Sunday, June 25, 2017

Even in the cryptocurrency markets, the 1% own more Bitcoins than the other 99% combined

Ever since the 2008 financial crisis and subsequent rise of central bank programs that have helped engineer the wealth of nations into the hands of the 1%, nearly every single market has seen this anomaly take place as access to cheap money has allowed those who control capital to multiply their wealth immensely.

And perhaps the saddest part in this is that even the cryptocurrencies are not immune to their being accumulated into the hands of a few as new analysis of Bitcoin wallet holdings shows that less than 1% of Bitcoin owners control more than the other 99% combined.

Data courtesy of Bitcoinprivacy.net

A breakdown of the data in this chart confirms that the majority of Bitcoins are currently held by a small minority of individuals or entities.

99%

(17.8+17.6+16.8+12.9+7.5+4.4+1.8 millions) = 78.8 million Bitcoin wallets.

(1.78+17.6+168+1290+7500+44000+180000) = 232,958 total Bitcoins.

1%

(531,248+137,501+13,852+1619+115+3) = 684,338 Bitcoin wallets.

(531,248+1,375,010+1,385,200+1,619,000+1,150,000+300,000) = 6,360,458 total Bitcoin.

We are also taking note of the fact that according to Bitcoin mining statistics, there are supposed to have been over 16 million Bitcoins having been mined as of June 25, 2017, and this data is pointing to the fact that nearly 10 million of these coins have not been registered as being tied to a Bitcoin wallet.  And invariably this is leading to both an assumption and a conjecture that those coins are either being held outside the active Bitcoin blockchain by one or more select entities, or have been lost due to their original wallet holders having somehow eliminated them from existence through a myriad of circumstances such as hard drive failures, or lost and forgotten passwords to their wallets.

4 comments:

Ken - What about BTC stored in devices such as Ledger/Trezor and Paper Wallets? Are the BTC transferred out to these external storage facilities excluded from the bitcoinprivacy.net count? Appreciate your considered feedback on this matter@

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No, I don't think so. That's really not how Bitcoin works. Even when you "transfer bitcoins offline” they are still on the blockchain. There is no such thing as taking them off the blockchain. A paper wallet or hardware wallet looks just like any other wallet to the rest of the world. Nobody can tell the difference because there isn't a difference. I.e. these are just methods of securing your private key.

Which brings me to my next point. That last paragraph of the article doesn't mean anything. It claims quite explicitly that it is based on conjecture. What is this nonsense about registering bitcoins? There is nothing to register. They are all there on the blockchain.

Finally, although there are individuals with absolutely ridiculous amounts of Bitcoin, many of those addresses that contain thousands of bitcoins belong to exchanges. When you send your money to Bitstamp, it gets accumulated in one of their addresses. So even though these bitcoins are "in the hands of the few" we are trusting these entities to hold on to our money so that we can trade, etc., the same way banks hold most of the fiat money and we trust them to do so.

It seems to me that the author of this article doesn't really understand how Bitcoin works and is jumping to unfounded conclusions, in an apparent attempt to spread FUD. I'm not saying Bitcoin doesn't have its problems, but this is nonsense.

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