The low distribution of bitcoins is an argument often made by critics of Bitcoin. What is it really ?
Distribution of bitcoins
Certainly, a few thousand people were able to amass several hundred bitcoins in the first years. But we could say the same of those who saw the potential of Google, Apple, Amazon very early on…
In short, the figures often given are those of Bitinfocharts :
Top10 addresses: 5.78% of all BTC
Top100: 14.63% (i.e. ~2.8 million BTC)
Top1000: 32.80%
Top10,000: 55.39%
It should now be noted that the most populated addresses essentially belong to the exchanges which actually guard the bitcoins of millions of people.
Glassnode has much more precise figures on the distribution of bitcoins. Here they are for January 2023, compared to two years ago:
-(Less than 1 BTC): 6.5% VS 4.9% in 2021
-(1-10 BTC): 10.5% VS 9% in 2021
-(10-50 BTC): 9% VS 8.9%
-(50-100 BTC): 4.6% VS 4.7%
-(100-500 BTC): 11.1% VS 11.8%
-(500-1000 BTC): 8.7% VS 6.6%
-(1000-5000 BTC): 14% VS 18.4%
-(More than 5000 BTC): 14.3% VS 13.3%
Here are even finer figures on the amount of BTC held on average in each tranche:
-(Less than 1 BTC): ~0.04 BTC ($873) for a population of 32 million people
-(1-10 BTC): ~2.7 BTC ($61,015) / 740,000 people
-(10-50 BTC): ~22 BTC ($487,200) / 80,000 people
-(50-100 BTC): ~74 BTC ($1.66M) / 12,000 people
-(100-500 BTC): ~214 BTC ($4.79M) / 10,000 people
-(500-1000 BTC): ~763 BTC ($17.1M) / 2,200 people
-(1000-5000 BTC): ~1855 BTC ($41.6M) / 1450 people
-(More than 5000 BTC): ~14,473 BTC ($324M) / 190 people
In short, it appears that an increasingly large share of bitcoins is held by the plebs (between 0 and 10 BTC). In 2022, the latter absorbed approximately 2.25 times more bitcoins than were mined.
Individuals holding less than 1 BTC are showing strong growth. The adoption rate, indicated by the creation of new addresses under 1 BTC, has jumped. Nearly 1.9 million of these types of addresses were created in the month of May alone. A record.
Yellow: Number of addresses holding more than 0.1 BTC
Red: Number of addresses holding more than 1 BTC
Miners and exchanges
We sometimes hear that miners concentrate BTC. This is a myth that does not take into account the operating costs of this industry. The miner with the most is the American Marathon with 13,280 BTC in reserve.
Only four listed miners have more than 1000 BTC in reserve. Many people have no choice but to sell their entire harvest to make ends meet.
While they held almost 100% of bitcoins in the early years, miners now own less than 4% (if we subtract the BTC mined by Satoshi Nakamoto).
Here is another graph that clearly illustrates the general trend since 2021:
Concerning exchanges, we note an acceleration in BTC outflows since the bankruptcy of FTX. The period from November to December 2022 saw exchange clients withdraw their holdings at a rate of 200,000 BTC/month.
Today, the twenty largest exchanges collectively hold approximately 1.8 million of bitcoins. Including 543,000 BTC at Binance, 433,000 BTC at Coinbase, 372,000 BTC at Bitfinex and 124,000 BTC at OKX.
All exchanges hold approximately 2.2 million BTC, compared to 3.2 million at the peak of 2020. In other words, more and more people are taking the plunge by taking possession of their private keys themselves.
In summary, accusations of BTC concentration in a few hands should always be taken with a grain of salt.
The arrival of Bitcoin ETFs will have the effect of once again concentrating BTC on a few addresses. But again, these BTCs will actually belong to millions of people.
Let’s finish by saying that 41% of bitcoins are now found in wallets of less than 100 BTC.
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