Although Satoshi Nakamoto, the creator of bitcoin, envisioned bitcoin to become a cryptocurrency for everyone, the largest cryptocurrency of the world by market cap hasn’t become a medium of exchange yet. Still, the fiat currencies by financial institutes administering centralized traits dominate the financial world. Although bitcoin is said to outclass fiat currencies by being decentralized, in reality, facts suggest something else.
Unlike fiat currencies that are controlled and manipulated by banks and governments, bitcoin was said to be an authorityless currency. Opposing to the centralized fiat currencies regulated by banks, bitcoin didn’t have any organization, person or body behind it.
Apart from that, bitcoin following the fundamentals of supply and demand was regarded as unpredictable and uncontrollable. In addition to that, as bitcoin transactions were managed by miners all over the world, the decentralization exhibited by bitcoin was confirmed.
However, it was recently revealed that bitcoin is not as strong as it widely perceived. Like fiat currencies, bitcoin is also accumulated in a handful of people. As only 0.1% of bitcoin users hold more than 40% of bitcoin supply, bitcoin is not becoming a standard for everyone in a manner the creator wished for.
— Richard Heart (@RichardHeartWin) November 19, 2019
The so-called whales who posses large shares of bitcoins are controlling the price of bitcoin and capable of driving the entire crypto market. As bitcoin follows fundamentals, if whales collectively sell or buy bitcoins, the dynamics of supply and demand change easily resulting in the rise or fall of bitcoin’s price.
Nakamoto introduced bitcoin while proposing it to become a global peer-to-peer payments system. For that to happen, bitcoin becoming a medium of exchange and replacing fiat currencies was required. However, at the moment, bitcoin gaining popularity due to speculation is considered as a store of value.
While investors are eyeing the crypto market in the hope of the bull market in order to obtain massive returns, they must understand that the sentiment of whales is very significant in determining the price of bitcoin. Let’s see if bitcoin spread unevenly among 0.1% users is able to redistribute randomly without accumulating in a few hands.
READ ALSO: Google, a threat to bitcoin?