Tell you a shocking fact: Bitcoin's wealth distribution is extremely uneven.
According to statistics, 2.8% of the Bitcoin wallet address controls the supply of Bitcoin by 95%. At first glance, the bitcoin community's wealth distribution seems to be more uneven than the US (the top 10% of citizens have more than 75% of the wealth) and South Africa (the country with the most unequal distribution of wealth).
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This statistic comes from BitInfoCharts, which tracks the bitcoin distribution of all known bitcoin addresses. The website calculates this based on public bitcoin information and draws this conclusion. However, this data is not so reliable and does not explain the entire situation of bitcoin allocation. At the same time, we should not use this data to draw extreme conclusions. The following five points will tell you why.
Reason 1 Nakamoto holds a lot of bitcoin
When Bitcoin was first introduced in 2009, its anonymous inventor, Nakamoto Satoshi, dug up a large amount of bitcoin in order to make the Bitcoin network run smoothly (otherwise Bitcoin blocks could not be generated normally). According to BitMEX estimates, Nakamoto has dug up about 700,000 bitcoins, which is equivalent to $7.4 billion at today's price.
When some other miners joined the Bitcoin network and the network was functioning normally, Nakamoto switched out. Since then, the address used by Nakamoto has never transferred a bitcoin, so most people believe that these coins will not be recirculated. However, BitInfoCharts still counts these bitcoins into the wealth distribution data, which accounts for 3.9% of the current total bitcoin supply.
Cause two lost, not found and forgotten bitcoin
The bitcoin in the hands of Nakamoto is not the only one that will not be circulated in the near future. One of the characteristics of Bitcoin is that users cannot delete it, you can only send it to an address that no one can access. For example, there used to be a player who accidentally lost a hard disk worth $86 million bitcoin. In fact, many people like him, either lost their private key or forgot their password, anyway, their Bitcoin has been "locked" in the wallet.
Chainanalysis estimates that, in fact, there may be 3.8 million bitcoins (including Nakamoto's) that will disappear forever like this. These bitcoins account for 20% of the current supply, and since many of the lost bitcoins were dug up early, removing these bitcoins from the calculations of BitInfoCharts would make bitcoin's wealth distribution seem more fragmented.
Reason three exchanges hold a lot of bitcoin
Most addresses that hold Bitcoin are cryptocurrency exchanges. The exchange hosts Bitcoin on behalf of users, but that doesn't mean they have Bitcoin. Aside from security issues (the exchange is a hacker's current situation), users can withdraw their bitcoin from the exchange at any time.
Trader Sasha Fleyshman pointed out that of the 10 wallets with the largest number of bitcoins, 7 are cryptocurrency exchanges, which contain about 727,000 bitcoins, which accounts for 4% of the bitcoin supply. Coupled with hundreds of other cryptocurrency exchanges, this number may be higher.
Cause 4 is very easy to generate bitcoin addresses
The drawback of BitInfoCharts in calculating the distribution of bitcoin holdings is that it focuses on the number of bits in Bitcoin and how many bitcoins are in each address. However, it does not consider those active addresses. Since generating a bitcoin address is very simple, exchanges often create different addresses each time they send and receive bitcoins. This would result in millions of empty addresses, or only one satoshi address.
The BitInfoCharts data shows that there are millions of bitcoin empty addresses, but in reality, these addresses are more like being abandoned by users.
Cause Five Bitcoin Address does not represent Bitcoin user
Another reason why Bitcoin wealth distribution cannot be measured in this way is that it measures the address, not the user. The statistics provided by BitInfoCharts are just a tool to see which address has how many bitcoins. However, anyone can have multiple addresses and the number of bitcoins in each address can be different.
If this is the case, then the results of the data analysis will also create certain misunderstandings, which will make people feel that the bitcoin's wealth distribution is more balanced than in reality.
Why does BitInfoCharts calculate bitcoin allocations this way, because adding all the bitcoin addresses is much simpler than finding out who owns which addresses. But in any case, using the data provided on BitInfoCharts as a measure of Bitcoin's true wealth distribution is completely misleading.