Bitcoin and mainstream money are more alike than its supporters claim. Despite claiming to be a decentralizing and egalitarian force, 0.01% of bitcoin owners control 27% of the offer. It is very similar to the traditional dollar, with the richest 1% controlling 30% of total US household wealth.
Currently, around 144 million people are bitcoin holders, of which only 10,000 people own about 5 million digital currencies, the equivalent of $232 billion, according to The Wall Street Journal. This means that, more than a decade after the launch of bitcoin, the distribution of the cryptocurrency continues to be concentrated on a very small number of main players.
cryptocurrency recent boom
The wealth of miners, bitcoin exchanges, and the number of people who own the cryptocurrency has exploded in the last two years. However, around 90% of transactions with this digital currency are the result of two activities that do not have a real economic function, according to the conclusions of the report by the National Office for Economic Research.
The first of these activities is the way in which the network processes these exchanges, while the second is the bitcoins sent between the wallets of the same user in an attempt to conceal their identity. The remaining 10% are transactions between different types of exchanges and exchanges between institutional investors.
On the other hand, the study highlights that 10% of the main miners control 90%, of which only 0.1%, or about 50 miners, have close to 50% of the mining capacity. These figures are significant because they put them back on the table.
This threat is based on the fact that half plus one of the miners agree to hack the rest of the community to rewrite the chain of operations, which would allow them to create new bitcoins and carry out exchanges without being its owner.
The end of bitcoin could be near
Eswar Prasad, a professor of international trade policy at Cornell University, argues that bitcoin itself may not last much longer due to its inefficient blockchain technology and the fact that it does not serve as a medium of exchange.
According to Professor Prasad, speaking to CNBC, some of the new cryptocurrencies use blockchain technology much more efficiently than bitcoin. For example, consider Solana, which can process up to 65,000 transactions per second, while bitcoin only has the capacity to handle seven transactions per second.
In addition, it highlights the environmental impact of the transaction validation mechanism used by bitcoin, whose carbon footprint is greater than that of all of New Zealand, needs as much electricity as Thailand to operate, and produces the same amount of electronic waste per year as the countries combined.
More generally, Prasad values the impact that cryptocurrencies have on central banks, which are already considering issuing digital versions of their own currencies. According to him, these digital currencies could provide a low-cost payment option that everyone has access to, which in turn would increase financial inclusion and potentially financial stability.