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Myth Buster: No, Bitcoin Wealth Is Not Ultra-Concentrated

By ssaurel | In Bitcoin We Trust | 22 Oct 2023


Beyond the lies about Bitcoin's allegedly disastrous environmental impact, one criticism against Bitcoin often comes up: that it's too concentrated and in the hands of a minority of people.

Fidelity did a remarkable job in September 2023 with its research report to show that Bitcoin is an opportunity for the environment:

"10 Key Takeaways From Fidelity’s Bullish Research Report on Bitcoin"

In my modest way, I'm going to tackle the previous assertion and show you that it's a myth.

First, let's look at a snapshot of Bitcoin's wealth distribution on October 18, 2023:

When you see this list, you can see that only 4 addresses currently have more than 100,000 BTC. We're talking about addresses here, not people, because each person can have several addresses on the Bitcoin network, as you know.

Among these 4 addresses, you probably have at least one belonging to Satoshi Nakamoto, if not two, since Satoshi Nakamoto owns over 1 million BTC that he has never used. Proof that his invention was meant to be a gift to mankind and that Satoshi Nakamoto is different, as I said earlier:

"The Reason Why Bitcoin Is Such a Unique Invention Also Lies in Satoshi Nakamoto’s Unique Personality"

The 4 addresses with between 100,000 and 1,000,000 BTC total 660,085 BTC, or 3.38% of the Bitcoin supply currently on the market.

At the next level down are 104 addresses with between 10,000 and 100,000 BTC. This category is often referred to as the Whales. There are 2,274,053 BTC in this category, representing 15.04% of Bitcoin's circulating supply.

This data should be read in conjunction with the Arkham Intelligence work I mentioned at the beginning of September 2023 on estimating the 5 richest addresses in Bitcoin and their owners:

"The 5 Richest Bitcoin Addresses, and Their Supposed Owners"

Here you can see that, in addition to the addresses belonging to Satoshi Nakamoto, the 5 supposedly richest addresses on the Bitcoin network belong to exchange platforms such as Bitfinex, Binance, Robinhood, and Coinbase.

These companies hold huge quantities of BTC but for their customers. They do not own the Bitcoin. Tens, if not hundreds, of millions of individual owners, hold these units of BTC by trusting these exchange platforms. This is a major risk, of course, but it gives you a wider distribution than the snapshot presented above would lead you to suppose.

But as always, these people would be better off taking possession of their private keys themselves. Not your Keys, Not your Bitcoin.

Beyond these addresses, Grayscale (GBTC) holds a total of 819,000 BTC, with GBTC holding a total of 644,000. The SEC is still holding out, but Grayscale will eventually be able to turn its trust into a Bitcoin Spot ETF. Sooner or later. Again, millions of individuals around the planet own these BTC units via Grayscale.

Publicly listed companies such as MicroStrategy, Tesla, Robinhood, Digital Galaxy, Marathon, and Hut 8 collectively hold 254,000 BTC, or around 1.2% of the BTC supply in circulation.

These companies hold this Bitcoin for their shareholders.

MicroStrategy, for example, holds 158,245 BTC for the company's 1,028 shareholders. It's not concentration here, but rather a group purchase of BTC if you like.

I haven't yet mentioned government ownership of BTC. Again, governments hold this BTC, but always on behalf of hundreds of millions of citizens. America and China are the world's largest holders of alleged BTC. Mind you, there's also Bulgaria here. We'd be over 500,000 BTC held if we added it all up.

Of course, you're going to tell me that billionaires like Michael J. Saylor, the Winklevoss twins, and Tim Draper own tens of thousands of BTC. That's true, but these 4 people are outweighed by the hundreds of millions of people I've mentioned so far.

In my opinion, the concentration of wealth in BTC is a myth. I've just shown you. We must not confuse the addresses that own these units of Bitcoin with the rights of the people who hold the private keys of these addresses to these units of Bitcoin.

What's more, we can see that the concentration between these addresses is steadily decreasing. More and more small BTC holders are exceeding the 1 BTC threshold. As the price of Bitcoin rises in fiat currency, the 0.1 BTC threshold will become symbolic, and so on.

Remember that, in the beginning, it was just Satoshi Nakamoto. Then Satoshi and Hal Finney. Almost fourteen years later, hundreds of millions of people own Bitcoin.

So patience is the key with Bitcoin. But you're used to that. Don't worry about the concentration of wealth in Bitcoin, which is a non-issue.

Stay strong, Stay Bitcoin HODLers.


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ssaurel
ssaurel Verified Member

Entrepreneur / Developer / Blogger / Author.


In Bitcoin We Trust
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