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Why 1 percent Bitcoin Controls 27 percent of all Circulating Coins

Bitcoin

The cryptocurrency market is currently dominating the world. Several crypto coins have successfully gained attention and hype among investors and the crypto community. Bitcoin is known as the crypto king, a pillar for other digital assets in the market. It has the full potential to attain new limits in the market as Blockchain technology becomes a hot sensation.

The largest fund holding Bitcoin is Grayscale’s Bitcoin Trust, which has 643,572 BTC, equivalent to over 3% of the cryptocurrency’s circulating supply. Next is CoinShares, which holds around 42,980 BTC through XBT Provider’s exchange-traded products. US-based software company MicroStrategy (MSTR) is the world’s biggest publicly traded corporate owner of bitcoin with holdings of about 129,218 BTC, according to its Q1 2022 earnings report. MicroStrategy’s BTC holdings were worth over $3bn, as of 22 July 2022.

There is no doubt that the Bitcoin market is exponentially growing, and we even saw crazy growth in 2017-2019. Celebrities, institutions, and companies are still making considerable investments in Bitcoin amid the crypto winter, hinting at tremendous growth in the future.

Bitcoin has spread its dominance in the crypto market and gained a priority in the crypto investment space. As more and more investors are joining the crypto market daily, the total supply of digital assets has broadened. 

As blockchain offers zero transparency on public records, anyone on the internet can see how much digital assets investors control. With the help of this, some studies and report notes have been executed to map out what kind of investors hold the majority of a crypto asset.

According to the Wall Street Journal (WSJ report) and a new study by the National Bureau of Economic Research reveals that a minuscule group of institutional investors control more of the total supply of Bitcoin. Researchers found that 0.01 of Bitcoin holders control 27 percent of the total Bitcoin supply. 

Also Read:

What is Bitcoin?

Bitcoin is the world’s first decentralized digital cryptocurrency, which means that it is a form of electronic money that only has existence in the virtual world rather than in physical presence. Unlike any fiat currency, Bitcoin can’t be regulated by any authority body or government as it is decentralized in nature. Bitcoin is peer-to-peer virtual money that is backed by open-source computing nodes on the Blockchain network and implements cryptography mechanisms to ensure authenticity from both ends.

How many Bitcoins do you need to be in the top 1%?

Is 0.28 BTC enough to be in the top 1%? Well, probably yes. The report found that less than 1% of the whale Bitcoin (BTC) holders allegedly regulate more than a quarter of the total circulation of Bitcoin. The National Bureau of Economic Research, a private non-profit research organization in America, released a study claiming that nearly 10,000 Bitcoin investors, or 0.01% of all BTC holders, acquire 5 million BTC, or 27% of the total 18.9 million coins in circulation.

The amount of BTC held by one percent of investors is equivalent to nearly $232 billion. The study was conducted with the help of finance professors Antoinette Schoar at MIT Sloan School of Management and Igor Makarov at the London School of Economics to map out and analyze every transaction made within the Bitcoin network to conclude the dominance of Bitcoin holders in its 13-year-old history. 

On 18 February, Blockworks Group analyst Jake Levison tweeted about the total Bitcoin amount to be owned to make it into the top 1% of Bitcoin holders worldwide. He said:

If you own 0.28 BTC, you’re statistically guaranteed to be in the richest 1% of the world in BTC terms.

Jake Levison, Blockworks Group Analyst

Though this fact received 1.5K likes from crypto enthusiasts, not everyone agreed with Levison’s tweet. @Haggsboson replied, “Maybe earlier, in 2030, average holdings are only 0.01 BTC, assuming 1 billion using the network.”

The 2030 assumption came after Unchained Capital’s Parker Lewis published a recent study called ‘Bitcoin Obsoletes All Other Money.’ Levison’s estimation is not really new to the crypto market as others have already assumed that 0.28 BTC is all to make you into the wealthiest 1% of bitcoin holders.

Why 1 percent Bitcoin Controls 27 percent of all Circulating Coins 1

Former Google Product Director Steve Lee explained the same fact in October 2018. He said, “If you own 0.28 BTC and HODL, you can be certain no more than 1% of the current world’s population can ever own more BTC than you. A modest investment of $1,830 today can ensure you are a 1% in a future Bitcoin world.” Many people agreed with Lee’s statement in 2018, but one replied, “That’s true, but you have to factor in that not all wealth will be in BTC. You might be in the 1% top BTC balances but not in the top 1% wealth.” So, on average, some bitcoinist think that holding around 0.01 BTC is enough to get into the top 1%, whereas few people agree that 0.28 BTC is all you need to get into the Bitcoin 1% club.

Why 1 percent Bitcoin Controls 27 percent of all Circulating Coins 2

15 BTC to Join the Bitcoin Club!

However, these two estimations from Lee and Levison seem too low, as research suggests that 15 BTC is the minimum amount needed to join BTC’s top 1%. A chart published in 2017 calculates that the top 1% of bitcoin holders need at least 15 BTC in their crypto wallet and 89 BTC to make themselves into the top 0.1%. According to the Blocklink.info chart, nearly 225,000 people are within the top 1% percentile range. A similar study was published by Bambouclub on 9 September 2017, and both reports implemented a new infrastructure of BTC distribution. Bambouclub and Blocklink.info published their reports on BTC’s distribution using a scheme that “disregards wallet and address data entirely.” The model’s research points include the following:

  • Power law applies to the total allocation of bitcoin wealth.
  • The distribution of bitcoin wealth is exactly the mirror of global wealth.
  • 25 million bitcoin owners.
  • No lost or burned bitcoins.
Why 1 percent Bitcoin Controls 27 percent of all Circulating Coins 3

In order to make it into the top 0.01%, Blocklink.info’s chart indicates that you need to own 433 BTC, and to push into the top 0.001% of bitcoin holders, you would require to hold 7,021 BTC. The study reported that only 500 people were in the 0.01% and just 250 people were placed in 0.001% in 2017. However, it is tough to get more accurate data in regard to the wealthiest bitcoiners as it is unknown if they hold any more amounts in different wallets.

Moreover, there’s a significant number of lost or burned bitcoins, and in January 2020, it was estimated to be more than 10 million BTC that had been sitting dormant for a whole year. The 10.7 million BTC that got lost is a significant part of the number of coins that haven’t moved in 2017.

What percent Bitcoin is owned by whales?

The study argues about the ramifications of centralization that are mainly twofold. First, it makes the entire bitcoin network more vulnerable to systemic risk. Second, the majority of the gains from the bullish price and increased adoption go to a disproportionately small-cap investor.

Elaborating on this, Ms. Schoar said, “Despite having been around for 14 years and the hype it has ratcheted up, it’s still the case that it’s a very concentrated ecosystem.” According to the WSJ report, there is a considerable gap between bitcoin holders and traditional American riches. Nearly 144 million wallets acquire the top position. Top holders of bitcoin control a significant share in BTC than the richest American personalities that hold in Dollars. The United States Federal Reserve says that the top 1% of US households control one-third of all wealth. 

Why 1 percent Bitcoin Controls 27 percent of all Circulating Coins 4

According to Quantum Economics founder Mati Greenspan, a majority of the total bitcoin supply is controlled by Satoshi Nakamoto, the pseudonymous creator of Bitcoin. Greenspan told Cointelegraph that Satoshi’s coins alone make up more than 5% of the bitcoin supply. He added, “Over time, the ownership of Bitcoin is designed to get more distributed. For fiats, the opposite tends to happen.” It’s worth highlighting that most of BTC’s circulating supply is also not directly controlled by anyone and is likely to be lost forever.

Lesser-known facts about Bitcoin’s Adoption Metrics

The number of BTC required to make it into the top 1% is nearly between 0.28 BTC to 15 BTC depending on various research. Steve Lee’s 2018 forecast assumes that there will only be 21 million bitcoins which is divided by 0.28 and then again divided by the number of people living on earth, which is 7.9 billion people as of October 2022. 

However, Jake Levison quickly gave up his statement when someone asked him about the timeframe to get into Bitcoin’s 1% club with 0.28. In reply, Levison tweeted,

From now until the end of time.

Jake Levison

The Blockworks Group analysts said,

My tweet was saying that if you own 0.28 BTC, only 1% of the world will ever be able to own more than you. Hence putting you in the top 1%.

Jake Levison

The answer to the BTC 1% club question is quite confusing and debatable as it comes with a lot of different calculations. The reason for finding the exact amount is unknown because it can’t be accurately calculated as the number of bitcoin transactions in mining bitcoin, bitcoin accounts, wallets, burned bitcoins, and bitcoin holders around the world is still unknown.

Moreover, there are several firms that made an attempt to calculate bitcoin holders in different countries and worldwide and came up with skewed online data. For instance, according to a research report published by Spencer Bogart of the venture capital firm Blockchain Capital, “Nearly 9% of the [American] population owns bitcoin.”

On 30 April 2019, Bogart added,

Including 18% of those aged 18–34 and 12% of those aged 35–44.

Spencer Bogart

However, there is a significant discrepancy with Bogart’s estimate as the study only reviewed 2,052 American adults, ignoring the 209 million adults who are currently 18 years of age and over. 

Should you invest in Bitcoin in 2023?

For a decade, Bitcoin has been turning out to be a profitable investment option. The price potential, developments, and the vast crypto market attract the attention of investors. Bitcoin has seen a tremendous spike since its inception, and it shook investors with its return on investment (ROI). For example, if you bought $100 worth of bitcoins in 2010, you could have been a millionaire today with a $20 million profit in your pocket. With these kinds of returns, it is better not to question its returns.

Why 1 percent Bitcoin Controls 27 percent of all Circulating Coins 5

According to CoinMarketCap, Bitcoin is currently trading near $19.4k with a market cap of $374 billion. As per the forecast data analysis, bitcoin’s price is expected to exceed $46,355 by the end of 2023, Bitcoin is anticipated to touch a maximum value of $45,391.04. Additionally, Bitcoin is capable of achieving a great deal in 2024. BTC is expected to reach $52,387.88 in 2024, making it a good investment option for investors in 2023.

Bitcoin may skyrocket soon in this crypto winter due to its vast community, and it may soon touch the $100k mark in 2025. Therefore, it is an excellent option for investing in bitcoins if you want to bring a wave to your investment portfolio out of digital currency. 

Bitcoin is the largest cryptocurrency in the crypto market by capitalization. It is a good investment option if you have high-risk management and a strong financial position. Bitcoin is the first choice of investors to bring a wave to their portfolio by adding exposure to this digital currency. However, we can’t guarantee its future investment as its price is highly volatile.

As Bitcoin is used to make international transactions at a low cost and protects users’ privacy due to its revolutionizing decentralization on the blockchain, skeptics argue that bitcoin is overvalued concerning its use cases. Other crypto experts say that it is a bubble and worthless as it has no actual use cases, one day, the bubble will pop, leading to a significant loss.

Final Words

Major bitcoin advocates revealed that the control of Bitcoin is dependent mainly on the hands of small-cap investors, and the study also revealed where and on what bitcoin is spent. According to the survey, 90% of Bitcoin transactions are not the outcome of users buying something with bitcoin; rather, the transactions are linked to wallet transfers between Bitcoin accounts.

The amounts can be examined as Bitcoin transactions have a public key through which it can be traceable on the blockchain network, and to eliminate the issue and maintain anonymity, Bitcoin holders usually move their funds within different crypto wallets to make the transaction harder to find. 

Of the remaining 10% of Bitcoin transactions, the report mentioned that less than 3% of them are connected to illegal transactions, frauds, or gambling, and the bulk of that 10% of transactions is linked to transactions made between several crypto exchanges and trading desks that represent major institutional investors. 

Bitcoin was introduced to the market in 2008 as an open-source software project that intended to be an electronic form of physical cash without any third party by working on a decentralized mechanism. Users were able to download its client software and become a node on the network to start mining bitcoin.

As Bitcoin is highly decentralized in nature, a user trades and uses bitcoin through trustworthy decentralized crypto exchanges. The costs of mining bitcoin have touched its peak, which has barred low-cap investors from joining the bitcoin race.

The potential profit of bitcoin miners and crypto exchanges has skyrocketed over the past two years as the bitcoin price jumped from $5,000 in March 2020 to as high as $68,990 last year. The number of users holding bitcoin is now doubled than before due to exponential growth, and now bitcoin has gathered major well-known investors like hedge-fund manager Paul Tudor Jones, entrepreneurs such as Elon Musk and Mark Cuban, and celebrities like actress Maisie Williams.

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FAQs

How much Bitcoin controls the rest?

The report found that less than 1% of the whale Bitcoin (BTC) holders allegedly regulate more than a quarter of the total circulation of Bitcoin.

How much Bitcoin do you need to be the wealthiest of Bitcoin holders?

0.28 BTC is all it takes to make you the wealthiest 1% of Bitcoin holders.

Alden Baldwin

Alden Baldwin

Journalist, Writer, Editor, Researcher, and Strategic Media Manager: With over 10 years of experience in the digital, print and public relations industries, he has been working with the mantra, Creativity, Quality and Punctuality. In his waning years promises to build a a self sustaining institute that provides free education. He is working towards funding his own startup. As a technical and language editor, he has worked with multiple top cryptocurrency publications such as DailyCoin, Inside Bitcoins, Urbanlink Magazine, Crypto Unit News and several others. He has edited over 50,000+ articles, journals, scripts, copies, sales campaign headlines, biographies, newsletters, cover letters, product descriptions, landing pages, business plans, SOPs, e-books, and several other kinds of content.

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