A new study has revealed that nearly half of all Bitcoins, the digital currency decentralized by Elon Musk is owned by just a few people despite its popularity. This was according to a report from Bloomberg.
It was also revealed that Bitcoin mining has a high concentration by a small percentage of all miners. This could potentially leave the market vulnerable to colluding miners.
According to the National Bureau of Economic Research, approximately one third of all Bitcoins in circulation is owned by the top 10,000 investors. NBER researchers used data collection methods that distinguished individuals and organizations to help them organize and sort difficult-to-track crypto addresses. The researchers found that approximately 8.5 million Bitcoin is owned by individuals and that at least three million of the cryptocurrency’s top 1,000 investors own it.
Researchers Igor Makarov, Antoinette Schor and others believe that this measurement of concentration is an exaggeration. We cannot rule out the possibility that some of the most important addresses are controlled or managed by the same entity. Satoshi Nakamoto was the creator of Bitcoin. He held Bitcoins at around 20,000 addresses. This made them appear to belong to 20,000 people.
A 51 percent attack on Bitcoin could result in the loss of bitcoin
Researchers also found that 90 percent of the global Bitcoin mining capacity is owned by the top 10 percent. Only 0.1 percent of miners own 50 percent of the mining capacity.
The new study shows that this high concentration makes the Bitcoin network vulnerable to a 51 per cent attack. This is where miners work together to control the majority of Bitcoin and hold it hostage.
The researchers stated that, despite all the attention Bitcoin has received in recent years, the Bitcoin ecosystem remains dominated by large and concentrated players. These could be large miners, Bitcoin holders or exchanges. This inherent concentration makes Bitcoin vulnerable to systemic risks and means that most of the benefits from further adoption will likely fall to a small number of participants.
Bitcoin hit a new record of $65,000 this month shortly after it entered the New York Stock Exchange on October 19. This year, the cryptocurrency saw a huge rise in popularity due to a prominent $1.5 Billion investment by EV automaker Tesla and endorsements by its CEO Elon Musk.
To bypass the need to have a central regulatory body, the digital currency is processed through the blockchain. The NBER’s latest study shows that Bitcoin is not as decentralized as the label suggests.