Bitcoin's On-Chain Distribution Continues To Be More Decentralized

To investors,

Bitcoin’s on-chain distribution continues to become more decentralized over time. We can explicitly prove this claim by looking at the on-chain metrics, which offer unique insight into the amount of bitcoin that is held by each individual bitcoin address.

First, let’s take a look at the largest holders of bitcoin on-chain. We can see that the number of bitcoin addresses with at least 10,000 bitcoin in their balance peaked in October 2018. Bitcoin's price was ~ $6,500 and we were about to get the final puke down in price of the 2018 bear market.

If we look at an order of magnitude smaller, the number of bitcoin addresses with a balance of 1,000 bitcoin or more peaked in February of 2021. There are currently about 2,100 bitcoin addresses that hold 1,000 bitcoin or more, which is very similar to where we were throughout most of 2020.

Now let’s take a look at bitcoin addresses with a balance of 100 bitcoin or more. The all-time high for that measurement peaked in February 2017, which was before the craziness of the 2017 bull market. At the time, there were about 18,500 bitcoin addresses that met the criteria, but today we have only approximately 16,100 bitcoin addresses with 100 bitcoin or more.

But here is what is really interesting — bitcoin addresses with at least 0.01 bitcoin or 0.1 bitcoin in their balance have continued to hit all-time highs. Today, there has never been more bitcoin addresses on-chain in the 12 year history that hold these smaller amounts of bitcoin.

Here is the 0.01 bitcoin balance chart, which shows more than 9.33 million bitcoin addresses:

Here is the 0.1 bitcoin balance chart, which shows more than 3.28 million bitcoin addresses:

These distribution charts are noteworthy because they highlight a very important part of the bitcoin story. As time goes on, the digital store of value continues to become more decentralized. This increase in decentralized ownership is not only a positive security feature, but it also means that the benefits of economic empowerment that bitcoin presents will eventually be enjoyed by more people globally.

You can think of the distribution of bitcoin holders as one piece of a three-legged stool. Bitcoin miners continue to get more decentralized over time and we continue to see more bitcoin node operators popping up around the world. This symbiotic relationship between holders, miners, and node operators allows bitcoin to gain strength, while continuing to run effectively without a CEO or centralized control.

Bitcoin’s design is beautiful and things are playing out exactly how they were intended. The electronic peer-to-peer cash system is evolving into a fully decentralized, digital store of value that can’t be debased, censored, or manipulated.

Hope each of you has a great start to your week. I’ll talk to everyone tomorrow.

-Pomp

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THE RUNDOWN:

El Salvador Buys 100 More Bitcoins as Crypto Market Falls: The government of El Salvador bought 100 more bitcoin, President Bukele tweeted on Friday, while the price of the largest crypto currency by market-cap fell near $54,000. “El Salvador just bought the dip. 100 extra coins acquired with a discount,” Bukele said. Bitcoin price fell about 8% on Friday around $54,237, as broader markets tumble on new COVID-19 variant fear. Read more.

Crypto.com to Sponsor Latin America’s Leading Soccer Competition: After renaming the Staples Arena in a $700 million deal in November, Singapore-based crypto exchange Crypto.com will become an official partner of Latin America’s leading soccer competition, CONMEBOL Libertadores. Through an agreement with CONMEBOL, the governing body for soccer in South America, Crypto.com will serve as an official partner of CONMEBOL Libertadores from 2023 to 2026 and as a licensee of the competition’s official non-fungible tokens as of 2022, the company said in a statement Thursday, without disclosing further terms. Read more.

Japanese Consortium Plans to Issue Bank Deposit-Like Digital Yen by End of Next Year: A consortium of 74 Japanese firms is planning to issue a digital yen that will work similar to bank deposits by the end of 2022, the consortium’s secretariat, DeCurret, said in a white paper and a progress report published on Wednesday. To ensure the stability of the digital currency, the consortium, dubbed Digital Currency Forum, is proposing a model similar to how bank deposits work, according to the white paper. The digital yen will be issued by banks as their liability, the paper added. Read more.

Hackers Are Attacking Cloud Accounts to Mine Cryptocurrencies, Google Says: Hacked Google Cloud accounts were used by 86% of the “malicious actors” to mine crypto currencies, according to a new report. Of the 50 hacked Google Cloud Platforms or GCPs, 86% of them were used for cryptocurrency mining, which typically consumes large amounts of computing resources and storage space, Google’s Cybersecurity Action Team wrote in the report. The remainder of the hacking activities included phishing scams and ransomware. Read more.

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Preston Pysh is a financial investor and host of the "We Study Billionaires" podcast.

In this conversation, we discuss negative yielding debt, increasing stress on pension plans, and how Bitcoin can solve recent macro economic problems.

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