Blockchain monitoring and intelligence platform, PARSIQ, has opened up the results of its study on the distribution of cryptocurrency wealth across the top five cryptocurrencies, showing clearly that Bitcoin wealth is concentrated in a relatively small number of wallet addresses, and this number hasn’t changed significantly in years.
Andre Kalinowski, Co-founder at PARSIQ, said:
“Right now, just 6,457 individual wallet addresses hold fifty percent of the entire cryptocurrency wealth of all the top five cryptocurrencies. Excluding Bitcoin, that number drops to 1,805. The individuals and organiSations which control these addresses hold a huge amount of influence, and their power goes mostly unchecked because their activities go largely unchecked.
Cryptocurrencies were created with the desire to create a more egalitarian society away from government manipulation and centralised control. However, the latest research from PARSIQ has found that cryptocurrency wealth is controlled by a small number of early adopter and exchange-owned “whale wallets.”
Across the top five cryptocurrencies by market capitalisation, the most concentrated is Ripple, with half of XRP controlled by only 14 wallet addresses, just 0.001% of the total funded wallet addresses3. However, Ethereum isn’t far behind with 346 wallets consisting of 0.003% of wallet addresses1.
“HODLing” leads to increased concentration of wealth
The minimum number of Bitcoins required to enter the elite of the top 50% of Bitcoin wallet addresses is 347 BTC, or around $3.8m equivalent. On average, these wallet addresses have been in existence for just over two years, so much of the accumulated wealth pre-dates the surge of interest in late 2017.
In its first few years, Bitcoin wealth became gradually more distributed, but this accumulation has not changed significantly in two years (see chart below), and to some extent has gone into reverse. Ethereum and Litecoin have also been relatively stable, although far fewer wallets control half the wealth with these cryptocurrencies – 346 and 180 wallet addresses respectively.
Bitcoin Cash is the exception to a stable two years. It has seen a significant concentration of wealth since the hard fork that created it, as large holders of BCH cashed in on their holdings.
The real story is that although mass media interest in 2017-2018 has brought significant interest, very little has changed under the surface. The whales are still holding cryptocurrencies long-term and still have the ability to move the markets.
“The fact is, the transparency that’s part of the DNA of cryptocurrencies has been clouded by the size and complexity involved in analysing these cryptocurrencies. It’s time to open up the blockchain to everyone, to encourage fairer wealth distribution, or at least ensure the whales are more accountable through better monitoring.”
- Bitcoin wallet addresses holding at least $1, currently numbering 20,314,235 wallets. Ethereum wallet addresses with at least $1 number 10,129,112
- Credit Suisse Wealth Report 2017 found 1% of the world’s population own 50.1% of the global wealth (or approximately $140tn) https://www.credit-suisse.com/about-us/en/reports-research/global-wealth-report.html
- Wallets holding at least 20 XRP (approximately $6), currently numbering 1,592,456
PARSIQ is a next-generation blockchain monitoring and intelligence platform. PARSIQ’s solution listens to all blockchain activity and builds a fully indexed representation of what happens in a particular blockchain and when. It goes beyond the current solutions, with new innovations such as mempool monitoring and ParsiQL, a query language to allow complex logic conditions to be created that reacts in real-time to the events or specific transactions on the blockchain. The technology protects against unauthorized blockchain events, it’s market intelligence capability gives new insights into blockchain trading activities and with forensics, it can deep dive into past criminal activity that has taken place on the blockchain.
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Also published on Medium.