So much for bitcoin democratizing the world of finance.
A new study has found that less than 10,000 people worldwide collectively own 5.5 million bitcoin — nearly a third of the 18.77 million bitcoin that thus far has been mined. The latter currently carries a market value of nearly $1.2 trillion.
What’s more, less than 1,000 people own 15 percent of the bitcoin that’s in circulation, a chunk that’s currently worth $180 billion. The study from the National Board of Economic Research notes the concentration could be even more acute than it is able to prove.
“Our results suggest that despite the significant attention that bitcoin has received over the last few years, the bitcoin ecosystem is still dominated by large and concentrated players, be it large miners, bitcoin holders or exchanges,” study authors Igor Makarov and Antoinette Schoar found.
“This measurement of concentration most likely is an understatement since we cannot rule out that some of the largest addresses are controlled by the same entity,” Makarov and Schoar said.
The concentration of bitcoin mining — the process of introducing new bitcoin into circulation — is even more problematic, the authors write. Just 10 percent of bitcoin miners are responsible for 90 percent of bitcoin mining and 0.1 percent of miners are responsible for 50 percent of bitcoin mining.
“This inherent concentration makes bitcoin susceptible to systemic risk and also implies that the majority of the gains from further adoption are likely to fall disproportionately to a small set of participants,” the authors added.
The price of bitcoin has jumped from around $13,000 in November to nearly $67,000 last week. On Tuesday, it recently changed hands at $62,092.94.
