One of Bitcoin’s (BTC) major promises is freedom — the unshackling of the financial world from the constraints of the traditional (TradFi) system. How? Through decentralization, a trustless system allows for peer-to-peer exchanges of value.
Recently, the premier crypto has attracted a new tag — the people’s money — in reference to its supposed egalitarian design and function. But is BTC truly the all-embracing medium of exchange that its proponents make it out to be?
Financial analyst Vik Aggarwal has presented new bitinfocharts data faulting that notion. He shared his thoughts via a LinkedIn post.
Nearly 75% of available Bitcoin is held by 2% of its addresses
According to the presentation, a paltry 2% of BTC addresses hold 74% of the digital asset. This highly concentrated power, Aggarwal says, contradicts BTC’s founding principles.
He explained:
Bitcoin was supposed to be decentralized, step away from the central banks, a freedom from authorities. Do you know it is actually the opposite of that?
~ Aggarwal
The analyst also said the concentration could spell trouble for the coin and its network should the few BTC whales decide to dump it. He gave the example of an unnamed Chinese firm that triggered a $649 million flash crash when it sold its holdings.
Contrasting thoughts on BTC decentralization
Aggarwal’s post received a lot of comments on the issue with some people criticizing his claims while others supported him. Maureen Salim is one of those in support. She depicted the 2% as dragons guarding the gold (BTC).
To her, investing in BTC is a high-stakes poker game in which small-scale traders are the chips. She agreed they’d suffer most of the whales decided to sell their stashes.
But to Olivier C., Aggarwal was missing the point. He explained that by decentralization, Bitcoiners meant the consensus protocol, which protected the BTC platform. Meanwhile, distribution refers to the amounts held by the wallets.
He added that the anti-BTC propaganda was TradFi’s way of continuing to control the financial system. Olivier insisted that BTC was the key to unlocking the free economy.
What next for BTC decentralization?
The debate on BTC decentralization has remained thorny for a long time. However, it’s coming back to the fore following increased interest in the asset by institutional investors.
Some say that shift is beneficial to the coin as it shows the confidence of large-scale investors in BTC. Meanwhile, other crypto users are wary that the entry of big-monied players in the space makes the coin inaccessible to retailers.
As the debate rages, there’s a growing need to audit Bitcoin’s evolution to ensure it stays true to the creator’s intentions.
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