Are crypto whales in control? New research analyzes the wealth distribution of Bitcoin, Ethereum, Litecoin and Bitcoin
A new report suggests that Bitcoin’s (BTC) wealth is now more evenly distributed, unlike other major cryptocurrencies like Litecoin (LTC).
According to a study published by Clovr that examined transactions in widely used digital currencies in November 2019, Bitcoin’s wealth distribution has improved significantly compared to the previous year.
However, the report shows that the top altcoins in terms of market cap are increasingly being controlled by whales.
Bitcoin’s Gini coefficient, a statistical measure of wealth distribution, fell from 0.66 to 0.64 in 2019.
Meanwhile, Bitcoin Cash’s Gini coefficient (BCH) is increasingd from 0.73 to 0.75, while ether (ETH) rose from 0.69 to 0.78. Litecoin’s remained at the top of the list at 0.83.
Source: Clovr / Bitinfocharts
Crypto whales would need to control at least 4,545 of the largest Bitcoin wallets in existence to hold half of the circulating supply of the leading cryptocurrency, the report said. To control most of what Ether has to offer, a small group of users would only need to own the ETH, which is stored in 322 wallets.
To own most of the circulating supply of Bitcoin Cash, crypto whales would only need to control 1,109 wallets. Most of the Litecoin supply (LTC) could be controlled by holding the keys for only 189 wallets.
According to Clovr, the top 10,000 wallet addresses of each digital currency have been analyzed and key wallets have been left out. According to the study, wealth inequality was even more severe among large ERC-20 tokens.
For example, Huobi Pool Token (HPT), the native cryptocurrency of Huobi’s mining pool, has a Gini coefficient of 0.99, with 70% of the outstanding tokens belonging to a single wallet.
In general, tokens with a relatively smaller market cap have had more severe wealth inequality issues.
The researchers propose
“If you’re a cryptocurrency investor worried about centralized wealth, avoiding buying tokens with market cap less than $ 100 million can help.”
You can view the full report here.
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