The information in the report isn’t entirely new, but a working paper that was released on the National Bureau of Economic Research’s website in October, based on data gathered until the end of June.
The Wall Street Journal claimed this morning that “0.01% of Bitcoin holders control 27% of the currency in circulation,” which gave a boost to the conclusion of the earlier assertion by the National Bureau of Economic Research.
Key findings of the report
The top 1,000 investors control about 3 million, or 16%, of all circulating Bitcoin, and the top 10,000 investors own around 5 million, or 27%, of Bitcoin,
The report showed cryptocurrency exchanges control 75% of real Bitcoin volume, while other types of transactions, such as illegal transactions or mining rewards, explain only a minor part of total volume.
Exchanges are also the blockchain’s most connected nodes. The great interconnection of exchanges, as well as the ease with which tainted bitcoins can be mixed in with clean volume, has significant consequences for transaction transparency and traceability, as well as the implementation of Know-Your-Customer (KYC) regulations across the network.
Bitcoin mining capacity is highly concentrated and has been for the last five years. The top 10% of miners control 90% and just 0.1% (about 50 miners) control close to 50% of mining capacity.
Furthermore, this mining capacity concentration is counter-cyclical and varies with the price of Bitcoin. It reduces when the Bitcoin price rises sharply, and it rises when the price falls or falls sharply.
While intermediary balances have been continuously expanding since 2014, by the end of 2020, they will only total 5.5 million bitcoins, or around one-third of the total Bitcoin in circulation. Individual investors, on the other hand, will control 8.5 million bitcoins by the end of 2020, accounting for over half of all bitcoins in circulation.