Global Bitcoin Ownership And Distribution In 2024
Global Bitcoin Ownership And Distribution In 2024
Key Takeaways
- Bitcoin’s capped supply at 21 million creates inherent scarcity, akin to precious metals.
- Lost and concentrated Bitcoin holdings is estimated to be 29% of total BTC supply significantly impacting market dynamics and valuation of a single BTC.
- 6.5% of Bitcoin addresses hold between 0.1 and 1 BTC and 1.59% hold 1 to 10 BTC.
- Extremely few addresses manage larger amounts, with 0.25% controlling 10-100 BTC and virtually none holding more than 1000 BTC.
The Bitcoin total supply is capped at 21 million, which introduces the concept of scarcity into Bitcoin’s economic model. The inherent limitation is similar to the finite amount of precious metals like gold.
The scarce supply of Bitcoin is a fundamental condition in its protocol that drives Bitcoin’s value. However, over time, the circulation of Bitcoin has changed many hands, with ownership and distribution being influenced by several factors, including lost coins and concentrated holdings among large-scale investors, or “whales.”
What Is The Distribution Of Bitcoin Holders?
The Bitcoin distribution table, illustrated in the image below, is a true and structured representation of the distribution of Bitcoin holdings across different wallet addresses on any given day as of 6 May, 2024.
“No, Bitcoin Distribution Is Not Highly Concentrated.”
The table below categorizes wallet addresses based on the amount of Bitcoin they contain and provides data on various metrics such as the number of addresses, the amount of Bitcoin held in each address, the equivalent value in USD, and the percentage of total Bitcoin held by those addresses.
Types And Categorization Of Bitcoin Hodlers
Although there are no strict guidelines for categorization, hodlers can be classified into eight distinct groups:
Humpbacks & Whales
At the top of the crypto ecosystem are humpbacks, holding over 5,000 Bitcoin in a single wallet which surpass even the whales, who hold between 1,000 and 5,000 Bitcoins in a single wallet. These groups, including high net worth individuals, early Bitcoin adopters and large institutions, can significantly influence market price. This categorization tends to hodl onto their coins for long periods of time, however, they have the major control and ability to manipulate prices and induce volatility.
Together humpbacks and whales hold 40% of the total Bitcoin supply.
Dolphins & Sharks
These categories, while holding considerable Bitcoin amounts, lack the market sway of the larger groups. However, sharks have between 500 and 1,000 Bitcoins, and Dolphins control between 100 and 500 Bitcoins. These are typically institutions not classified as Whales or Humpbacks but considered to be still a tiny portion of the market in address terms.
Together sharks and dolphins hold circa 20% of the total Bitcoin supply.
Fish & Octopus
Despite the seemingly modest names, these investors control a significant portion of the Bitcoin supply. Fish accounts contain 50-100 Bitcoins, and Octopus accounts range from 10-50 Bitcoin. The entry level for an Octopus is around $630,000 at current May 2024 Bitcoin prices.
Together fish and octopus hold 22% of the Bitcoin supply.
Crabs
One of the smallest categories are the crabs which hold 1-10 Bitcoin. This part of the market represents a significant portion of Bitcoin wallet holders. Individuals or entities that hold one Bitcoin form part of the 1.88% of addresses of Bitcoin holders that hold anywhere between 1 and 5000 btc in a wallet, which positions wholecoiners in a strong position.
Together crabs hold 11% of the Bitcoin supply.
Shrimp
With less than 1 Bitcoin, respectively. This portion of the market represents the majority of Bitcoin wallet addresses. Those that hold between 1 and 0.1 BTC form part of the top 8.45% addresses which is still high and as the amount of BTC on a single address reduces below 0.1 the percentage of addresses increases substantially. This illustrates that the bulk of investors control addresses with less than 0.1 BTC.
Together crabs hold 7% of the Bitcoin supply.
Bitcoin Address Distribution
Discussing Bitcoin addresses provides valuable insights into the distribution of Bitcoin across its user base, reflecting both the decentralization ethos and the concentration of wealth within the network.
The chart below illustrates the percentage distribution of Bitcoin addresses categorized by the amount of BTC said address holds. The chart below shows that while a vast majority of addresses hold less than 0.1 BTC (92% of all addresses), a progressively smaller percentage of addresses hold larger amounts.
Only 6.5% of addresses hold between 0.1 and 1 BTC, and even fewer, 1.59%, control between 1 and 10 BTC. The number shrinks dramatically as the amount of Bitcoin increases, with only 0.25% of addresses controlling between 10 and 100 BTC, and a tiny 0.0003% holding between 100 and 1000 BTC.
There are virtually no addresses (0%) holding between 1000 to 1 million BTC, highlighting the extreme rarity of such large holdings.
How Does Lost Bitcoins Affect The Crypto Market In The Long Run?
A significant number of Bitcoin over the last 15 years has been lost, inaccessible or just locked up never to be sold again, with estimates ranging from 18% up to 29% of all mined Bitcoins which have been ‘lost’ forever. Whilst it is impossible to know the actual number of lost Bitcoin, estimates can be taken.
These estimates are based on the analysis of how much Bitcoin has not moved from certain addresses over a period of 5 or more years and which addresses are presumed to be lost or locked away to lost keys, discarded hardware, or forgotten wallets.
Estimation Of Lost Bitcoins
Approximately 29%, nearly a third, of all Bitcoins ever created are now considered lost and gone forever. This estimation implies that about 7.7 million Bitcoin has not moved from said wallets, suggesting they are no longer accessible.
Reasons For Bitcoins Being Lost
In the early Bitcoin days, miners had acquired a significant amount of Bitcoin but fell victim to losing access to wallets or keys.
There are cases like that of James Howells, a man from the United Kingdom who in 2013 accidentally threw away a hard drive containing 8,000 Bitcoin while clearing out his desk. As the value of Bitcoin increased, the gravity of his loss became painfully evident, highlighting one example of how important it is to secure and back up crypto wallet information.
Generally, suppose a Bitcoin has not been moved for an extended period, such as over a five-year or decade period. In that case, it is typically assumed that the owner has lost access to said Bitcoin.
What Happens To Lost Bitcoins
Lost Bitcoin remains on the blockchain and is permanently frozen in wallets, effectively and indirectly reducing the circulating supply. The reduction in supply can contribute to the scarcity of Bitcoin, potentially increasing its long-term value.
Despite the inaccessibility of the lost Bitcoin, which still exists on the blockchain ledger, untouched and unspendable, it is extremely important for hodlers today to secure wallet keys and maintain backups in the volatile and decentralized landscape of cryptocurrency.
Impact of Lost Bitcoins On Crypto Market And Scarcity
The idea of lost Bitcoin was a significant topic of conversation in the earlier years of Bitcoin. Still, in 2024, this conversation has become less discussed publicly due to market players preferring to keep such information undisclosed.
The loss of a substantial amount of Bitcoin contributes to the digital scarcity of Bitcoin because the more coins are presumed lost, the less circulating supply is in the Bitcoin protocol.
Ultimately, this makes remaining Bitcoin more valuable.
Has Gold Ever Been Lost?
Similar to Bitcoin, which has been lost due to factors like forgotten passwords and misplaced hardware, physical gold has also disappeared over its 5,000-year history for various reasons.
Whether through shipwrecks, buried treasures that remain unrecovered, or gold used in industrial applications that ended up in landfills, the precious metal continually gets removed from circulation.
These losses, occurring across millennia, underline the parallels between modern digital assets and ancient stores of value, showcasing how both are susceptible to loss due to the unique challenges of their respective eras.
Still, an estimated $60 billion in sunken treasure is waiting at the bottom of the ocean around the world.
The Socio-Economic Impact Of Bitcoin’s Scarcity
The Influence of Wealthy Investors
Wealthy investors and large institutions have been acquiring significant amounts of Bitcoin, leading to concerns about wealth disparity. As these entities continue to accumulate Bitcoin, the availability for new investors diminishes, potentially driving up the price due to increased scarcity.
Public Perception And Market Accessibility
The public’s understanding of Bitcoin’s scarcity is important as it has an effect on the cryptocurrency’s adoption and the overall general market behavior. Misconceptions about digital scarcity and the accessibility of Bitcoin might lead to a skewed perception of its value and function as a democratic financial system.
Strategic Considerations For Potential Investors
Investors need to consider the implications of high concentration among large holders and the potential for significant price movements due to the activities of a few.
Understanding the distribution of Bitcoin and the percentage of lost coins is an important understanding to internalize for any Bitcoin investor and trader before making informed investment decisions
Conclusion
An understanding of the distribution of Bitcoin offers exciting insights into the Bitcoin market structure and potential future developments. With a substantial portion of Bitcoin presumed lost and a significant concentration of wealth among a few addresses, Bitcoin ownership becomes an essential consideration for both investors and regulators.
As the Bitcoin network continues to grow and expand globally, serving as a reliable store of value, owning a single Bitcoin could become increasingly challenging due to the diminishing supply. This scarcity increases due to factors such as lost coins and substantial holdings by the ultra-wealthy, who own circa 60% of all Bitcoin in circulation and range in classification from dolphins to humpbacks, effectively reducing the circulation of available coins.
FAQs
Lost Bitcoin reduces the supply, potentially driving prices up and making entry more expensive for new investors. Lost Bitcoin cannot be recovered if the private keys are lost, permanently reducing the circulating supply. Utilizing secure storage solutions like hardware wallets and maintaining backups of key information are crucial to prevent loss.How does the lost Bitcoin affect new investors?
Can lost Bitcoins ever be recovered?
What measures can prevent the loss of Bitcoins?
