Bitcoin first came into existence on Jan. 3, 2009 when Satoshi Nakamoto mined the genesis block, minting the first cryptocurrency. In the years since, some wallet addresses have amassed a large portion of the supply.
According to the Blockchain Council, more than 19.71 million Bitcoin (BTC) have been awarded to miners in block rewards. Nakamoto’s white paper dictates only 21 million are available, meaning most Bitcoin is already in circulation.
BitInfoCharts data shows that around 1.86% of wallet addresses — over one million — hold more than 90% of all total BTC currently in circulation. Known as whales, some of these individuals or entities hold large amounts of crypto.
Speaking to Cointelegraph, Caroline Bowler, CEO of Australian crypto exchange BTC Markets, said any concentration of BTC ownership among a small number of addresses presents both challenges and benefits.
“On one hand, it raises concerns about market manipulation, centralization and liquidity constraints,” she said.
“On the other hand, it provides these large holders with substantial market influence, strategic advantages and exclusive opportunities.”
Bowler says that for the broader BTC ecosystem, the concentration of crypto underscores the importance of continued efforts to promote decentralization and enhance market stability to mitigate potential risks associated with uneven wealth distribution.
Nakamoto’s original BTC white paper proposed a decentralized system for peer-to-peer transactions without going through a financial institution or intermediary. His goal was to take financial control back from the elites.
According to data from Exploding Topics, just over 46 million BTC wallets hold at least $1 in value. Less than half of these wallets have more than $100 worth of crypto.
BitInfoCharts data shows only four wallets hold between 100,000 and 1 million BTC, totaling 688,681 BTC. The next 100 largest owners possess a combined total of 2,464,633 BTC. Together, these 104 addresses account for about 15.98% of the total supply.
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Bowler speculates that if the entire BTC supply were to ever be accumulated by a small group of whales, it would change the whole ecosystem.
“The concentration of 100% of Bitcoin in a few addresses would fundamentally alter the dynamics of the Bitcoin ecosystem,” she said.
“It would centralize control, undermine the core principles of decentralization, and potentially lead to market manipulation, loss of trust and increased regulatory scrutiny.”
At the same time, Bowler says these theoretical holders could have unprecedented power over the BTC network and its future. She believes the result would likely damage BTC’s reputation and drive users toward more decentralized alternatives.
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“If 100% of Bitcoin is in the hands of the few, it is likely that interest and development on the network would fade,” she said.
“The point of Bitcoin is that it is universal with trading and uses popularized by ordinary people. If it loses that popular touch, an alternative will likely appear.”
Unprecedented market control but not much else
Phillip Lord, president of crypto tap payment app Oobit, told Cointelegraph that if a small number of addresses owned most of the BTC, these whales would gain even more control over the market, but they still couldn’t change the Bitcoin Network or protocol.
“This centralization could potentially impact the market, as these addresses could influence Bitcoin’s price through large transactions,” he said.
“However, owning such a substantial portion of Bitcoin does not inherently provide direct control over the protocol or the ability to change its code.”
Whales already wield significant influence over BTC market dynamics, with their massive holdings giving them the power to sway supply and demand. As a result, traders and other people in the space tend to keep an eye out for any transactions by whales.
When whales increase their BTC stash, prices tend to soar, while selling off portions of their holdings can lead to declines.
Lord says there is a distinction between BTC as a cryptocurrency and the Bitcoin network, which serves as the project’s decentralized infrastructure.
While individuals can own BTC as a token, the Bitcoin network operates on decentralized architectural principles.
Lord thinks the protocol or code could be changed, but it requires a decentralized consensus process, not control over most of the BTC. Changes are proposed through Bitcoin Improvement Proposals (BIPs), which the community then discusses and reviews.
“For a change to be implemented, it must gain broad support from miners, developers and node operators,” Lord said.
“Once there is sufficient consensus, the changes are incorporated into a new version of the Bitcoin software, which users can choose to adopt. If a significant majority adopts the new version, the changes become part of the Bitcoin protocol.”
Governance model relies on community consensus
Jonathan Hargreaves, global head of business development at Web3 ecosystem Elastos, which developed the Bitcoin layer-2 solution, told Cointelegraph that any concentration of wealth among the top 1% remains a central global economic issue.
According to data from United Kingdom-based nonprofit organization Oxfam International, 81 billionaires have more wealth than 50% of the world combined.
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If BTC went down that path, Hargreaves said the “concentration could lead to centralization.” That could potentially alter the “foundational principles of Bitcoin,” which aimed to redefine the social contract toward a global consensus.
He doesn’t think any amount of BTC will provide extra control over the network, though, and the only additional benefit would be wealth.
“Bitcoin and decentralized currencies initially promised greater inclusion, but this goal has not materialized as anticipated,” Hargreaves said.
“However, Bitcoin’s governance model does not grant holders the authority to alter its core mechanisms. Key principles like the 21 million coin limit and non-inflationary nature are immutable, so the benefits to this 1% are limited to the wealth creation opportunity.”
Certain aspects of the BTC code have been modified or removed in the past. Operation Concatenate (OP_CAT), an opcode that allowed users to combine two data sets into a single transaction script, was disabled in 2010 by Nakamoto over security concerns.
Hargreaves says the governance model relies on community consensus, involving developers, node operators, miners, the core development team and technicians, akin to typical open-source projects.
“The concentration of ownership itself may not pose a direct threat, but the centralization of funds could potentially erode these principles over time,” Hargreaves said.
“However, there is an expectation that these community stakeholders, including Nakamoto, would likely resist attempts to influence or buy consensus. Therefore, I don’t see 100% BTC ownership being the threat rather than attempts to buy the Bitcoin network.”
Nothing stopping whales from holding all the Bitcoin
Sasha Ivanov, founder of the Waves Tech ecosystem, said that at this stage, there are no mechanisms to provide “fair distribution and prevent the traditional Pareto distribution of wealth,” where top holders have all the BTC.
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He thinks whale addresses having the most supply of a given asset provides them material benefits since they can indirectly control the price and engage in market manipulation.
“Large holders have the financial means to skew the development in the direction they see fit,” he said.
“It could lead to full centralization of Bitcoin since the community will have no recourse to withstand the financial incentives and will be fully driven by the vision of a cohort of large holders.”
