The “top 1%” has referred to the nation’s wealthiest Americans by income or net worth. Now, a new study has found leading bitcoin holders rule a bigger share of the cryptocurrency than the wealthiest U.S. households control in dollars.
The Blockchain Analysis of the Bitcoin Market by the National Bureau of Economic Research revealed 0.01% of bitcoin owners dominate 27% of the currency. The cost to mine it has become so high that only a small group of enterprise-level firms can afford to do it.
Researchers found the top 10,000 bitcoin accounts hold 5 million bitcoins, or $232 billion. Given Crypto.com reports 114 million people around the globe hold bitcoin, the fraction of top holders control 27% of the 19 million bitcoins in circulation. In contrast, the Federal Reserve Board reports the top 1% of households hold 33% of all the country’s wealth.
The 53-page analysis represents the first time researchers have chronicled bitcoin, which debuted in 2008. Researchers argue that the bitcoin sector is susceptible to systemic risk and most gains from increasing prices and the expansion of the currency will go to a very small group of investors.
“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,” Antoinette Schoar, professor at MIT Sloan School and author of the study told The Wall Street Journal.
While the open-source software project was intended to be an electronic form of cash without caretakers, bitcoin has emerged as highly centralized. Most trading, for example, is completed through exchanges.
A single bitcoin has seen wild increases in value to $68,990 in November, up from $5,000 in the first quarter of 2020, a 1,278% increase.
The currency has attracted the attention of entrepreneur Elon Musk, Shark Tank star Mark Cuban and former First Lady Melania Trump.