The 1% Monopoly Of Bitcoin: All You Should Know


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Author: Jeffrey Taylor

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A lot of people labeled cryptocurrency as the savior that will put an end to centralized banking and its limitations. Not being tied to a government or central bank, it was deemed to be free from human bias and unequal distribution. However, a research conducted by the National Bureau of Economic Research brings to light findings about the famous Bitcoin.

The research suggests that bitcoin seems to have developed its one percent group of investors who will most likely benefit from a lot of the gain in coming years.

The skewness of the 1%

The research of the NBER revealed that the top ten thousand Bitcoin investors own a total of approximately 5million Bitcoins or $240 billion worth of the coin, according to cryptocurrencies current prices. Finance experts, Igor Makarov and Antoinette Schoar said that, even though bitcoin was launched in 2009, it’s still been controlled amongst a few top players in the market up until now.

The Wall Street Journal reported that these top players only represent 0.01% of the total amount of bitcoin holders in the world yet they control 27% of the digital currency. The situation is similar to a time where the American dollar was controlled by about 1% of the strong and powerful, that in turn led to 30% of the U.S household wealth to be controlled by that 1%.

What does this ‘Skewness’ implies?

Well, Makarov and Schoar have expressed their concerns over this “skewness'” by the 1%. They are of the opinion that the significant skewness on the ownership of Bitcoin implies that the majority of gains from further adoption of Bitcoin as a means of exchange, by countries and cooperate societies are likely to fall disproportionately to a small set of participants.

It’s no news that Bitcoin and many other digital currencies traded on crypto platforms like eToro, have been on the forefront of many of this year’s biggest financial gains and losses. Although it is considered by many financial experts as a very unstable form of money, Bitcoin reached remarkable new heights this year. Part of the reason for this milestone is because new companies are accepting it as a new form of payment.

The vulnerability of Bitcoin to the 1%.

As the fame of these digital currencies rise, they seem to have become the target of many multi-million dollar scams in recent history. A total of about $681 million in crypto assets have been lost to scam operations between the months of January to July. According to reports from Cryptocurrency intelligence firm CipherTrace.

The vulnerability of Bitcoin comes directly from the fact that despite the fame it has managed to amass since its inception, only a very few people own a huge chunk of it. This makes it an easy target for large price swings from week to week.

Who makes up the 1%?

Makarov and Schoar, collected data from bitcoin since its inception till date. The data does not reveal the name of people who own the most Bitcoin but due to Elon Musk’s January announcement about his involvement in bitcoin, we can guess he will make the cut for the top players.

A lot of lists floating around the internet suggest that Matthew Roszak, chairman of blockchain company “Bloq” holds a cryptocurrency net worth of about $1.5 billion. A high chance that he also makes the 1% cut. These investors did not come into these strong stakes by trading with great platforms like plus500. They were big and early investors.

BWCEvent aspires to share balanced and credible details on cryptocurrency, finance, trading, and stocks. Yet, we refrain from giving financial suggestions, urging users to engage in personal research and meticulous verification.

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Jeffrey Taylor is a retired mechanical engineer who has an interest in all things financial, including emerging markets and cryptocurrencies.