Bitcoin is in a bit of a slump right now. Despite this, it has a market capitalization of $186.78 billion as of the time of this writing - which would make it NASDAQs tenth highest-valued company if it was a NASDAQ company, above PepsiCo but below Comcast.
This has led some to ask who exactly holds all of that wealth. Since bitcoin is a decentralized form of wealth, is it spread out evenly, or is there a ruling class that holds most of it, like fiat currency? How much do people invest in bitcoin on average?
A Bit of Clarification
To answer this, it is important to take a moment to understand exactly what bitcoin is. While bitcoin today is a highly speculated commodity, when it started, it was regularly argued to be irrelevant or on its way to extinction. It was not uncommon for early advocates of bitcoin to have wallets with hundreds of coins; bitcoin price did not cross $100 until August 4, 2013. For much of these early years, it was not unheard of for an enthusiast to take a powerful desktop rig, download bitcoin mining software onto it, let it run, and produce a block and the 25 coins reward every week or so.
While many of the large bitcoin holders today are major institutional holders and "whale" investors, some are these "legacy" enthusiasts. The anonymous founder of bitcoin, Satoshi Nakamoto, supposedly has a wallet of 980,000 bitcoin, making him or her one of the richest persons in the world.
The Top One Percent
The bitcoin blockchain is public, so it is possible to ascertain some information from it regarding our original query. The website bitcoinprivacy.net shows, for example, that the top 1,000 wallets hold 35.7 percent of all the bitcoin in circulation, with only 111 having 10,000 bitcoin or more.
To understand this, there are 27,967,566 wallets in existence that have a positive balance, sharing 16,763.267 bitcoin. This is an average of 0.438 bitcoin ($4,862) per wallet.
This breaks down this way:
- There are 3 wallets with 100,000 bitcoin or more.
- There are 103 wallets with 10,000 to 99,999 bitcoin.
- There are 1,432 wallets with 1,000 to 9,999 bitcoin.
- There are 12,263 wallets with 100 to 999 bitcoin.
- There are 126,453 wallets with 10 to 99 bitcoin.
- There are 475,529 wallets with 1 to 9 bitcoin.
- There are 1,718,834 wallets with 0.1 to 0.9999... bitcoin.
- There are 4,135,452 wallets with 0.01 to 0.0999... bitcoin.
- There are 5,336,154 wallets with 0.001 to 0.0099... bitcoin.
- There are 7,156,379 wallets with 0.0001 to 0.00099... bitcoin.
- There are 6,201,506 wallets with 0.00001 to 0.000099... bitcoin.
While it may be feasibly possible to calculate the exact average and median wallet wealth by auditing the blockchain, it is not practical. Instead, it is safe to estimate that the median wallet wealth is somewhere between 0.0001 ($1.10) and 0.000999... ($10.98) bitcoin. This is significantly less than the average.
What Does This Mean?
If you were to critically analyze what these numbers mean, it would suggest that most bitcoin holders do not have a significant stake in the wealth being cultivated from the speculation spree. This can be for a number of reasons. This, for example, can be a realization of the large number of wallets created to cash in on bitcoin faucets or websites that offer micropayments for visiting.
Whatever may be causing this, a one percent ruling class is forming in the bitcoin market where more than 99 percent of the wealth is held by the one percent with the most bitcoin. Sounds familiar, doesn't it? If the goal was to create an economic system that is different or better than fiat systems, it may be time to go back to the drawing board.
How much should you invest in bitcoin? Read Bitcoin Market Journal and learn to invest like a pro!