Tech

Bitcoin is largely controlled by a small group of investors and miners, according to research.

Why is it important: Bitcoin and other popular cryptocurrencies are easier to obtain than ever, but that hasn’t changed the fact that a small percentage of users still control most of the market. According to a new study by the National Bureau of Economic Research (NBER) via Bloomberg, the 10,000 largest individual bitcoin investors control roughly one-third of the cryptocurrency in circulation.

It can be difficult to distinguish individual owners from larger groups and exchanges that hold currency for many users, but NBER was able to skirt the problem lies in the use of a specific data collection method to make the distinction. They found that at the end of last year, the first 10,000 private owners controlled about 8.5 million bitcoins, while the top groups controlled about 5.5 million bitcoins.

Digging deeper, the NBER found that there were about three million of the 8.5 million bitcoins controlled by the largest 10,000 investors for the 1000 largest private investors.

Moreover, the researchers note that their measurement of concentration is likely an understatement, as they cannot rule out that some of the largest addresses are controlled by the same person. This is especially true of early bitcoins, many of which are believed to belong to the mysterious creator of the cryptocurrency, Satoshi Nakamoto.

If you look at the concentration of miners, the situation becomes even more obvious.

The NBER found that the first 10 percent of mining operations control about 90 percent of the bitcoin mining capacity. Moreover, only 0.1 percent of miners (about 50 operations) provide half of all mining.

These observations led the NBER to conclude that despite the attention paid to Bitcoin over the past few years, the ecosystem is still dominated by a concentration of key players, making the ecosystem vulnerable to systemic risk, such as a 51% attack where a group of miners can take over. control most of the network.

Bitcoin is currently trading at just under $ 62,000 after hitting an all-time high of $ 67,000 last week. Other coins have also been on the rise lately. Shiba inuThe Dogecoin meme coin has risen more than 64 percent since the end of last week.

Image Credit Rodnae Productions


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