The problem of uneven distribution of digital assets has long worried researchers, crypto enthusiasts and even old-school economists. Thus, many believe that the rigidly limited supply of digital gold over time increasingly settles in whales.
Just over a year ago, Chainalysis researchers found that a third of THE total BTC market offering is concentrated in a group of just 1,600 addresses. These addresses hold almost 5 million coins (excluding inactive wallets, the funds of which are considered irretrievably lost – from 2.3 million BTC to 3.7 million BTC). Experts have concluded that excessive inequality increases the risks of volatility, as the actions of a small group of holders can significantly affect the price of bitcoin and the market as a whole.
How unevenly distributed are bitcoins?
Estimates of different researchers differ slightly depending on the methodology. However, experts agree on one thing – the disparity in the distribution of the majority of the assets on the market is really significant.
According to Decrypt editor Tim Copeland, 2.8% of wallets control 95% of the total bitcoin offer. Comparable data provided by blockchain engineer Prithi Kasirreddi:
Bitcoin wealth distribution: 2% of addresses control 80% of the wealth.
— Preethi Kasireddy (@iam_preethi) August 13, 2019
It is also noteworthy that many addresses of coins have been lying motionless for a long time. Thus, according to bitMEX researchers, bitcoin creator Satoshi Nakamoto alone has been able to make 700,000 BTC ($7 billion at current prices) since 2009. At the same time, at least since the middle of 2010, when Satoshi stopped working on his brainchild, these coins are out of circulation.
Chainalysis estimates that approximately 3.8 million BTCs, including those mined by Satoshi, may be irretrievably lost (e.g. due to the loss of private keys). This is about 20% of the current market offer of the first cryptocurrency, which, obviously, will never reach the maximum mark of 21 million BTC.
Thus, bitcoin is an extremely scarce asset and the coins that have been withdrawn from circulation only exacerbate the degree of inequality. Thus, 85% of digital gold is mined by miners, and whales are not particularly eager to sell off assets even in times of high volatility.
As mentioned, huge volumes of bitcoins are stored on centralized exchanges, regularly subjected to hacker attacks. According to the observations of trader Sasha Fleischman, out of the 10 largest addresses 7 belong to large trading platforms. These platforms hold more than 4% of the total BTC offer (approximately 727,000 coins).