Cryptocurrency Concentration - Just 4% Own Over 95% Of Bitcoin

Bitcoin has been making a lot of news lately. The cryptocurrency shot up in value by over 200% in 2017, making many people fear that the market is in a bubble. Last week, China decided to close its bitcoin exchanges, which caused investors around the world to panic about the currency’s long-term viability. But HowMuch.net asks, how many people own bitcoin, and how is the currency distributed around the world? Check out our new visualization.

Source: HowMuch.net

Our graph represents the entire bitcoin market, which has a value of around $60 billion. For comparison, that’s bigger than several well-known companies, like Fed-Ex and General Motors. We then divided the value of the bitcoin market by address. As you can see, over 95% of all bitcoins in circulation are owned by about 4% of the market. In fact, 1% of the addresses control half the entire market. 

There are a couple limitations in our data. Most importantly, each address can represent more than one individual person. An obvious example would be a bitcoin exchange or wallet, which hold the currency for a lot of different people. Another limitation has to do with anonymity. If you want to remain completely anonymous, you can use something called CoinJoin, a process that allows users to group similar transactions together. This makes it seem like two people are using the same address, when in reality they are not. 

So it’s a complex situation. but let’s try to break bitcoin down as simple as possible. Bitcoin is just a type of money, like dollars and euros. The main difference is that there isn’t a sovereign government backing the currency, and it instead lives online. This is possible thanks to something called the blockchain. Banks and companies must keep detailed records of where they send money, marking it possible to detect fraud and criminal activity. The blockchain works differently because it breaks each transaction into tiny components, routes the pieces through a computer network, and directs them to a recipient who can then re-assemble the code together. If you don’t have the right key, you can’t own a bitcoin. And if you aren’t at the right digital address (think your home network’s IP address), then you can’t receive bitcoin.

The technology is hard to understand, and it presents challenges for companies and people who want to use it. That’s why folks typically turn to a vendor like Coinbase to handle their transactions. You know how you carry physical money in your personal wallet? Think of Coinbase as a digital wallet. You use it to buy stuff and pay for services. But be careful—people can steal your digital wallet, and the thieves can be untraceable. And that’s the issue. There’s only a very limited number of bitcoin wallet providers out there. It’s not like you can just go to your local bank and buy some bitcoin.

The big takeaway from all this is that if you are considering purchasing some bitcoin, you have very limited options. There are only a few key players in the game where you can park your investment. And if you do make that purchase, understand that it is highly speculative and unregulated, so prepare for a bumpy ride.

Comments

VD nope-1004 Tue, 09/19/2017 - 18:43 Permalink

early stages (ahem "early adopters" heh) of every single ponzi scheme -- the "Satoshi's" own most, selling to greater foolz. same as it ever was... coinbase is essentially working for the gov collecting everything on every single crypt0-muppet dumb enough to use it.  

In reply to by nope-1004

techpriest Bay of Pigs Tue, 09/19/2017 - 21:42 Permalink

If we're going by the Pareto Principle:

20% of the people own 80% of the wealth
4% of the people own 64% of the wealth (20%^2 and 80%^2)
0.8% of the people own ~51% of the wealth

This is what Pareto observed to be the case for a natural system. It is also observed in command economies: there is always a 1%, but there difference is how you get there and what the average number is.

In reply to by Bay of Pigs

USisCorrupt techpriest Thu, 09/21/2017 - 07:30 Permalink

The article can be very misleading for I personally own over 30 Bitcoin Paper wallets/cold storage wallets, physical Bitcoins "Casascius & Titan" ranging anywhere from .10 of a Bitcoin to 15 Bitcoins and all are post August 1st, 2017.One must realize that the addresses that have dust $5 are mainly wallets on the exchanges associated with account holders such as myself which are 3 in total.

In reply to by techpriest

Implied Violins TeamDepends Tue, 09/19/2017 - 22:23 Permalink

Actually, some of us shower the crypto religionistas with red arrows in the hopes that they will eventually come to their senses and go back to gold and silver, but nay...apparently this is what they mean by "the bifurcation of the world".

Those who follow the AI genie will descend into hell, while those of us who immerse ourselves in the REAL, TANGIBLE fruits of this world will ascend into heaven. Alas.

In reply to by TeamDepends

Implied Violins TeamDepends Tue, 09/19/2017 - 23:40 Permalink

I'm sorry, but I'd rather have that 2% in food and seeds and water filters. I just don't trust ANYTHING electronic. You know that we 'plebes' never get *any* technological upgrade until our "masters" have completely compromised it, right? Did you read that article I linked to on how the NSA has a back door into EVERY COMPUTER via the hard drive, and possibly even the BIOS chips?

But at least you aren't whole-hog into it. I guess it's worth a hedge, especially with the volatility right now, but still...I sleep well at night knowing I've got something MATERIAL to fall back on once it all formally goes to hell. And NONE of that is in FRN's. ZERO.

IN any case, I wish you well. Never downvoted you except one time you told a joke that made me throw up in my mouth a little. We dream the same dream of freedom. And the ultimate irony? I'm sure if we met, we'd have NO trouble bartering!! Peace and OUT...

In reply to by TeamDepends

shocktherapy tmosley Tue, 09/19/2017 - 19:33 Permalink

So low balance address are unspendable because of high fees. Wow ! Bitcoin transaction timeAugust 22, 2017, 09:25:05 AM #1Can we please do something to speed up transaction time and the high transaction fees?This is getting absurd. I just spent $10 USD to send $7500 but my fee was too low. It may take a week for my transaction to process. Who knows. I should have spent 3x that figure to get processing within 1 hour ($30). With that same fee I could have just used a wire transfer from a bank online and it would have been just as fast as bitcoin. The selling point of bitcoin is that it was supposed to be 'better' than traditional banking services. It's not. 

In reply to by tmosley

Zuke Kook tmosley Tue, 09/19/2017 - 23:41 Permalink

I've gone through about 50 addresses myself since the end of 2012 and I'm rarely active in BTC transactions. You're supposed to use a new address for every transaction and wallets like Electrum keep BTC in several addresses. So this post is not an accurate representation of Bitcoin holdings. I have been saying that BTC and cryptocurrencies are in a bubble since the end of May. There are many indications of that. This is not one of them.

In reply to by tmosley

BallAndChained tmosley Wed, 09/20/2017 - 03:55 Permalink

> Costs too much to consolidate them into one address at the moment.Why does it cost so much? Isn't bitcon supposed to be cheap and fast?Bitcon is supposed to be a currency, so when you move currency to one account it should be free.I have different accounts at one centralized bank and it cost nothing to move money around as many times as I want. And they didn't waste a huge amount of electricity, sending it to China to solve some difficult math problem. The centralized transfer was instant. No long wait for China to confirm.That means Centralized is better and more efficient than Distributed.

In reply to by tmosley

Curiously_Crazy nope-1004 Tue, 09/19/2017 - 18:54 Permalink

It's because up until 3 odd years back nobody really new about it (and if they did, the majority didn't care) and it's only been in the past year it's become the done thing among those who usually put their cash towards stawks, and that's a hell of a new influx of cash without many more coins.The early adapters, say mining on our CPU's around 2011 before going to GPU's then ASIC's mined a majority of the coins before the big boys even got into town. It was just a tech hobby for nerds.As one poster noted.. the issue is trying to get out of ones position. It's gonna be one giant pain in the arse because anything over 5K deposited into a bank account at any one times raises immediate red flags for the banks.. "soooo.. where did all this cash come from all of a sudden buddy" the fact that it's none of their business means nothing to gov, who they happily hand over their data to.

In reply to by nope-1004

loveguru Tue, 09/19/2017 - 18:39 Permalink

well that explains the wild swings in price. ain't nothing but a ponzi propaganda. Blockchain holds the real value. Countries will end up creating their own sovereign crypto currencies, Bitcoin will be quashed.