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The Bitcoin Whales: 1,000 People Who Own 40 Percent of the Market

203 points by tpatke 9y ago

PrimalDual 9y ago
I am very curious to see what this will do to Chinese style capital controls. They probably have started cracking down on exchanges but even with an outright ban it sounds like a more powerful method to get money of of the country.
marsrover 9y ago
I really enjoy investing in cryptocurrencies. However, I have a lot of doubt this is going to make the world a more fair or better place. It's going to create a wealth gap like has never been seen in first world countries.
- seibelj 9y ago
  I struggle to think of any other way bitcoin could have caught on without early enthusiasts getting a huge number of coins.
- charlesdm 9y ago
  It's redistribution of wealth. Old money being transferred to new owners. New fortunes are being made ever day. It doesn't matter.
- simias 9y ago
  It seems pretty obvious to me as well. Given huge speculation surrounding them at the moment I'm surprised we don't hear more people warning about these things. I don't think I want to live in a world where BTC replaces the USD/EUR/... Untraceable money means that corruption and tax evasion would be easier than ever. Democratic governments would be worse off in dealing with that, because unlike totaliatrian regimes they won't be able to round up BTC-rich people and break their fingers until they give their secret keys. Deflation means that the rich will get richer doing nothing while the poor won't be able to get a loan to bootstrap their businesses. Forget about trickle down economics, this is downright "trickle up". I have yet to hear a reasonable rebuttal to these claims. Every time I see these points brought up in the bitcoin community it's met with a bunch of hand waiving and claims that they're "FUD" and that the poster doesn't know what they're talking about. So please, BTC enthusiasts, educate me so that I can stop spreading this "FUD", where's the flaw in my reasoning?
  - knocte 9y ago
    > Untraceable money Bitcoin is not untraceable money, it can be even more traceable than normal currency. It could be stablished as a law that public money when being spent in the blockchain needs to be auditable by the people (identities of sender and recipient known), and this way you would end up with even less corruption than the current system. > Deflation means that the rich will get richer Wrong. Rich people don't have money, they have holdings. Most of the holdings that rich people nowadays have are not money. Deflation just benefits the savers, as opposed to the spenders. Some savers might be rich but not all. Incentivising saving instead of consumption may make the planet a bit greener. Plus, if one day we stop measuring cryptocurrency value with a fiat-unit of measure, maybe we find out that the cryptocurrency value is actually the stable value. The asset that is not stable is the fiat currency because it's being depreciated all the time. The day all stores in the planet denominate prices in cryptocurrency, the bad consequences of deflation (hoarding for the sake of profit) will be almost imperceptible.
    - simias 9y ago
      >> Deflation means that the rich will get richer >Wrong. Rich people don't have money, they have holdings. Most of the holdings that rich people nowadays have are not money. Isn't one reason for not hoarding cash (and instead investing it in various holdings, stock market, etc...) is that money loses value? If I was a millionaire in dollars I definitely wouldn't keep that on my bank account, slowly having it lose its value. If I was a millionaire in BTC I'd have a hardware wallet with my secret keys in a safe and that's about it. >Deflation just benefits the savers, as opposed to the spenders. Some savers might be rich but not all. Sure, but conversely I can tell you that the people who don't save money are overwhelmingly poor. For a big chunk of humanity saving money is a luxury. >Incentivising saving instead of consumption may make the planet a bit greener. Coin mining will take care of filling that gap, don't worry. If rich people reduce their investments because of deflation how do you redistribute wealth? >Plus, if one day we stop measuring cryptocurrency value with a fiat-unit of measure, maybe we find out that the cryptocurrency value is actually the stable value. Well yeah, 1BTC == 1BTC, that's stable I guess. If BTC replaces fiat it'll stabilize eventually but it will still be deflationary. My arguments were about that, not the current instability. >The asset that is not stable is the fiat currency because it's being depreciated all the time. The day all stores in the planet denominate prices in cryptocurrency, the bad consequences of deflation (hoarding for the sake of profit) will be almost imperceptible. That's kind of the hand waving I was talking about in my previous comment. I don't see how you can justify you jumping to that conclusion. How can you assume that switching from an inflationary to a deflationary economy "will be almost imperceptible"?
- bufferoverflow 9y ago
  But this time it's voluntarily. Anybody can get it at any time. I've been telling my friends and family since 2012, and only one of them invested. Those who take risks, get rewarded. You can't win if you refuse to try. Of course, there are truly poor people out there who can't have a dollar to spare, but it's mostly due to geography, corruption or war, not evil capitalists.
  - jrochkind1 9y ago
    You know what "risk" means, right?
    - bufferoverflow 9y ago
      Do you own a dictionary?
      - jrochkind1 9y ago
        You seem to be talking about it like it's a sure thing. "Those who take risks, get rewarded." Or lose all their risked money. shrug. If it was a sure thing, it wouldn't be a risk. Generally if a market if functioning theoretically optimally, you can't make a lot of money on this sort of "investment" unless you've also risked losing a lot of money. Whether the BTC market is functioning rationally/optimally is another question, but the answer probably doesn't reduce your risk. Generally anyone that tells you that you can make an unusual amount of money on an investment (or, um, MLM business) without risking losing a lot is trying to scam you (even if they believe their own scam).
  - adjkant 9y ago
    Most of these people are likely affected by capitalism to an extreme: imperialism. Much larger of an injustice than anything you listed. The people who are most able to take risks (in the investment sense) are those with the most. An exponential growth system such as this only widens the gap, voluntary or not. Everyone can get in, but the benefit is unequal. You need money to make money. This does not solve any equality issues on the grand scale, and only elevates a few lucky ones. To expect people to educate themselves on cryptocurrencies and understand the market when half the people in tech don't know what's going on is not reasonable.
- puranjay 9y ago
  One of the biggest issues I have with cryptocurrencies is how elitist it really is. If your currency needs multiple 'Explain it like I'm 5' posts, it really isn't for the masses; it's for the world's technocrats.
- golergka 9y ago
  Are you implying that more fair is more equal? Why?
- russdpale 9y ago
  I dont believe so. The network can align the interests of the users properly.
jackpeterfletch 9y ago
If they have access to their wallets.
FLUX-YOU 9y ago
>Holders of large amounts of bitcoin are often known as whales. And they’re becoming a worry for investors. They can send prices plummeting by selling even a portion of their holdings. That's not indicative of something that's a store of value.
- davidmr 9y ago
  Is there any currency or commodity or derivative for which that statement is not true? It seems self-evident that if you own a lot of something like gold, dollars, BTC, sterling, etc. and you sell it, its value relative to what you're selling it for declines.
  - kazen44 9y ago
    the major difference between fiat and bitcoin in this case seems to be that the whales in case of fiat currency are either the central banks (like the FED and ECB) or large international banks who own a lot of currency?
    - empath75 9y ago
      in the case of diamonds, it's deBeers.
      - charlesdm 9y ago
        Used to be. Don't think they have the power over the market they used to have.
      - inglondon 9y ago
        There is also no derivatives market for diamonds
  - FLUX-YOU 9y ago
    I'd bet that large holders of gold sell small amounts all the time without the market going nuts and kicking off volatility swings. But I could be wrong. It's less the mechanism and the implication that people imply by following whales. Why should a store-of-value market react when someone sells a small amount regardless of their current holdings?
bufferoverflow 9y ago
Most of these "whales" are hot and cold wallets for various exchanges, investment fund holdings, seized coins waiting to be sold. It's nearly impossible to map an address to its owner (or owners).
- ct0 9y ago
  Isn't the US Gov one of these whales ever since SilkRoad was seized?
  - bufferoverflow 9y ago
    Not anymore, they all got auctioned off. Cheaply too, they averaged around ~$290 per bitcoin. https://www.justice.gov/usao-sdny/pr/acting-manhattan-us-attorney-announces-forfeiture-48-million-sale-silk-road-bitcoins https://www.justice.gov/usao-sdny/pr/acting-manhattan-us-att...
  - charlesdm 9y ago
    These coins were mostly sold off to venture capitalist Tim Draper, for $50m: https://hacked.com/tim-draper-has-made-over-110-million-since-2014-with-his-bitcoin-investment/ https://hacked.com/tim-draper-has-made-over-110-million-sinc... Might sound like a success story now, but at a certain point he was down 70% on his investment!
    - ct0 9y ago
      Wonder if he sold them after he made his 10% or so
      - charlesdm 9y ago
        I think he still owns them, according to a recent interview.
drcross 9y ago
Whales can only sell once. It's also not in their self interest to make a market collapse, why would they depress the price of the thing they are trying to sell? When whales do sell many smaller buyers then take ownership of their coins decreasing the chance of future volatility. These concerns are being exaggerated too much.
- libertine 9y ago
  1,000 people is a really small number, and if mildly organized they can easily manipulate the market by controlling a great slice of the supply side. Too much control on the hands of few.
- neaden 9y ago
  It's not in their interest but things happen. Lots of these people live in China right? Let's say some economic downturn happens in China, or government policy changes or something and they need to liquidate some of their bitcoin assets in a hurry all the sudden you could have a market collapse.
  - drcross 9y ago
    The same can be said of gold, or anything else. I don't see why this is significant. Whales being forced to sell would allow people to buy coins at cheap rate and solve the problem that the article is reporting on.
- tehlike 9y ago
  They can crash it to rebuy. It happened pretty often in altcoins.
zencash 9y ago
these are exchange accounts that hold volumes of BTC.
sevensor 9y ago
It's interesting to see how this is playing out. Libertarians have long argued that government-issued fiat currency is a tool of state oppression. Now we have a real-world experiment demonstrating on a grand scale what happens when you create a currency by consensual fiat. I'd be interested to hear what libertarians think about this: Is Bitcoin truly the kind of currency libertarians have been advocating? Have I mischaracterized the libertarian position? What do you think about the concentration of Bitcoins in the hands of a small number of people? Where is this experiment going in the long run?
- nnash 9y ago
  Considering the difficulty involved in even buying bitcoin I'd have to say no. If you want to make a sizeable investment you need to hand over large amounts of personal data to an exchange. I'm talking the works; routing number, passport, proof of residency etc. I should be able to simply walk to a BTC ATM put cash in and add it to a wallet on my phone (perhaps you can in some places?). Additionally, exchanges like Coinbase are required to report any transaction over 20,000USD to the IRS. Fiat cash is much less of a PITA.
  - whoopdedo 9y ago
    Or just pay more to move your money into a country that doesn't care about such things, then buy it truly anonymously. Or mine it if you have access to cheap electricity and can afford the equipment to be near the top in hashing speed. In either case, you can see how Bitcoin wealth is biased to people with lots of fiat to begin with. I question if there could be any new currency that would not suffer the same inequality.
- jjaredsimpson 9y ago
  Also since a large number of coins are lost the 40% number understates the size of the whales. Estimates are that 20% of coins are simply lost for good.
  - vibrio 9y ago
    This is interesting but my understanding of blockchain is limited so: Aren't all transactions 'encoded' in the blockchain? If so why can't the coins be found? If not, what does the blockchain "record"?
knocte 9y ago
Large holders of bitcoin are probably believers so I don't think they would do any detrimental action to the ecosystem on purpose. Plus, if they wanted to sell BTC they would not be so stupid to do it with a large market order (because it would act against their favour), OTC market exists (or even limit orders, which don't move the market but if anything, they make it more price-stable).
- tehlike 9y ago
  How about their heirs?
tantalor 9y ago
> Because bitcoin is a digital currency and not a security And in that statement, there is the fraud.
- AdamSC1 9y ago
  No one has classified Bitcoin as a security. Per Wikipedia: >The U.S. Treasury classified bitcoin as a convertible decentralized virtual currency in 2013.[1] >The Commodity Futures Trading Commission, CFTC, classified bitcoin as a commodity in September 2015. >Per IRS, bitcoin is taxed as a property.[2] [1]https://www.fincen.gov/news/testimony/statement-jennifer-shasky-calvery-director-financial-crimes-enforcement-network https://www.fincen.gov/news/testimony/statement-jennifer-sha... [2]https://www.irs.gov/uac/newsroom/irs-virtual-currency-guidance https://www.irs.gov/uac/newsroom/irs-virtual-currency-guidan... In the US it is classified either as a currency, piece of property or a commodity, and as of Monday it will also be available as a futures contract of a commodity. Neither commodities nor futures contracts are consider securities, as they fail the clause of the Howey Test that would make them dependent on a single entity or management group. This is why commodity futures trade is managed by the CFTC (Commodity Futures Trade Commission) rather than the SEC (Securities Exchange Commission). In fact, while some other tokens and ICOs have been found to be securities both in the US and abroad, no country has formally noted Bitcoin as a security - many treat it as a currency under a new classification for eMoney, Digital Currency or Virtual Currencies.
iliicit 9y ago
There is so much volume and volatility in Bitcoin markets that a whale can sell insane amount of coins (e.g. 10k) in within days without much effect on price. Placing limit orders in front of the best ask and moving them in case the price goes down will do the trick. Bitfinex traded over 100k coins within last 24 hours. it's reasonable to assume that you can capture 1% of this volume on the daily basis using the limit orders. Selling 10k Bitcoins can be easily done within 10 days without pushing the price down. I think it's possible to do this within 1 day.
foobarbecue 9y ago
Whales or sharks?
aaavl2821 9y ago
Market manipulation is a big risk here. Basically "wolf of wall st" style shenanigans, or the stuff that salomon brothers did in the mortgage bond market in the 1980s. Essentially a few big investors who've cornered the market, acting in concert, can move the market essentially according to their own desire. I read yesterday that the order book for btc was $33 million (don't know what the daily volume is; could anyone enlighten me? Not an active bitcoin follower but have experience in markets). The top 1,000 BTC holders own about $100 Billion at current prices. Even a few of them could concertedly buy small amounts of BTC at rapidly increasing prices, then if that leads to a huge rally and increase in volume (like yesterday) they can sell into that volume and make a nice profit. Lots of other things like that they can do: https://www.girardgibbs.com/securities-fraud/stock/market-manipulation/examples/ https://www.girardgibbs.com/securities-fraud/stock/market-ma... Not saying they do those things, but that is a real risk in unregulated, concentrated markets where there is no real way to quantify value EDIT: montecarl pointed me to the gdax site, also https://data.bitcoinity.org/markets/price/6m/USD?c=e&t=l https://data.bitcoinity.org/markets/price/6m/USD?c=e&t=l shows price and vol data (im a noob) and it looks like volume is much higher, on the order of 100-150k BTC / day so over $1B USD volume at $17K / BTC.
- isolli 9y ago
  That's why I would be worried about investing in Bitcoin futures. I could not find any information on how the settlement price will be calculated, but I assume it would be easy to manipulate the price for a short time around the settlement date.
- montecarl 9y ago
  Mouse over the orderbook on this page: https://www.gdax.com/trade/BTC-USD https://www.gdax.com/trade/BTC-USD It will show you how much money you need to move the market on that exchange.
  - aaavl2821 9y ago
    thats a lot more volume than i thought based on the comment i read yesterday. also just found this site https://data.bitcoinity.org/markets/price/6m/USD?c=e&t=l https://data.bitcoinity.org/markets/price/6m/USD?c=e&t=l which has historical price and volume data. looks like 24 hour volume has generally been around 100-150k BTC / day could still manipulate markets with 40% concentration and that much liquidity, but would be much harder than if the daily volume was on the order of tens of millions like i mistakenly thought
crazypyro 9y ago
Is this really that surprising? To me, it just seems to be mirroring wealth inequality. 63% of total private wealth in America is owned by the 1%[1]. I'm sure the top 1,000 have a significant amount of that 63%. [1]https://www.bloomberg.com/news/articles/2017-06-16/the-u-s-is-where-the-rich-are-the-richest https://www.bloomberg.com/news/articles/2017-06-16/the-u-s-i...
bruno2223 9y ago
Btc prices can still being manipulate by whales? (Honest question) I know shitcoins can, because the Market Cap is low and it is easier for whales to manipulate the market. But... This also happen with BTC now days? There are millionaires who puts all their BTC in one exchange? Jesus.. they are crazy.
EGreg 9y ago
That means Bitcoin has a lot more to grow. That 40% can be sold off to many more people eventually. What worries me more is the elextricity consumption: https://motherboard.vice.com/en_us/article/aek3za/bitcoin-could-consume-as-much-electricity-as-denmark-by-2020 https://motherboard.vice.com/en_us/article/aek3za/bitcoin-co...
- sooheon 9y ago
  That 40% is far more likely to consolidate than to be sold off.
- rednerrus 9y ago
  What should worry you is more than 200K transactions sitting in the queue and not being able to get confirmations for 3 days.
mmgutz 9y ago
I read an interesting analogy yesterday in a poker chat of all places. The guy basically said, let's put bitcoin to buy a coffee litmus test. If I were to buy a cup of coffee in the current frenzy, I would be at the cashier waiting a day for the transaction to go through and when it does go through the fee for transaction would be greater than cost of the coffee. If that is true, how is bitcoin better? Would that transaction even go through considering miners would prioritize transactions with larger fees.
- montecarl 9y ago
  For a cup of coffee you probably don't need to wait a full day to be certain the transaction has gone through. Blocks are mined on average every 10 minutes and pending transactions are broadcast immediately and (assuming a large enough fee is paid) will be included in the next block. For a $3 purchase, you probably don't even need to wait for it to be included in the blockchain (although to protect against double spend you do). But the poker guy is right, bitcoin is not really appropriate for replacing credit cards for small purchases at the minute for several reasons: 1) You must wait between 1-20 minutes to get your transaction included in the next block. 2) You must pay a fee that could be 100% of the total transaction or more (for small purchases). 3) You must pay capital gains tax on your purchase (possibly at the short term capital gains rate even), which complicates your tax reporting. Issue 1 and 2 may be solved with technological solutions soon, if the lighting network (distributed settlement layer on top of bitcoin) is successful.
- beager 9y ago
  The narrative has shifted as the dynamics and value have shifted. It’s more like gold now. You wouldn’t pay for coffee with gold.
  - mmgutz 9y ago
    Right, I wouldn't. Maybe it's better termed cryptomineral instead of cryptocurrency.
- jsutton 9y ago
  Bitcoin isn't better as a currency, that use of Bitcoin is long gone. It's a store of value and the backbone of the cryptocurrency market place at the moment. Most cryptocurrencies are paired with BTC.
IkmoIkmo 9y ago
There's absolutely no source to the claim that 40% is owned by 1000 people. Only at the very end of the article we see a lateral claim, that 17% of bitcoin is held in just 100 addresses. It's not unlikely the same reasoning (i.e. 40% of coins on top 1000 addresses) is used for the larger claim. But that says very little. A bitcoin address after all can be shared by many users, in the same way a bank vault can contain money from many individuals. It's quite likely that the top addresses are held in a (semi) custodial function by parties like Coinbase or Kraken, which have hundreds of thousands to millions of customers, but may store their users' coins on a number of addresses that's a tiny fraction of their user count. Regardless, unequal wealth distribution isn't entirely unique to bitcoin, either. The top 1% worldwide own about 50% of the world's wealth, the richest 10% own about 85%.
- prophesi 9y ago
  > There's absolutely no source to the claim that 40% is owned by 1000 people. Only at the very end of the article we see a lateral claim, that 17% of bitcoin is held in just 100 addresses. Yeah, I really dislike that the title sounds like it's a fact.
  - tomxor 9y ago
    > Yeah, I really dislike that the title sounds like it's a fact. I do wonder how much people try to manipulate perception with media to serve their trading interests... fake news is so easy these days. Just look at what happened yesterday: a bunch of online news outlets output a bunch of speculation about the new 15,000 high, over the next 12 hours it created a sort of bubble going up to ~17,000 that popped and re-established it's original price point at ~15,000. It's possible the opposite is being attempted here: trying to create a short term crash bubble, so they can get ready to buy on the down, before re-establishing it's original natural market value.
- malikNF 9y ago
  While I agree with you, it would be hard to dismiss the title of the article since looking at the btc rich list there's quite a few addresses with low number of transactions, but massive amounts of btc in them. https://bitinfocharts.com/top-100-richest-bitcoin-addresses.html https://bitinfocharts.com/top-100-richest-bitcoin-addresses....
b111coins 9y ago
So let me get this.. 40% isn't being traded, 30% isn't yet mined, say 10% lost in between. Are we left with 20% that is being traded?
ggm 9y ago
In classic gambling, whales are the people you comp high worth rooms, food, drugs to, because they are willing to drop huge sums on the games of chance. You nurture whales, to make a living off whales. You fly your whales to interesting casinos and then quietly wait for the odds to fall in your favour. Is this the metaphor the bitcoin-digerati want?
- cantrip 9y ago
  The whale metaphor in this sense means something completely different. Language is highly subjective, so no the gambling metaphor is not applicable here.
  - ggm 9y ago
    the whale metaphor is subject to multiple interpretations and gambling is pretty much what hodl is.
NathanCH 9y ago
Wasn't there stories recently about how just nine people had 50% of the world's wealth? Edit: Nevermind, it was eight people.
SkyMarshal 9y ago
Second to last paragraph provides some perspective: "Among the coins people invest in, bitcoin has the least concentrated ownership, says Spencer Bogart, managing director and head of research at Blockchain Capital. The top 100 bitcoin addresses control 17.3 percent of all the issued currency, according to Alex Sunnarborg, co-founder of crypto hedge fund Tetras Capital. With ether, a rival to bitcoin, the top 100 addresses control 40 percent of the supply, and with coins such as Gnosis, Qtum, and Storj, top holders control more than 90 percent. Many large owners are part of the teams running these projects."
QML 9y ago
Additional article of how “decentralized” cryptocurrency is: https://news.earn.com/quantifying-decentralization-e39db233c28e https://news.earn.com/quantifying-decentralization-e39db233c...
deleted 9y ago
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tudorconstantin 9y ago
Wow, such FUD, much propaganda lately, all against BTC. Is it risky? sure. Do you HAVE to buy? of course not. Anybody can sit on the sides and shout "bubble, ponzi, pyramidal scheme", but then don't whine when the early adopters and risk takers got to buy it at just $16K and 3 years later it trades at $1M.

203 points by tpatke 9y ago

I am very curious to see what this will do to Chinese style capital controls. They probably have started cracking down on exchanges but even with an outright ban it sounds like a more powerful method to get money of of the country.

marsrover 9y ago

I really enjoy investing in cryptocurrencies. However, I have a lot of doubt this is going to make the world a more fair or better place. It's going to create a wealth gap like has never been seen in first world countries.

seibelj 9y ago
I struggle to think of any other way bitcoin could have caught on without early enthusiasts getting a huge number of coins.
charlesdm 9y ago
It's redistribution of wealth. Old money being transferred to new owners. New fortunes are being made ever day. It doesn't matter.
simias 9y ago
It seems pretty obvious to me as well. Given huge speculation surrounding them at the moment I'm surprised we don't hear more people warning about these things. I don't think I want to live in a world where BTC replaces the USD/EUR/... Untraceable money means that corruption and tax evasion would be easier than ever. Democratic governments would be worse off in dealing with that, because unlike totaliatrian regimes they won't be able to round up BTC-rich people and break their fingers until they give their secret keys. Deflation means that the rich will get richer doing nothing while the poor won't be able to get a loan to bootstrap their businesses. Forget about trickle down economics, this is downright "trickle up". I have yet to hear a reasonable rebuttal to these claims. Every time I see these points brought up in the bitcoin community it's met with a bunch of hand waiving and claims that they're "FUD" and that the poster doesn't know what they're talking about. So please, BTC enthusiasts, educate me so that I can stop spreading this "FUD", where's the flaw in my reasoning?
- knocte 9y ago
  > Untraceable money Bitcoin is not untraceable money, it can be even more traceable than normal currency. It could be stablished as a law that public money when being spent in the blockchain needs to be auditable by the people (identities of sender and recipient known), and this way you would end up with even less corruption than the current system. > Deflation means that the rich will get richer Wrong. Rich people don't have money, they have holdings. Most of the holdings that rich people nowadays have are not money. Deflation just benefits the savers, as opposed to the spenders. Some savers might be rich but not all. Incentivising saving instead of consumption may make the planet a bit greener. Plus, if one day we stop measuring cryptocurrency value with a fiat-unit of measure, maybe we find out that the cryptocurrency value is actually the stable value. The asset that is not stable is the fiat currency because it's being depreciated all the time. The day all stores in the planet denominate prices in cryptocurrency, the bad consequences of deflation (hoarding for the sake of profit) will be almost imperceptible.
  - simias 9y ago
    >> Deflation means that the rich will get richer >Wrong. Rich people don't have money, they have holdings. Most of the holdings that rich people nowadays have are not money. Isn't one reason for not hoarding cash (and instead investing it in various holdings, stock market, etc...) is that money loses value? If I was a millionaire in dollars I definitely wouldn't keep that on my bank account, slowly having it lose its value. If I was a millionaire in BTC I'd have a hardware wallet with my secret keys in a safe and that's about it. >Deflation just benefits the savers, as opposed to the spenders. Some savers might be rich but not all. Sure, but conversely I can tell you that the people who don't save money are overwhelmingly poor. For a big chunk of humanity saving money is a luxury. >Incentivising saving instead of consumption may make the planet a bit greener. Coin mining will take care of filling that gap, don't worry. If rich people reduce their investments because of deflation how do you redistribute wealth? >Plus, if one day we stop measuring cryptocurrency value with a fiat-unit of measure, maybe we find out that the cryptocurrency value is actually the stable value. Well yeah, 1BTC == 1BTC, that's stable I guess. If BTC replaces fiat it'll stabilize eventually but it will still be deflationary. My arguments were about that, not the current instability. >The asset that is not stable is the fiat currency because it's being depreciated all the time. The day all stores in the planet denominate prices in cryptocurrency, the bad consequences of deflation (hoarding for the sake of profit) will be almost imperceptible. That's kind of the hand waving I was talking about in my previous comment. I don't see how you can justify you jumping to that conclusion. How can you assume that switching from an inflationary to a deflationary economy "will be almost imperceptible"?
bufferoverflow 9y ago
But this time it's voluntarily. Anybody can get it at any time. I've been telling my friends and family since 2012, and only one of them invested. Those who take risks, get rewarded. You can't win if you refuse to try. Of course, there are truly poor people out there who can't have a dollar to spare, but it's mostly due to geography, corruption or war, not evil capitalists.
- jrochkind1 9y ago
  You know what "risk" means, right?
  - bufferoverflow 9y ago
    Do you own a dictionary?
    - jrochkind1 9y ago
      You seem to be talking about it like it's a sure thing. "Those who take risks, get rewarded." Or lose all their risked money. shrug. If it was a sure thing, it wouldn't be a risk. Generally if a market if functioning theoretically optimally, you can't make a lot of money on this sort of "investment" unless you've also risked losing a lot of money. Whether the BTC market is functioning rationally/optimally is another question, but the answer probably doesn't reduce your risk. Generally anyone that tells you that you can make an unusual amount of money on an investment (or, um, MLM business) without risking losing a lot is trying to scam you (even if they believe their own scam).
- adjkant 9y ago
  Most of these people are likely affected by capitalism to an extreme: imperialism. Much larger of an injustice than anything you listed. The people who are most able to take risks (in the investment sense) are those with the most. An exponential growth system such as this only widens the gap, voluntary or not. Everyone can get in, but the benefit is unequal. You need money to make money. This does not solve any equality issues on the grand scale, and only elevates a few lucky ones. To expect people to educate themselves on cryptocurrencies and understand the market when half the people in tech don't know what's going on is not reasonable.
puranjay 9y ago
One of the biggest issues I have with cryptocurrencies is how elitist it really is. If your currency needs multiple 'Explain it like I'm 5' posts, it really isn't for the masses; it's for the world's technocrats.
golergka 9y ago
Are you implying that more fair is more equal? Why?
russdpale 9y ago
I dont believe so. The network can align the interests of the users properly.

jackpeterfletch 9y ago

If they have access to their wallets.

FLUX-YOU 9y ago

>Holders of large amounts of bitcoin are often known as whales. And they’re becoming a worry for investors. They can send prices plummeting by selling even a portion of their holdings. That's not indicative of something that's a store of value.

davidmr 9y ago
Is there any currency or commodity or derivative for which that statement is not true? It seems self-evident that if you own a lot of something like gold, dollars, BTC, sterling, etc. and you sell it, its value relative to what you're selling it for declines.
- kazen44 9y ago
  the major difference between fiat and bitcoin in this case seems to be that the whales in case of fiat currency are either the central banks (like the FED and ECB) or large international banks who own a lot of currency?
  - empath75 9y ago
    in the case of diamonds, it's deBeers.
    - charlesdm 9y ago
      Used to be. Don't think they have the power over the market they used to have.
    - inglondon 9y ago
      There is also no derivatives market for diamonds
- FLUX-YOU 9y ago
  I'd bet that large holders of gold sell small amounts all the time without the market going nuts and kicking off volatility swings. But I could be wrong. It's less the mechanism and the implication that people imply by following whales. Why should a store-of-value market react when someone sells a small amount regardless of their current holdings?

bufferoverflow 9y ago

Most of these "whales" are hot and cold wallets for various exchanges, investment fund holdings, seized coins waiting to be sold. It's nearly impossible to map an address to its owner (or owners).

ct0 9y ago
Isn't the US Gov one of these whales ever since SilkRoad was seized?
- bufferoverflow 9y ago
  Not anymore, they all got auctioned off. Cheaply too, they averaged around ~$290 per bitcoin. https://www.justice.gov/usao-sdny/pr/acting-manhattan-us-attorney-announces-forfeiture-48-million-sale-silk-road-bitcoins https://www.justice.gov/usao-sdny/pr/acting-manhattan-us-att...
- charlesdm 9y ago
  These coins were mostly sold off to venture capitalist Tim Draper, for $50m: https://hacked.com/tim-draper-has-made-over-110-million-since-2014-with-his-bitcoin-investment/ https://hacked.com/tim-draper-has-made-over-110-million-sinc... Might sound like a success story now, but at a certain point he was down 70% on his investment!
  - ct0 9y ago
    Wonder if he sold them after he made his 10% or so
    - charlesdm 9y ago
      I think he still owns them, according to a recent interview.

drcross 9y ago

Whales can only sell once. It's also not in their self interest to make a market collapse, why would they depress the price of the thing they are trying to sell? When whales do sell many smaller buyers then take ownership of their coins decreasing the chance of future volatility. These concerns are being exaggerated too much.

libertine 9y ago
1,000 people is a really small number, and if mildly organized they can easily manipulate the market by controlling a great slice of the supply side. Too much control on the hands of few.
neaden 9y ago
It's not in their interest but things happen. Lots of these people live in China right? Let's say some economic downturn happens in China, or government policy changes or something and they need to liquidate some of their bitcoin assets in a hurry all the sudden you could have a market collapse.
- drcross 9y ago
  The same can be said of gold, or anything else. I don't see why this is significant. Whales being forced to sell would allow people to buy coins at cheap rate and solve the problem that the article is reporting on.
tehlike 9y ago
They can crash it to rebuy. It happened pretty often in altcoins.

zencash 9y ago

these are exchange accounts that hold volumes of BTC.

sevensor 9y ago

It's interesting to see how this is playing out. Libertarians have long argued that government-issued fiat currency is a tool of state oppression. Now we have a real-world experiment demonstrating on a grand scale what happens when you create a currency by consensual fiat. I'd be interested to hear what libertarians think about this: Is Bitcoin truly the kind of currency libertarians have been advocating? Have I mischaracterized the libertarian position? What do you think about the concentration of Bitcoins in the hands of a small number of people? Where is this experiment going in the long run?

nnash 9y ago
Considering the difficulty involved in even buying bitcoin I'd have to say no. If you want to make a sizeable investment you need to hand over large amounts of personal data to an exchange. I'm talking the works; routing number, passport, proof of residency etc. I should be able to simply walk to a BTC ATM put cash in and add it to a wallet on my phone (perhaps you can in some places?). Additionally, exchanges like Coinbase are required to report any transaction over 20,000USD to the IRS. Fiat cash is much less of a PITA.
- whoopdedo 9y ago
  Or just pay more to move your money into a country that doesn't care about such things, then buy it truly anonymously. Or mine it if you have access to cheap electricity and can afford the equipment to be near the top in hashing speed. In either case, you can see how Bitcoin wealth is biased to people with lots of fiat to begin with. I question if there could be any new currency that would not suffer the same inequality.
jjaredsimpson 9y ago
Also since a large number of coins are lost the 40% number understates the size of the whales. Estimates are that 20% of coins are simply lost for good.
- vibrio 9y ago
  This is interesting but my understanding of blockchain is limited so: Aren't all transactions 'encoded' in the blockchain? If so why can't the coins be found? If not, what does the blockchain "record"?

knocte 9y ago

Large holders of bitcoin are probably believers so I don't think they would do any detrimental action to the ecosystem on purpose. Plus, if they wanted to sell BTC they would not be so stupid to do it with a large market order (because it would act against their favour), OTC market exists (or even limit orders, which don't move the market but if anything, they make it more price-stable).

tehlike 9y ago
How about their heirs?

tantalor 9y ago

> Because bitcoin is a digital currency and not a security And in that statement, there is the fraud.

AdamSC1 9y ago
No one has classified Bitcoin as a security. Per Wikipedia: >The U.S. Treasury classified bitcoin as a convertible decentralized virtual currency in 2013.[1] >The Commodity Futures Trading Commission, CFTC, classified bitcoin as a commodity in September 2015. >Per IRS, bitcoin is taxed as a property.[2] [1]https://www.fincen.gov/news/testimony/statement-jennifer-shasky-calvery-director-financial-crimes-enforcement-network https://www.fincen.gov/news/testimony/statement-jennifer-sha... [2]https://www.irs.gov/uac/newsroom/irs-virtual-currency-guidance https://www.irs.gov/uac/newsroom/irs-virtual-currency-guidan... In the US it is classified either as a currency, piece of property or a commodity, and as of Monday it will also be available as a futures contract of a commodity. Neither commodities nor futures contracts are consider securities, as they fail the clause of the Howey Test that would make them dependent on a single entity or management group. This is why commodity futures trade is managed by the CFTC (Commodity Futures Trade Commission) rather than the SEC (Securities Exchange Commission). In fact, while some other tokens and ICOs have been found to be securities both in the US and abroad, no country has formally noted Bitcoin as a security - many treat it as a currency under a new classification for eMoney, Digital Currency or Virtual Currencies.

iliicit 9y ago

There is so much volume and volatility in Bitcoin markets that a whale can sell insane amount of coins (e.g. 10k) in within days without much effect on price. Placing limit orders in front of the best ask and moving them in case the price goes down will do the trick. Bitfinex traded over 100k coins within last 24 hours. it's reasonable to assume that you can capture 1% of this volume on the daily basis using the limit orders. Selling 10k Bitcoins can be easily done within 10 days without pushing the price down. I think it's possible to do this within 1 day.

foobarbecue 9y ago

Whales or sharks?

aaavl2821 9y ago

Market manipulation is a big risk here. Basically "wolf of wall st" style shenanigans, or the stuff that salomon brothers did in the mortgage bond market in the 1980s. Essentially a few big investors who've cornered the market, acting in concert, can move the market essentially according to their own desire. I read yesterday that the order book for btc was $33 million (don't know what the daily volume is; could anyone enlighten me? Not an active bitcoin follower but have experience in markets). The top 1,000 BTC holders own about $100 Billion at current prices. Even a few of them could concertedly buy small amounts of BTC at rapidly increasing prices, then if that leads to a huge rally and increase in volume (like yesterday) they can sell into that volume and make a nice profit. Lots of other things like that they can do: https://www.girardgibbs.com/securities-fraud/stock/market-manipulation/examples/ https://www.girardgibbs.com/securities-fraud/stock/market-ma... Not saying they do those things, but that is a real risk in unregulated, concentrated markets where there is no real way to quantify value EDIT: montecarl pointed me to the gdax site, also https://data.bitcoinity.org/markets/price/6m/USD?c=e&t=l https://data.bitcoinity.org/markets/price/6m/USD?c=e&t=l shows price and vol data (im a noob) and it looks like volume is much higher, on the order of 100-150k BTC / day so over $1B USD volume at $17K / BTC.

isolli 9y ago
That's why I would be worried about investing in Bitcoin futures. I could not find any information on how the settlement price will be calculated, but I assume it would be easy to manipulate the price for a short time around the settlement date.
montecarl 9y ago
Mouse over the orderbook on this page: https://www.gdax.com/trade/BTC-USD https://www.gdax.com/trade/BTC-USD It will show you how much money you need to move the market on that exchange.
- aaavl2821 9y ago
  thats a lot more volume than i thought based on the comment i read yesterday. also just found this site https://data.bitcoinity.org/markets/price/6m/USD?c=e&t=l https://data.bitcoinity.org/markets/price/6m/USD?c=e&t=l which has historical price and volume data. looks like 24 hour volume has generally been around 100-150k BTC / day could still manipulate markets with 40% concentration and that much liquidity, but would be much harder than if the daily volume was on the order of tens of millions like i mistakenly thought

crazypyro 9y ago

Is this really that surprising? To me, it just seems to be mirroring wealth inequality. 63% of total private wealth in America is owned by the 1%[1]. I'm sure the top 1,000 have a significant amount of that 63%. [1]https://www.bloomberg.com/news/articles/2017-06-16/the-u-s-is-where-the-rich-are-the-richest https://www.bloomberg.com/news/articles/2017-06-16/the-u-s-i...

bruno2223 9y ago

Btc prices can still being manipulate by whales? (Honest question) I know shitcoins can, because the Market Cap is low and it is easier for whales to manipulate the market. But... This also happen with BTC now days? There are millionaires who puts all their BTC in one exchange? Jesus.. they are crazy.

EGreg 9y ago

That means Bitcoin has a lot more to grow. That 40% can be sold off to many more people eventually. What worries me more is the elextricity consumption: https://motherboard.vice.com/en_us/article/aek3za/bitcoin-could-consume-as-much-electricity-as-denmark-by-2020 https://motherboard.vice.com/en_us/article/aek3za/bitcoin-co...

sooheon 9y ago
That 40% is far more likely to consolidate than to be sold off.
rednerrus 9y ago
What should worry you is more than 200K transactions sitting in the queue and not being able to get confirmations for 3 days.

mmgutz 9y ago

I read an interesting analogy yesterday in a poker chat of all places. The guy basically said, let's put bitcoin to buy a coffee litmus test. If I were to buy a cup of coffee in the current frenzy, I would be at the cashier waiting a day for the transaction to go through and when it does go through the fee for transaction would be greater than cost of the coffee. If that is true, how is bitcoin better? Would that transaction even go through considering miners would prioritize transactions with larger fees.

montecarl 9y ago
For a cup of coffee you probably don't need to wait a full day to be certain the transaction has gone through. Blocks are mined on average every 10 minutes and pending transactions are broadcast immediately and (assuming a large enough fee is paid) will be included in the next block. For a $3 purchase, you probably don't even need to wait for it to be included in the blockchain (although to protect against double spend you do). But the poker guy is right, bitcoin is not really appropriate for replacing credit cards for small purchases at the minute for several reasons: 1) You must wait between 1-20 minutes to get your transaction included in the next block. 2) You must pay a fee that could be 100% of the total transaction or more (for small purchases). 3) You must pay capital gains tax on your purchase (possibly at the short term capital gains rate even), which complicates your tax reporting. Issue 1 and 2 may be solved with technological solutions soon, if the lighting network (distributed settlement layer on top of bitcoin) is successful.
beager 9y ago
The narrative has shifted as the dynamics and value have shifted. It’s more like gold now. You wouldn’t pay for coffee with gold.
- mmgutz 9y ago
  Right, I wouldn't. Maybe it's better termed cryptomineral instead of cryptocurrency.
jsutton 9y ago
Bitcoin isn't better as a currency, that use of Bitcoin is long gone. It's a store of value and the backbone of the cryptocurrency market place at the moment. Most cryptocurrencies are paired with BTC.

IkmoIkmo 9y ago

There's absolutely no source to the claim that 40% is owned by 1000 people. Only at the very end of the article we see a lateral claim, that 17% of bitcoin is held in just 100 addresses. It's not unlikely the same reasoning (i.e. 40% of coins on top 1000 addresses) is used for the larger claim. But that says very little. A bitcoin address after all can be shared by many users, in the same way a bank vault can contain money from many individuals. It's quite likely that the top addresses are held in a (semi) custodial function by parties like Coinbase or Kraken, which have hundreds of thousands to millions of customers, but may store their users' coins on a number of addresses that's a tiny fraction of their user count. Regardless, unequal wealth distribution isn't entirely unique to bitcoin, either. The top 1% worldwide own about 50% of the world's wealth, the richest 10% own about 85%.

prophesi 9y ago
> There's absolutely no source to the claim that 40% is owned by 1000 people. Only at the very end of the article we see a lateral claim, that 17% of bitcoin is held in just 100 addresses. Yeah, I really dislike that the title sounds like it's a fact.
- tomxor 9y ago
  > Yeah, I really dislike that the title sounds like it's a fact. I do wonder how much people try to manipulate perception with media to serve their trading interests... fake news is so easy these days. Just look at what happened yesterday: a bunch of online news outlets output a bunch of speculation about the new 15,000 high, over the next 12 hours it created a sort of bubble going up to ~17,000 that popped and re-established it's original price point at ~15,000. It's possible the opposite is being attempted here: trying to create a short term crash bubble, so they can get ready to buy on the down, before re-establishing it's original natural market value.
malikNF 9y ago
While I agree with you, it would be hard to dismiss the title of the article since looking at the btc rich list there's quite a few addresses with low number of transactions, but massive amounts of btc in them. https://bitinfocharts.com/top-100-richest-bitcoin-addresses.html https://bitinfocharts.com/top-100-richest-bitcoin-addresses....

b111coins 9y ago

So let me get this.. 40% isn't being traded, 30% isn't yet mined, say 10% lost in between. Are we left with 20% that is being traded?

ggm 9y ago

In classic gambling, whales are the people you comp high worth rooms, food, drugs to, because they are willing to drop huge sums on the games of chance. You nurture whales, to make a living off whales. You fly your whales to interesting casinos and then quietly wait for the odds to fall in your favour. Is this the metaphor the bitcoin-digerati want?

cantrip 9y ago
The whale metaphor in this sense means something completely different. Language is highly subjective, so no the gambling metaphor is not applicable here.
- ggm 9y ago
  the whale metaphor is subject to multiple interpretations and gambling is pretty much what hodl is.

NathanCH 9y ago

Wasn't there stories recently about how just nine people had 50% of the world's wealth? Edit: Nevermind, it was eight people.

SkyMarshal 9y ago

Second to last paragraph provides some perspective: "Among the coins people invest in, bitcoin has the least concentrated ownership, says Spencer Bogart, managing director and head of research at Blockchain Capital. The top 100 bitcoin addresses control 17.3 percent of all the issued currency, according to Alex Sunnarborg, co-founder of crypto hedge fund Tetras Capital. With ether, a rival to bitcoin, the top 100 addresses control 40 percent of the supply, and with coins such as Gnosis, Qtum, and Storj, top holders control more than 90 percent. Many large owners are part of the teams running these projects."

QML 9y ago

Additional article of how “decentralized” cryptocurrency is: https://news.earn.com/quantifying-decentralization-e39db233c28e https://news.earn.com/quantifying-decentralization-e39db233c...

deleted 9y ago

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tudorconstantin 9y ago

Wow, such FUD, much propaganda lately, all against BTC. Is it risky? sure. Do you HAVE to buy? of course not. Anybody can sit on the sides and shout "bubble, ponzi, pyramidal scheme", but then don't whine when the early adopters and risk takers got to buy it at just $16K and 3 years later it trades at $1M.