[2018-06-10] Study Shows That 1/3 of All Bitcoin Owned by 1,600 Wallets

[Terraformer]

The Express reported that figures from Chainalysis, a well-known cryptocurrency analysis firm, show that over one-third of all Bitcoin is in only 1,600 wallets.

1,600 Wallets Hold Over 1/3 of All Bitcoin

This issue has been no secret in the cryptocurrency community, with small investors in the space continually dubbing these wallets as ‘whales.’ The aforementioned 1,600 wallets all have more than 1,000 Bitcoin each, with 100 of these wallets containing over 10,000 Bitcoin, reports the Express.

At current market prices, 10,000 Bitcoins clocks in at a staggering $75 million U.S., which is by no means a figure to scoff at.

Chainalysis chief economist Phillip Gladwell specifically stated:

“This concentration of wealth means that bitcoin is at risk of volatility as the moves of a small number of people will have a large price effect.”

This has become a valid worry, with the trustee of the Mt.Gox exchange dumping thousands of Bitcoin on public exchanges, further fueling Bitcoin’s short-term bearish trend.

Despite these fears, further analysis has shown that some of these ‘whales’ have not moved their Bitcoin in years, leading some to believe that a few of these wallets are owned by particularly unlucky individuals who have lost access to these Bitcoin. Others also suspect that Satoshi suffered the same fate, with his, her, or their wallets collectively holding over one million of potentially lost Bitcoin.

In addition, according to an analysis done by the Chainalysis, the amount of Bitcoin held by long-term holders has been decreasing, relative to the amount of Bitcoin held by short-term holders. This means that there has been a shift in power dynamic, with the market movement power of short-term speculators growing.

Despite some the presence of a belief that this is a promising sign, there is worry that short-term speculators are only here to play with the price of Bitcoin.

Bitcoin Is Not the Only Blockchain Experiencing This Problem

Skeptics of the decentralized nature of cryptocurrencies have begun to criticize a variety of different projects for having a similar condition, with top wallets holding large majorities of cryptocurrency wealth.

According to an analysis done by Reddit users, the top 10 EOS wallets hold almost half of all EOS coins, 496,735,539 to be more specific.

However, it is important to note that some of these addresses are most likely exchanges, reducing the risk of a centralization issue. However, further analysis found that the top 75 EOS holders own at least $10 million worth of EOS coins, clocking in at 646,595, with a low-chance that these are all exchanges.

This has become the topic of controversy with many in the cryptocurrency community, with some critics stating that Block.one’s attempts to mitigate this form of centralization were not effective. It is still unclear how far this issue extends in the case of EOS, but we will soon see with yesterday’s opening of the mainnet.

Popular altcoin, Litecoin, has also had problems with this issue, with the top 400 wallets containing just over 50% of all coins in circulation.

However, many analysts believe that when adoption in this industry grows, that all cryptocurrencies will begin to spread thin across an ever-growing number of wallets. But until that happens, many will still worry about these so-called ‘whales’ manipulating the market, dragging prices to where these whales want them to be.

Source >> https://www.newsbtc.com/2018/06/10/study-shows-that-1-3-of-all-bitcoin-owned-by-1600-wallets/

[1Referee]

However, many analysts believe that when adoption in this industry grows, that all cryptocurrencies will begin to spread thin across an ever-growing number of wallets.

Analysts haven't exactly proven to be reliable sources of knowledge. 

If people think that current distribution of crypto wealth is unfair, then wait and see what happens when institutions start rolling.

In this market we are dealing with an incredible number of fools only caring about their short term profits; they don't realize how precious of an asset Bitcoin is. This is the exact reason holders become wealthier than ever before, and that we have a lower number of tradable on-exchange Bitcoins than ever before. Smart people hoard Bitcoin, foolish people sell. The only way to prevent wealth distribution to become even more unfair, is to not sell your coins to the smarter people. In other words, become smart yourself.

[davis196]

I`m not surprised by this info.Early adopters and big investors will benefit the most from bitcoin and every other altcoin in the market.By the way,your info isn`t accurate enough.Perhaps some of these wallets belong to big crypto exchange platforms,not crypto whales.If btc get adopted in daily retail purchases,the number of hodlers will decrease for sure.

[Lucius]

This report only show that some amount of BTC is connected with some addresses, not wallets. Theoretically it is possible that all that coins belong to only one person or to 10 persons, and I do not see any problem in that. As they say most of coins are not moved for years, and it is possible that great part of those coins are lost, which is actually good news - there will never be 21 million of available BTC, even Satoshi say this is something positive regarding BTC price one day.

I do not agree that Satoshi is lost access to his private keys, he was too smart to allow something like that. But many early adopters were negligent, price of BTC was very low and they did not take it seriously.

[buwaytress]

However, many analysts believe that when adoption in this industry grows, that all cryptocurrencies will begin to spread thin across an ever-growing number of wallets.

Analysts haven't exactly proven to be reliable sources of knowledge. 

If people think that current distribution of crypto wealth is unfair, then wait and see what happens when institutions start rolling.

In this market we are dealing with an incredible number of fools only caring about their short term profits; they don't realize how precious of an asset Bitcoin is. This is the exact reason holders become wealthier than ever before, and that we have a lower number of tradable on-exchange Bitcoins than ever before. Smart people hoard Bitcoin, foolish people sell. The only way to prevent wealth distribution to become even more unfair, is to not sell your coins to the smarter people. In other words, become smart yourself.

Precisely why they'll keep on harping on all these skewed numbers to their benefit, to hold on to their status quo for as long as possible. As metrics and blockchain analyses get better, they already have to let go of one of the old Bitcoin tropes that only kidnappers and dark market traders use them.

Guys like Chainalysis and Elliptics should start digging into some of these big wallets and see how much of it actually belongs to exchanges we already know hold the big wallets. These represent hundreds of thousands of user accounts - all lumped into exchange-owned wallets. Of course, this does reflect the reality that all these users don't own anything more than a pledge and promise from exchanges - but it is important to note that these huge balances are channeled by many, many individual users.

[kevoh]

This report only show that some amount of BTC is connected with some addresses, not wallets. Theoretically it is possible that all that coins belong to only one person or to 10 persons, and I do not see any problem in that. As they say most of coins are not moved for years, and it is possible that great part of those coins are lost, which is actually good news - there will never be 21 million of available BTC, even Satoshi say this is something positive regarding BTC price one day.

I do not agree that Satoshi is lost access to his private keys, he was too smart to allow something like that. But many early adopters were negligent, price of BTC was very low and they did not take it seriously.

Exactly! It is highly possible that many of the 1600 are early users of Bitcoin like Laszlo Hanyez, the guy who bought pizza with 10000 btc and others who were able to accumulate large amounts of btc  and have somehow lost access to their bitcoins.

[Proton2233]

This report only show that some amount of BTC is connected with some addresses, not wallets. Theoretically it is possible that all that coins belong to only one person or to 10 persons, and I do not see any problem in that. As they say most of coins are not moved for years, and it is possible that great part of those coins are lost, which is actually good news - there will never be 21 million of available BTC, even Satoshi say this is something positive regarding BTC price one day.

I do not agree that Satoshi is lost access to his private keys, he was too smart to allow something like that. But many early adopters were negligent, price of BTC was very low and they did not take it seriously.

This distribution of coins is typical for all cryptocurrencies. I think it's a time bomb. At any moment, dormant coins might be active in the market and cause a cave-in. We have all seen the market reaction to the large sales of mtgox coins. Perhaps this is a limiting factor in the growth of the popularity of cryptocurrencies.

[richardsNY]

Perhaps this is a limiting factor in the growth of the popularity of cryptocurrencies.

How is it limiting factor? If it was a limiting factor as you say, there probably wouldn't be much fresh capital flowing into this market. It's like the nature, the strongest survive, where in this case those with the largest fiat stacks survive. Crypto isn't all that different from what's happening in stock markets -- there is a constant transfer of wealth happening, from the poor to the rich. Even Warren Buffett acknowledged that. Bitcoin might be decentralized and all that, but the markets people trade in aren't, and that's where most people go wrong. You as average joe can't beat those who know more than you or have more financial resources....

[gentlemand]

Remove known exchange and custodial wallet addresses from these counts and then we'll talk. Until then, I'm profoundly uninterested.

I'm sure it is concentrated in a small number of hands, but nowhere near that small. Several million coins on that list will actually belong to several million individuals. Whether all of them are allowed to access them is another matter.