By Jon Matonis
Friday, June 22, 2012
Everyone is familiar with Forbes 400 as the definitive list
to wealth in America. But few people know about the world’s
up-and-coming bitcoin richest and what motivates them to accumulate and
maintain large balances.
The Bitcoin Richest ranks the top
worldwide holders of bitcoin wealth on the blockchain. The caveats are
that we cannot identify the affluent person or business (but you know
who you are) and the same entity may hold the private keys to multiple
bitcoin addresses. At the current exchange rate of $6.50 per BTC,
the top address on the list holds control to an astonishing $2.85
million in total value (as of 6/20/12). Top ten balances are clickable
to show dates with transaction history and my analysis follows:
BTC Balance Bitcoin Address (Hash 160-bit format)
can we learn from this list? First, it demonstrates that a broad group
of people are comfortable enough with the bitcoin crypto to exit the
traditional banking system and leave significant value on the blockchain
for extended periods. I can only guess that they must have a rigorous
onsite and offsite backup process for retrieving the private key or
perhaps they rely on Brainwallet for the utmost in mobility.
with the exception of the top three addresses, the wealth is evenly
distributed as 8,000 BTC is the cut-off to make the top 100 list.
Incidentally, this has remained consistent with a similar list computed in December 2011 in which the cut-off to make the list was 6,925 BTC.
why leave your wealth in a distributed proof-of-work system instead of a
traditional bank? In a broad sense, bitcoin wealth offers protection
from unpredictable political risk such as sovereign confiscation, excessive taxation, and capital controls
at the border. In addition to preservation of value when compared to
national fiat currencies, bitcoin wealth eliminates bank solvency risk
and the risk of exogenous shocks to the uber-leveraged financial
pyramid. Remember, a pyramid was not a monument but a tomb.
the challenges confronting bitcoin consultants in certain industries is
how to transfer bitcoin value in amounts of $10 million or more for
purposes of trade settlement and for the mitigation of jurisdictional
bank risk. With the total bitcoin market capitalization at approximately
$60 million and the largest single address holding merely $2.85
million, you can begin to see the obstacles. The bitcoin market is still
too nascent and small for robust use in global trade settlement.
Liquidity and depth would have to increase significantly to accommodate
requests without severe price disruption.
Thanks to the excellent work of Blockchain.info, we can get an idea of current trade and settlement usage by looking at the 100 largest bitcoin transactions culled from the most recent 50,000 transactions. Bitcoin Days Destroyed also provides an indication of transaction volume that attempts to strip out transfers to oneself and account reorganizations.
For further reading:
“The death of banks – and the future of money”, Detlev Schlichter, June 20, 2012
“Underground Remittances – From Hawala to Bitcoin”, Mondato, June 20, 2012
AT THE INTERSECTION OF FREE BANKING, CRYPTOGRAPHY, AND DIGITAL CURRENCY
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