New Study: Bitcoin Is More Centralized Than It Looks And 51% Vulnerable To Attack
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Answer New Study: Bitcoin Is More Centralized Than It Looks And 51% Vulnerable To Attack
One of the strengths of Bitcoin that Bitcoin fanatics sing about is how decentralized it is to traditional financial systems.
A recent study by the National Bureau of Economic Research revealed that the network may not be as decentralized as we think.
Few Hands…and Lots of Bitcoin:
An in-depth study conducted by the US-based National Bureau of Economic Research (NBER) revealed that the bulk of Bitcoin is owned by a small number of individuals.
The research team used a methodology that involved splitting addresses between brokers and individuals, which led to interesting results despite the difficulty of scrutiny.Read:Brazil Launches Its First Environmentally Friendly Bitcoin ETF…Details Here
The study revealed that 10,000 wallets control over 6,000,000 Bitcoin which is a third of all cryptocurrencies in circulation.
For further investigation, NBER discovered that 1,000 investors own about 3,000,000 bitcoins.
The researchers said:
This measure of concentration is likely to be underestimated because we cannot rule out that some of the largest addresses are controlled by the same entity.
The results indicate that despite the great interest that Bitcoin has received over the years, the Bitcoin ecosystem is still controlled by large and focused players, whether they are major miners, Bitcoin holders or exchanges.
The trend of concentration can also be detected among cryptocurrency miners where 10% of the leading miners account for 90% of asset generation while only a fraction was responsible for 50%.
Despite the seemingly decentralized nature of the network, the NBER study continues to paint a different picture.
The downside of the heavy concentration of miners according to the study is the 51% attackability of the network.
This type of attack occurs when the attacker controls the majority of the blockchain’s hash power.
Biggest Bitcoin Whale:
Although it is difficult to know who the biggest Bitcoin owners are, some entities do stand out from the group as the biggest whales.Read:Find out the amount and value of cryptocurrencies seized by the US Cybercrime Unit in 2021
For institutions, MicroStrategy is the largest entity holding roughly 111,042 bitcoins worth over $6 billion and shows no signs of slowing down in acquisitions of more bitcoins.Read:Cardano founder: CBDC is a really bad idea
Satoshi Nakamoto, the founder of Bitcoin, owns more than 1 million Bitcoins, making him the largest whale.
Other individuals who hold large amounts of bitcoin include twin brothers Winklevoss, Barry Silbert, Tim Draper, Michael Novogratz and Bitmain owner Mikri Zahn.
Before the crypto ban campaign in China, the country was responsible for more than 50% of the bitcoin hash rate but with the recent ban, America now has the highest concentration of bitcoin miners.
Kazakhstan and Russia are in second and third place, respectively.
The second largest bank in Singapore plans to enter the cryptocurrency market
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