Sunday, August 14

Concentration in cryptocurrencies: 10,000 investors control a third of all Bitcoins in the world

It is certainly difficult to know whether or not the addresses of the wallets represent independent investors or companies and even trading markets. However, this study manages to differentiate these accounts, but those responsible warn that the concentration may be even higher.

Why? Those responsible indicate that “we cannot rule out that some of the most important addresses are not controlled by the same entity “. For example, 20,000 particularly old addresses that could belong to the same person (such as Satoshi Nakamoto) were considered to belong to 20,000 different people, when indeed many of them may be controlled by a single person or entity.

Along with the concentration problem, another appears: the NBER study also reflected how 0.1% of the world’s largest miners (50 in total) control 50% of the bitcoin mining capacity. If we go to the top 10% of the world’s miners, the capacity they control is a staggering 90% based on that data.

That – and not the control of more or less bitcoins, as we indicated initially – makes the danger of the call reappear “51% attack “, in which a group of miners who control more than 50% of the mining rate of the network or its computing power end up intervening in the normal operation of blockchain transactions. According to this study, the network is especially vulnerable if the price of bitcoin falls sharply.

The threat is clear to all small investors – individuals or companies – who rely on bitcoin as that store of value that was once gold. About 46 million Americans are estimated to have invested in bitcoin to some extent, and the figure is likely high in the rest of the world given the growing interest that cryptocurrency markets are generating. Total, individual investors hold about 8.5 million bitcoins.