Bitcoin threatens to become the currency of the rich

The Bitcoin is not just any digital currency. In the eyes of its followers, the world’s first and most important crypto coin is nothing less than a tool for breaking the power of classic banks and financial players. The mysterious founder Satoshi Nakamoto hopes that a new financial world will emerge on the foundation of blockchain technology in 2009.

Ten years after their launch, it is now clear that the real social conditions are also reflected in the supposedly anarchic grassroots world of crypto currencies. This can be seen, for example, when looking at the Bitcoin distribution of wealth.

As a new study by the industry portal Kryptoszene.de based on the blockchain analysis page Bitinfocharts shows, inequality is particularly pronounced in the cryptographic world. The most important results:

 

  • In total, there are 13.5 million Bitcoin accounts (addresses). According to the survey, almost 42 percent of them have 1000 Bitcoin or more – which in dollars is equivalent to millions or even billions of dollars in assets.
  • Three account holders alone own almost 2.5 percent of all coins issued. 12.5 percent of the coins are in 106 accounts: Their holders form the super-rich of the crypto world and have over 10,000 to 100,000 virtual coins at their disposal, currently worth around 20.8 billion dollars.
  • On the other hand, almost half of all Bitcoin holders share the homeopathic sum of only 0.02 percent of their total assets. On the vast majority of accounts, Bitcoins are worth less than ten dollars.

 

“The imbalance is immense”, concludes Kryptoszene.de. The findings are particularly surprising against the background that “the decentralized nature of the blockchain would rather suggest that the gap between rich and poor in crypto space would be smaller”.

One thing is clear: the survey has methodological weaknesses. The blockchain analysis does not allow conclusions to be drawn as to whether a Bitcoin account belongs to an individual, a crypto company or even a large asset manager. In this respect, the conclusion that the thickest accounts are in the hands of individual millionaires and billionaires should be treated with caution. It is also unclear from which countries and continents the holders come.

However, observers have no doubt that the gap between the rich and poor in the crypto world is particularly wide. This is also due to the rapid development of the market, explains Philipp Sandner, Head of the Blockchain Center at the Frankfurt School of Finance and Management. “Few people hold many Bitcoins,” he says.

As long as the currency had a niche existence, this was not a problem. But as a result of the rapid rise in the Bitcoin exchange rate from less than a cent ten years ago to the current level of around $9,300, the wealth of these people also increased enormously. “This can lead to problems, especially if it is not even known who these people are,” Sandner warns.

Even in the analogue world, wealth is very unevenly distributed, as the German debate on the reintroduction of wealth tax shows. For the crypto world, however, such discussions are comparatively new.

 

The unholy power of cryptosuperaching

The share and power of crypto millionaires and billionaires could continue to grow with the influx of wealthy private investors into the market. Despite all the price turbulence, more and more rich people are buying Bitcoin and Co. – with a small part of their analogue assets, but absolutely with appreciable amounts. US asset managers like Fidelity now offer Bitcoin custody, while German start-ups like Iconic Funds want to make trading on traditional stock exchanges possible.

It remains to be seen what the gaping rich-poor scissors will do with the crypto world in the long term. What the influence of the super-rich can do, however, is shown by studies by US scientists John Griffin and Amin Shams of the state universities in Texas and Ohio. They attribute the sharp rise in Bitcoin’s price to $20,000 in 2017 to the actions of a single address that is said to have triggered a chain reaction.

“Our results suggest that it’s not thousands of investors driving the price of Bitcoin, but just one big one,” Griffin said, according to Bloomberg news agency. “In a few years, people will be surprised that crypt investors have put billions into the hands of people they didn’t know and who were hardly regulated.

The Bitcoin scene is already arguing about a construction site that threatens the world-enhancing vision of the beginning: the high power consumption of the blockchain network and its climatic consequences. Now a new bone of contention could follow: the influence of crypto millionaires on the overall market.