The numbers don’t lie? How to weaken bitcoin (BTC) – or hope to do it ? If the image of a bitcoin linked to criminal activities tends to run out of steam, discredit the decentralized character of the king of cryptocurrencies by recalling that very few hands share the bulk of a huge loot.
More than a quarter of bitcoin under the control of the richest
A new study from the National Bureau of Economic Research, reported by the Wall Street Journal found that 10,000 wallets control 27% of bitcoin in circulation.
In other words, 0.01% of bitcoin holders alone own 5 million bitcoins, or more than a quarter of the current supply. The National Bureau of Economic Research is a private, non-profit US research organization.
This study was conducted by finance professors Antoinette Schoar of the MIT Sloan School of Management, and Igor Makarov of the London School of Economics. It aims to demonstrate that bitcoin would not therefore be as decentralized as we think.
Professor Shoar describes bitcoin as a ” highly concentrated ecosystem “. The research report further indicates, to give relief to the data, that the richest 1% of US households hold about a third of all wealth according to the US Federal Reserve (FED).
>> Trading bitcoin and cryptocurrencies without breaking the bank, are you tempted? Ascendex opens its arms to you <<
Centralized bitcoin: between position and facts
Does this research effectively shatter the myth of bitcoin’s decentralization – at least with regard to his detention -, and does the latter expose himself to a risk of increasing centralization during this decade ? Quantum Economics founder Mati Greenspan points out that more than 5% of bitcoins in circulation are theoretically controlled by Satoshi Nakamoto. Will these bitcoins ever move or did Satoshi only accumulate them in the early ages of the project to protect it from possible attacks?
The data provided by this study must also take into account that a significant amount of bitcoin’s supply – estimated at around 4 million BTC by Coincover – is considered lost forever. Some large wallets are also owned by exchanges and other platforms that control bitcoins on behalf of its clients.
Thus, if this ratio could be perceived as disturbing, even shocking, it potentially hides a large number of different situations in reality which it is particularly difficult to determine with precision.
Greenspan also believes that “over time, bitcoin ownership is designed to become more distributed. For fiats, the opposite tends to happen ”.
Although Greenspan is stepping up to defend the decentralization of bitcoin, the markets have been witnessing well for over a year to a race for massive accumulation from certain companies or institutional investors. MicroStrategy now holds over 122,000 BTC.
Race to buy bitcoin: banks, essential future resellers?
The entry of a growing number of large investors into the markets therefore has both advantages and disadvantages for bitcoin. She is a lever for its price, but it could also in the long term, achieve a fairly paradoxical scenario if the logic is taken to the extreme : that retail investors be obliged in 5 to 10 years, to buy bitcoins from banks or other traditional financial institutions that have become BTC whales, in order to be able to obtain them.
Despite the encouraging studies that show that a growing share of the population in different countries are familiar with bitcoin and its younger siblings, more interesting research should allow us to compare the rate of bitcoin adoption by small wallets compared to large wallets over different time periods. Large investors who are professional investors can indeed understand and anticipate earlier, compared to average investors, the interest in buying bitcoin, and they are doing so overwhelmingly.
Countries that decide to make bitcoin legal tender, such as El Salvador, certainly contribute to the adoption of bitcoin by the general public. However, we will still have to wait before being able to measure more precisely the impact of this legalization of bitcoin on the multiplication of the number of small portfolios in the country.
What does this study supposed to undermine bitcoin’s decentralization really reveal? It is above all a photograph at a time T, and to infer from this that the centralization of bitcoin will increase or not over time, would in reality be only speculation. The only certainty we could have today is that bitcoin will not be at its $ 100,000 meeting by the end of 2021.
Are you convinced by the decentralization of bitcoin and its development potential? An airdrop awaits the first 400 users who will register on Ascendex ! Better yet, this welcome bonus will be added to the 10% reduction on all your trading fees (affiliate link, subject to trading at least $ 100, see conditions on site).