Despite having the goal of being widespread and utilized by many people throughout the globe, bitcoin, it turns out, is still experiencing very concentrated ownership according to a new survey conducted by the National Bureau of Economic Research.
Bitcoin Isn’t Falling Into Too Many Hands
Bitcoin was built as a means of giving financial freedom and power back to the common people. Right now, the world’s financial systems are largely governed by centralized banks that “take their orders” from high-ranking regulators that seek endless say in how people live and whatever financial decisions they make.
For example, if you were to apply for a bank account through a certain institution or seek out such a firm’s services, you would likely be made to experience a heavy background check that would involve checking your credit, your job history, and many other elements. Given your circumstances, the bank would have the final say regarding whether they would provide their services to you.
This is an issue in that it can prevent many people from getting their hands on the tools they need to survive everyday life and purchase what they need. However, bitcoin and crypto are designed to be the exact opposite of banking systems. Through bitcoin, all a person needs are a simple internet connection and a digital wallet. They can then begin trading, buying, and selling like nobody’s business. Bitcoin does not care about their personal histories; it is available to all who need it.
Why, then, is ownership so concentrated? Could it be that people are ultimately afraid of bitcoin and don’t want to deal with its volatility? Could it be that they are concerned regarding its ties to criminal organizations in the past? What is the reasoning behind current ownership limitations?
According to the survey, approximately 10,000 of the world’s individual investors control or own about one-third of the current BTC supply. The survey also suggests that at the end of 2020, roughly 5.5 million of the world’s bitcoin was controlled by people, while more than eight million was controlled by exchanges and digital trading platforms.
Controlled By a Select Few…
Researchers Igor Makarov and Antoinette Schoar who conducted the survey explained in an interview:
This measurement of concentration most likely is an understatement since we cannot rule out that some of the largest addresses are controlled by the same entity… Our results suggest that despite the significant attention bitcoin has received over the last few years, the ecosystem is still dominated by large and concentrated players, be it large miners, bitcoin holders or exchanges. This inherent concentration makes bitcoin susceptible to systemic risk and further implies that most of the gains from further adoption are likely to fall disproportionately to a small set of participants.
At press time, bitcoin is trading for just under $59,000.