- Bitcoin is more fairly distributed than altcoins.
- Cardano may be dangerously centralized.
- Whales are still a significant issue for BTC.
When contemplating crypto whales, the knee jerk reaction is to automatically think, “lotsa bitcoin;” However, according to statistics from Intotheblock—a crypto intelligence company—BTC ownership may actually be less concentrated than most altcoins.
Tracking numerous cryptocurrency addresses holding more than 1% of the supply of Bitcoin; Ethereum; Bitcoin Cash; Litecoin; BitcoinSV; Cardano and Tether, the analytics firm discovered that bitcoin distribution is actually fairer than many altcoins.
39 bitcoin addresses boast, holding a relatively meager 11% of the total supply of BTC. By sheer contrast, 154 addresses own 40% of all ETH, and 128 addresses own 47% of Litecoin’s total supply. Further, a mere 140 addresses allegedly hold well over half of all USDT—a whopping concentration of 58%.
So while bitcoin gets a bad rap for being hoarded by whales, it seems altcoins may be just as bad, if not worse.
The Not-So-High-Price of a 51% Attack
Thes statistics are most concerning among those cryptocurrencies employing a proof of stake algorithm, whereby block validation is determined via holdings. The higher the stake, the more mining power is granted.
Of course, in the instances of centralization, this can pose a distinct issue. A person or group in possession of 51% of the total supply of a POS-based cryptocurrency effectively controls the network and could carry out a myriad of nefarious deeds. ADA is one such staking coin, and with only 39 addresses controlling 40% of the total supply, a malicious attack is not far from the realms of possibility.
Of course, being the majority stake owner is, in itself, probably incentive enough not to launch an attack.
Bitcoin Still Has a Major Whale Problem
Equal distribution aside, it seems bitcoin’s whale troubles are still very much present.
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According to a recent Bloomberg article—citing data via research firm, Coin Metrics—investors holding 1,000 to 1 million BTC control a massive 42.1% of bitcoin’s total supply. Moreover, this sum is up 4.2% from figures collated back in 2017, proving that the problem is continuing to persist.
Speaking to Bloomberg John Griffin, a finance professor at the University of Texas at Austin, affirmed the rather obvious argument against whales:
The problem with a few large players holding crypto is that when they sell they can easily push the price down, which makes the market susceptible to rapid swings.
Nevertheless, Bloomberg did provide one tidbit of hope gleaned from blockchain analytics company, Flipside Crypto. According to researchers, only 3.5% of all crypto addresses are actively trading. This seems to allude to the idea that the vast majority of whales are HODLing… Let’s hope it stays that way.
This article was edited by Samburaj Das.