The beauty of Bitcoin is that is is decentralized. It is supposedly there to enable those who are outside of the banking, economic and finance sector of Wall St and the stock market to also access some degree of sovereignty without the need for intermediaries like banks or brokers. You control your own currency, coin and wallet keys.
Yet as in all financial markets, Bitcoin seems to also attract whales. These are the massively rich who can buy up loads of coin like a whale gulping up mouthfuls of plankton in one foul swoop. Whether they are wallet holders who have been involved in accumulating Bitcoin since the beginning and simply "hodl" until now, thus accumulating massive profit without lifting a finger, or whether they are part of the already wealthy who simply kept on buying the dip, and accumulated year after year, one thing is for certain, there are some huge Bitcoin hodlers and accumulators out there.
So, is Bitcoin really decentralized or are their big wallets already controlling the market and the limited amount of 21 million Bitcoin ever in existence? The good news is that the blockchain upon which Bitcoin runs is an open ledger and can be seen by anyone who wishes to in this transparent industry. We also happen to have some avid sleuths and full time researchers in the crypto space who are publishing their findings all the time for us to inspect. One such organization has just published their recent findings if you want to know more at https://blog.chainalysis.com/reports/the-economic-impact-of-ether-whales?
According to them, 20% of all Bitcoin ever mined is owned by 488 whales. About 18 million out of the total 21 million has been mined so far and there will never be more than 21 million, so it will only increase in value. Added to that we have 33% of the second most traded cryptocurrency, Ethereum owned by 376 whales by 2019. This sounds a little like a monopoly or centralized domination and control of the supply, leading me to think that this decentralized theory of cryptocurrency may have been hijacked. And it may well have been already, but the ray of hope is that the amount of Ethereum owned by whales is down from the 47% owned by those whales in 2016. This means that the whale domination has dropped almost 15% in the past three years.
To find out even more, I went to another interesting website that you might like for data called https://bitinfocharts.com/top-100-richest-bitcoin-addresses.html. Here we can see the top 100 wallet addresses of the biggest Bitcoin hodlers of all currently. Actually we can see every single Bitcoin wallet listed, even yours and mine. The entire list is there by the looks of it. That's how open and transparent the Bitcoin blockchain ledger is. We can see the wallets and how much they contain and when any Bitcoin is moved and to which other wallet it is moved, but we can't tell who owns the wallets. "Aye, there's the rub", as Hamlet said in his soliloquy "to BTC or not to BTC."
Pis from pixabay
Still at least we can observe the movement of the Bitcoin and all the other coins on their respective blockchains, except perhaps for Monero and other privacy coins. With Monero you can find the block details all listed but no wallets, no addresses hodling Monero because it is private, thanks to the South African Monero founder, "Fluffy Pony" who took privacy to be more important than anything.
But back to Bitcoin – in the "rich list" you can see the top wallets by net worth and Bitcoin amount held, and the top 5 wallets are all exchanges, namely Bittrex with 121 805 BTC, Binance 107 432 BTC, Bitstamp 102 848 BTC, Huobi 98 040 BTC and another Binance 89 303 BTC. Scattered down the top 100 list are other exchanges all named and labeled for the public to see, but interspersed in between are the whales, anonymous owners of major amounts of Bitcoin, some of which has never been moved. Take number seven in the top 100. This wallet was created in March 2011 and has just under 80 000 BTC in it, the last of which went in just three days ago. And none have ever left. This wallet has been accumulating since 2011 until today and just hodling, though bull and bear markets.
This kind of wallet or Bitcoin investor doesn't affect the price since they don't flood the market with any of their Bitcoin, but some whales sometimes do, and the price of Bitcoin can be affected as a result, to our detriment as plankton swimming around the whales in the crypto ocean. There are other websites with observers tracking whale moves who will inform us every time a large move of Bitcoin from one wallet to another occurs. Especially if it's to an exchange.
Further good news is that, according to the chainalysis.com website, the Ether whales only really account for 7% of all economic activity on the Ethereum blockchain, the rest are all simply hodlers. So the top ETH hodlers don't really affect the price and we can presume the same for BTC, except on that odd occasion. A certain percentage will indeed make waves in the market when they splash about. It's actually whale season here where I live now on the south coast of Africa as every year around this time in winter the whales arrive in my bay for calving. I wish the crypto whales were as predicatble.
With the whale dominance in ETH declining from 47% down to 33% since 2016 it is a good sign that centralization of crypto holdings is not growing, and as the market matures over the coming years more and more big institutional investors will buy in and dilute the dominance somewhat, spreading the supply further out to more wallet holders. The conclusion seems to be that although whales can affect intraday volatility considerably on the odd occasion that they dump a massive amount of cryptocurrency on the market via an exchange for trading, they don't affect the long term price of the particular coin itself. This apparently concurs with traditional stock market action too over the course of history, so it seems that we need not fear the whales all that much. The real risk is more likely from the sharks who lie in wait for non-discerning and naive investors upon whom they pounce with scams and ponzi schemes galore. Bitconnect 2.0 anyone? Apparently they're on the rise so surfers and investors beware.