obtainable than ever, but that hasn’t changed the fact that a small percentage of users still control the majority of the market. According to a new study from the National Bureau of Economic Research (NBER) via Bloomberg, the top 10,000 individual Bitcoin investors control roughly one third of the cryptocurrency in circulation.

It can be difficult to differentiate individual owners from larger groups and exchanges that hold currency for many users, but the NBER was able to skirt this challenge by using a specific data collection method capable of making the distinction. What they discovered is that at the end of last year, the top 10,000 individual owners controlled about 8.5 million Bitcoins while the top groups oversaw closer to 5.5 million Bitcoins.

Digging deeper, the NBER found that the top 1,000 individual investors accounted for about three million of the 8.5 million Bitcoins controlled by the top 10,000 investors.

What’s more, the researchers note that their measurement of concentration is most likely an understatement since they can’t rule out that some of the largest addresses are controlled by the same entity. This is especially true of early Bitcoins, many of which are suspected to be held by the cryptocurrency’s mysterious creator, Satoshi Nakamoto.

Things are even more pronounced when looking at the concentration of miners.

NBER found that the top 10 percent of mining operations control around 90 percent of the Bitcoin mining capacity. What’s more, just 0.1 percent of miners (about 50 operations) are responsible for half of all mining output.

These observations led the NBER to conclude that despite the attention Bitcoin has received over the past few years, the ecosystem is still dominated by a concentration of key players, making the ecosystem susceptible to systemic risk like a 51 percent attack, where a group of miners could take control of the majority of the network.

Bitcoin is currently trading just south of $62,000 after reaching a record high of nearly $67,000 last week. Other coins have also been riding high as of late. Shiba Inu, a meme coin inspired by Dogecoin, is up more than 64 percent since late last week.

Image credit: Rodnae Productions

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Irata

Posts: 1,805   +3,033
According to Wikipedia, “As of Q3 2019, the top 10% of households held 70% of the country's wealth”.

Even the US Dollar is the same way, what else is new?


https://en.wikipedia.org/wiki/Wealth_inequality_in_the_United_States?wprov=sfti1
As opposed to the US, where the top 1% of earners in the United States account for about 20% of the country's total income annually.

That's simply how things work... not ideal... just reality...

That‘s still better than the top 0.1% controlling 50% of the output, wouldn‘t you say ?
 

sreams

Posts: 190   +312
It's not like a normal fiat currency. There is no regulation at all. No it's not the same regardless of the "whataboutism" defense.

There are also no legal tender rules forcing people to accept it as currency. Which means its value is purely a function of people seeing it as valuable. The few who hold the bulk of Bitcoin are only rich because people allow them to be.
 

Dimitriid

Posts: 1,300   +2,545
Do you guys think the regular money is owned by lots more people than these 10,000?

All bitcoin is doing is basically a miniature copy of the exact same stuff that happens already when it comes to global wealth and like a couple thousand billionaires basically owning the entire world.

It goes to show that if you listen to Libertarians, you'd be just at the most, changing the names of the people who basically own all of the wealth in the world but nothing would fundamentally change for 99% of the people, because their concept of "Freedom" is utterly incomplete if we grant people the "freedom" to control other people's lives through wealth and resources: We've been saying collectivize the means of production for centuries for a reason guys.
 

wiyosaya

Posts: 6,711   +5,146
Wow. So what us skeptics have been saying all along is essentially true. Sounds like a fatal weakness that will rear its ugly head. Hey wait a minute. We've already seen inklings of that when crapto goes wild because Musky passed gas. :rolleyes:
It's not like a normal fiat currency. There is no regulation at all. No it's not the same regardless of the "whataboutism" defense.
Whataboutism makes everything better - you know - like that old Blue Bonnet Margarine commercial?? "Everything's better with Blue Bonnet On it." :rolleyes: 🤣 🤣 🤣
IMO, its stupidity that goes unrecognized.
 

wiyosaya

Posts: 6,711   +5,146
As opposed to the US, where the top 1% of earners in the United States account for about 20% of the country's total income annually.

That's simply how things work... not ideal... just reality...
So, we all should throw our hands up and say, Oh well. That's how it is. It reminds me of an environmental movie I saw a few years bad. "Toxic waste is good for you!" Or so some corporations would like you to believe.

The problem is accepting it enables it.
 

emmzo

Posts: 360   +342
Musk just posted a photo of his Shiba Inu puppy and the Shiba Inu token has risen by more than 50%. If crypto isn`t the future of finances, I don`t know what is...
 

Sausagemeat

Posts: 1,037   +863
I think most of us here would like crypto if they didn’t use graphics cards to mine it.

Also if you’re rich. Inflation is very high at the moment and it’s making all of us poorer. Unless you put your money into crypto.
 
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merikafyeah

Posts: 268   +217
Technically it’s a PONZI Scheme.

Pyramid schemes are separated from MLM schemes in that there is no product to sell.

All crypto is a PONZI scheme
ICOs can be used as a vehicle for ponzi schemes, but that doesn't mean all cryptocurrencies are inherently a ponzi scheme. Ponzi schemes are run by people or centrally controlled entities. It is therefore logically and categorically impossible for a "decentralized ponzi scheme" to exist. Ipso facto, bitcoin is not a ponzi scheme, though there are certainly ponzi schemes that could involve bitcoin.

Calling bitcoin a ponzi scheme is as factually inaccurate as calling it ransomware.
 

elementalSG

Posts: 218   +359
I think most of us here would like crypto if they didn’t use graphics cards to mine it.

Also if you’re rich. Inflation is very high at the moment and it’s making all of us poorer. Unless you put your money into crypto.
I am wondering what will happen to all the graphics cards mining Ethereum when June 2022 comes and Ethereum finally moves to a Proof of Stake algorithm (rather than Proof of Work) that no longer requires any type of mining.

Maybe we can have a field day buying graphics cards finally at normal prices after June 2022?
 

Sausagemeat

Posts: 1,037   +863
I am wondering what will happen to all the graphics cards mining Ethereum when June 2022 comes and Ethereum finally moves to a Proof of Stake algorithm (rather than Proof of Work) that no longer requires any type of mining.

Maybe we can have a field day buying graphics cards finally at normal prices after June 2022?
Il believe it when I see it. As much as I would love to see Ethereum shift theres also a tonne of miners out there who dont. And then what about all the other coins people mine on GPUs? If theres a glut of GPU power sitting out there it will get used somehow I reckon.

But it is nice to dream of cards dropping so much in value that il be wiping my bum with an RTX 3090.
 

psycros

Posts: 3,698   +4,649
Do you guys think the regular money is owned by lots more people than these 10,000?

All bitcoin is doing is basically a miniature copy of the exact same stuff that happens already when it comes to global wealth and like a couple thousand billionaires basically owning the entire world.

It goes to show that if you listen to Libertarians, you'd be just at the most, changing the names of the people who basically own all of the wealth in the world but nothing would fundamentally change for 99% of the people, because their concept of "Freedom" is utterly incomplete if we grant people the "freedom" to control other people's lives through wealth and resources: We've been saying collectivize the means of production for centuries for a reason guys.

And by "centuries" you mean ONE century. And every time that illogical idea has been tried its ended in famine and death, and with an even greater concentration of wealth than before.
 
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