Bitcoin has come a long way in the short time it’s been here. However, it was initially designed to diversify wealth and limit the gap between the haves and have nots by giving people the financial freedom and independence they had always wanted. Sadly, things haven’t quite turned out that way, as it appears a wealthy one percent – just like we see in standard finance and business – controls much of the world’s bitcoin supply. Bitcoin Hasn’t Distributed Wealth Evenly A new study conducted by the National Bureau of Economic Research shows that the wealthiest one percent of bitcoin investors controls almost as much of the digital currency as most American households possess USD. The study examined the top 10,000 accounts. Together, they hold as many as five million
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Nick Marinoff considers the following as important: Bitcoin, Bitcoin News, National Bureau of Economic Research, News, wealth gap
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Bitcoin has come a long way in the short time it’s been here. However, it was initially designed to diversify wealth and limit the gap between the haves and have nots by giving people the financial freedom and independence they had always wanted. Sadly, things haven’t quite turned out that way, as it appears a wealthy one percent – just like we see in standard finance and business – controls much of the world’s bitcoin supply.
Bitcoin Hasn’t Distributed Wealth Evenly
A new study conducted by the National Bureau of Economic Research shows that the wealthiest one percent of bitcoin investors controls almost as much of the digital currency as most American households possess USD. The study examined the top 10,000 accounts. Together, they hold as many as five million bitcoin units, which at press time, are worth more than $230 billion.
It is believed that as many as 114 million people across the globe own or trade crypto. Right now, there are 19 million bitcoin units in circulation, roughly one percent of all bitcoin investors control as much as 27 percent of the total units available for trading.
Compare this with the one percent of households in America that control roughly one third of the nation’s standard wealth. During these times, the wealth gap appears to be growing like it never has before. Arriving at this information were the study’s conductors Antoinette Shoar and Igor Makarov, professors at the MIT Sloan School of Management and the London School of Economics respectively.
Both figures looked at every bitcoin transaction to occur over the last 13 years. They say that with the data in hand, there are two major problems that stem from bitcoin’s present circumstances. The first is that it is now vulnerable to systemic risk. The second is that most of the gains that arise from bitcoin being adopted by institutions or from its price spikes are going to a limited number of investors.
In an interview, Schoar explained:
Despite having been around for [nearly] 14 years and the hype it has ratcheted up, it’s still the case that it’s a very concentrated ecosystem.
A Centralized Financial Tool?
What’s truly frightening about this situation is that bitcoin appears to be everything it was designed not to be when it first arrived on the financial scene. It is not distributing wealth evenly. Instead, it is becoming a highly centralized financial tool in which a select few people are allegedly benefiting, while the rest are stuck taking the scraps that fall from the table.
In addition, the price of the asset has become so big in recent years that very few people can afford to purchase it. In just under two years, the world’s number one digital currency rose from being (briefly) under $4,000 in March of 2020 to just under $70,000 last November.