The Bitcoin Whales: 1,000 People Who Own 40 Percent of the Market

It's interesting to see how this is playing out. Libertarians have long argued that government-issued fiat currency is a tool of state oppression. Now we have a real-world experiment demonstrating on a grand scale what happens when you create a currency by consensual fiat. I'd be interested to hear what libertarians think about this: Is Bitcoin truly the kind of currency libertarians have been advocating? Have I mischaracterized the libertarian position? What do you think about the concentration of Bitcoins in the hands of a small number of people? Where is this experiment going in the long run?

There&#x27;s absolutely no source to the claim that 40% is owned by 1000 people. Only at the very end of the article we see a lateral claim, that 17% of bitcoin is held in just 100 addresses.<p>It&#x27;s not unlikely the same reasoning (i.e. 40% of coins on top 1000 addresses) is used for the larger claim.<p>But that says very little. A bitcoin address after all can be shared by many users, in the same way a bank vault can contain money from many individuals. It&#x27;s quite likely that the top addresses are held in a (semi) custodial function by parties like Coinbase or Kraken, which have hundreds of thousands to millions of customers, but may store their users&#x27; coins on a number of addresses that&#x27;s a tiny fraction of their user count.<p>Regardless, unequal wealth distribution isn&#x27;t entirely unique to bitcoin, either. The top 1% worldwide own about 50% of the world&#x27;s wealth, the richest 10% own about 85%.

Market manipulation is a big risk here. Basically &quot;wolf of wall st&quot; style shenanigans, or the stuff that salomon brothers did in the mortgage bond market in the 1980s.<p>Essentially a few big investors who&#x27;ve cornered the market, acting in concert, can move the market essentially according to their own desire. I read yesterday that the order book for btc was $33 million (don&#x27;t know what the daily volume is; could anyone enlighten me? Not an active bitcoin follower but have experience in markets). The top 1,000 BTC holders own about $100 Billion at current prices. Even a few of them could concertedly buy small amounts of BTC at rapidly increasing prices, then if that leads to a huge rally and increase in volume (like yesterday) they can sell into that volume and make a nice profit. Lots of other things like that they can do: <a href="https:&#x2F;&#x2F;www.girardgibbs.com&#x2F;securities-fraud&#x2F;stock&#x2F;market-manipulation&#x2F;examples&#x2F;" rel="nofollow">https:&#x2F;&#x2F;www.girardgibbs.com&#x2F;securities-fraud&#x2F;stock&#x2F;market-ma...</a><p>Not saying they do those things, but that is a real risk in unregulated, concentrated markets where there is no real way to quantify value<p>EDIT: montecarl pointed me to the gdax site, also <a href="https:&#x2F;&#x2F;data.bitcoinity.org&#x2F;markets&#x2F;price&#x2F;6m&#x2F;USD?c=e&amp;t=l" rel="nofollow">https:&#x2F;&#x2F;data.bitcoinity.org&#x2F;markets&#x2F;price&#x2F;6m&#x2F;USD?c=e&amp;t=l</a> shows price and vol data (im a noob) and it looks like volume is much higher, on the order of 100-150k BTC &#x2F; day so over $1B USD volume at $17K &#x2F; BTC.

I really enjoy investing in cryptocurrencies. However, I have a lot of doubt this is going to make the world a more fair or better place. It&#x27;s going to create a wealth gap like has never been seen in first world countries.

&gt;Holders of large amounts of bitcoin are often known as whales. And they’re becoming a worry for investors. They can send prices plummeting by selling even a portion of their holdings.<p>That&#x27;s not indicative of something that&#x27;s a store of value.

Most of these &quot;whales&quot; are hot and cold wallets for various exchanges, investment fund holdings, seized coins waiting to be sold.<p>It&#x27;s nearly impossible to map an address to its owner (or owners).

I read an interesting analogy yesterday in a poker chat of all places.<p>The guy basically said, let&#x27;s put bitcoin to buy a coffee litmus test. If I were to buy a cup of coffee in the current frenzy, I would be at the cashier waiting a day for the transaction to go through and when it does go through the fee for transaction would be greater than cost of the coffee.<p>If that is true, how is bitcoin better? Would that transaction even go through considering miners would prioritize transactions with larger fees.

In classic gambling, whales are the people you comp high worth rooms, food, drugs to, because they are willing to drop huge sums on the games of chance. You nurture whales, to make a living off whales. You fly your whales to interesting casinos and then quietly wait for the odds to fall in your favour.<p>Is this the metaphor the bitcoin-digerati want?

Whales can only sell once. It&#x27;s also not in their self interest to make a market collapse, why would they depress the price of the thing they are trying to sell? When whales do sell many smaller buyers then take ownership of their coins decreasing the chance of future volatility. These concerns are being exaggerated too much.

So let me get this.. 40% isn&#x27;t being traded, 30% isn&#x27;t yet mined, say 10% lost in between. Are we left with 20% that is being traded?

Second to last paragraph provides some perspective:<p><i>&quot;Among the coins people invest in, bitcoin has the least concentrated ownership, says Spencer Bogart, managing director and head of research at Blockchain Capital. The top 100 bitcoin addresses control 17.3 percent of all the issued currency, according to Alex Sunnarborg, co-founder of crypto hedge fund Tetras Capital. With ether, a rival to bitcoin, the top 100 addresses control 40 percent of the supply, and with coins such as Gnosis, Qtum, and Storj, top holders control more than 90 percent. Many large owners are part of the teams running these projects.</i>&quot;

Is this really that surprising? To me, it just seems to be mirroring wealth inequality. 63% of total private wealth in America is owned by the 1%[1]. I&#x27;m sure the top 1,000 have a significant amount of that 63%.<p>[1]<a href="https:&#x2F;&#x2F;www.bloomberg.com&#x2F;news&#x2F;articles&#x2F;2017-06-16&#x2F;the-u-s-is-where-the-rich-are-the-richest" rel="nofollow">https:&#x2F;&#x2F;www.bloomberg.com&#x2F;news&#x2F;articles&#x2F;2017-06-16&#x2F;the-u-s-i...</a>

If they have access to their wallets.

That means Bitcoin has a lot more to grow. That 40% can be sold off to many more people eventually.<p>What worries me more is the elextricity consumption:<p><a href="https:&#x2F;&#x2F;motherboard.vice.com&#x2F;en_us&#x2F;article&#x2F;aek3za&#x2F;bitcoin-could-consume-as-much-electricity-as-denmark-by-2020" rel="nofollow">https:&#x2F;&#x2F;motherboard.vice.com&#x2F;en_us&#x2F;article&#x2F;aek3za&#x2F;bitcoin-co...</a>

Wow, such FUD, much propaganda lately, all against BTC.<p>Is it risky? sure. Do you HAVE to buy? of course not. Anybody can sit on the sides and shout &quot;bubble, ponzi, pyramidal scheme&quot;, but then don&#x27;t whine when the early adopters and risk takers got to buy it at just $16K and 3 years later it trades at $1M.

Btc prices can still being manipulate by whales? (Honest question)<p>I know shitcoins can, because the Market Cap is low and it is easier for whales to manipulate the market.<p>But... This also happen with BTC now days? There are millionaires who puts all their BTC in one exchange? Jesus.. they are crazy.

Additional article of how “decentralized” cryptocurrency is: <a href="https:&#x2F;&#x2F;news.earn.com&#x2F;quantifying-decentralization-e39db233c28e" rel="nofollow">https:&#x2F;&#x2F;news.earn.com&#x2F;quantifying-decentralization-e39db233c...</a>

I am very curious to see what this will do to Chinese style capital controls. They probably have started cracking down on exchanges but even with an outright ban it sounds like a more powerful method to get money of of the country.

Wasn&#x27;t there stories recently about how just nine people had 50% of the world&#x27;s wealth?<p>Edit: Nevermind, it was eight people.

Large holders of bitcoin are probably believers so I don&#x27;t think they would do any detrimental action to the ecosystem on purpose. Plus, if they wanted to sell BTC they would not be so stupid to do it with a large market order (because it would act against their favour), OTC market exists (or even limit orders, which don&#x27;t move the market but if anything, they make it more price-stable).

&gt; Because bitcoin is a digital currency and not a security<p>And in that statement, there is the fraud.

these are exchange accounts that hold volumes of BTC.

Whales or sharks?

There is so much volume and volatility in Bitcoin markets that a whale can sell insane amount of coins (e.g. 10k) in within days without much effect on price. Placing limit orders in front of the best ask and moving them in case the price goes down will do the trick. Bitfinex traded over 100k coins within last 24 hours. it&#x27;s reasonable to assume that you can capture 1% of this volume on the daily basis using the limit orders. Selling 10k Bitcoins can be easily done within 10 days without pushing the price down. I think it&#x27;s possible to do this within 1 day.