Is Bitcoin really decentralized? Nearly 60% of BTC is owned by 0.03% of addresses

Bitcoin operates on a decentralized ledger but is hardly decentralized in terms of wealth distribution. A huge chunk of BTC assets is owned by a small minority of investors.

Bitcoin richest

The ongoing Bitcoin bull run braced believers with new hope and embarrassed non-believers. However, some crypto market observers come up with substantiated skepticism targeting not so much Bitcoin's value as the wealth distribution among investors. Prompted by the surge, a finance expert with over 15k followers, nicknamed Darth Powell, posted a screen from revealing some disturbing data.

According to the numbers, as few as 0.04% of all BTC addresses own over 62% of all available Bitcoin. When you go a notch up, you can see that nearly 85% of BTC is owned by just 0.35% of address holders, and at a bit north of 2%, the ownership grows to over 94%. If you check global wealth distribution data, it doesn't come close to Bitcoin in terms of "unfairness." In 2020, Credit Suisse estimated that the richest 1.1% owned nearly half of the total wealth - and it's probably worse now.

Bitcoin landscape is constantly changing, but hardly in a way that mitigates the wealth concentration – which is quite understandable, given the fact that investing in Bitcoin is easier when you have a few spare millions of dollars. At press time, Bitcoin distribution numbers are slightly different. Currently, a tiny bit over 59% of Bitcoin is linked to 0.03% of addresses.

For 92.78% of the total BTC supply, the number of identifiers stands at 1.99% (don't confuse it with the number of owners, as one owner can have multiple addresses). Note that there are four addresses owning an insane amount of BTC: between 100k and 1 million units, with a total market share of 3.44%.

BTC wealth distribution

The large disparity in Bitcoin ownership has been a long-known fact. Still, it's worth reminding since many (most?) retail investors have little knowledge as to the extent of this phenomenon. Should Bitcoin suddenly become a global currency, a giant chunk of wealth would fall to an extremely small set of market participants.

Considering the above, Darth Powell questions the decentralization as the core feature of Bitcoin. He's both correct and wrong. Bitcoin is, indeed, decentralized with regard to the underlying mechanism – the logic and rules governing its network.

Still, if you identify decentralization with noble things such as democracy, equity, or people's empowerment, you could probably use a reality check. Wealth distribution in Bitcoin is totally out of line with its technical decentralization.