(Bloomberg) – Bitcoin’s growing popularity hasn’t changed one of its original attributes: Ownership is still concentrated in a few hands.
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Around 10,000 individual investors control a third of the cryptocurrency in circulation, according to a study by the National Bureau of Economic Research (NBER).
Crypto enthusiasts have long pondered who owns the most bitcoins. However, determining the concentration of ownership can be especially difficult, as many of the larger addresses do not typically represent individuals, but rather platforms and other entities that own the bitcoins on behalf of other investors.
However, using a data collection method that differentiated between addresses belonging to intermediaries from those of individuals, NBER researchers found that the former group controlled around 5.5 million bitcoins at the end of last year, while the second manages about 8.5 million. Additionally, the 1,000 individual investors owned around 3 million and the concentration could be even higher.
“This concentration measure is probably an underestimate, as we cannot rule out that some of the larger directions are controlled by the same entity,” wrote researchers Igor Makarov and Antoinette Schoar.
For example, the data did not assign the ownership of the first bitcoins divided into approximately 20,000 addresses and belonging to a single person (Satoshi Nakamoto) and considered them as the property of 20,000 different individuals.
The concentration of miners is even deeper, the data shows. NBER found that the top 10% of miners control 90% of bitcoin’s mining capacity, and only 0.1% (around 50 miners) control 50% of it.
Such a high concentration could make the bitcoin network vulnerable to a 51% attack, where a group of collusive miners or one miner can take control of the majority. NBER also found that concentration declines after sharp increases in the price of bitcoin, which means that the probability that the network is vulnerable to a 51% attack is higher when the price of bitcoin falls sharply.
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