BTC & USDT Are Getting ‘Real Usage’ While 85% of XRP, 95% of XLM Supply Held by Large Addresses
- How concentrated is crypto wealth? 95% of XLM, 85% of XRP, 46% of LTC, 40% of ETH, 29% of BCH, 24% of BSV, and 11% of BTC
The distribution of a crypto asset’s supply provides a clearer picture of the wealth distribution. And Bitcoin and Tether among the top cryptocurrencies seems to be getting real usage and are in the hands of more individual users.
“Those who control the wealth often control the power,” and when it comes to Bitcoin, it isn’t concentrated.
Bitcoin – the Least Concentrated
Initially, a few individuals held Bitcoin supply but over time it has gradually been distributed to a million different addresses. The percentage of BTC supply held by large addresses, with a balance of at least 1/1k of the total supply (0.001%) peaked at 33% in Feb. 2011 but as of Feb. 2020, those addresses now hold about 11% of the total supply.
Before the large price increases near the end of 2011 through early 2013, there has been a relatively large decrease in the percentage of supply held by these large addresses.
When it comes to Ethereum, which was distributed in a crowdsale unlike BItcoin, it started off highly concentrated — largest balances with at least 1/1k of total supply peaked at about 60% in July 2016. But as the significant decline in the ICO bubble deflated, so did those holding. Now, those addresses hold about 40% of the total ETH supply.
However, between Ethereum and Bitcoin, there is a difference in the supply as for bitcoin new addresses are often created for each transaction while in account-based chains like Ethereum addresses are frequently re-used.
USDT-Omni & USDT-ETH used as a medium of exchange but USDT-TRX not so much
Popular and largest stablecoin Tether’s three version Omni (USDT-Omni), Ethereum (USDT-ETH), and Tron (USDT-TRX) started out 100% concentrated, all three of them. But Omni and ETH-based have gotten increasingly distributed over time. Coin Metrics wrote in their report,
“This could be a signal that they are being used as a medium of exchange, which would explain why supply is flowing from addresses holding large balances to addresses holding smaller balances.”
Tron-based Tether, however, stayed 100% concentrated signalling it is not getting much usage as a medium of exchange but it is still relatively new, having been introduced in May 2019.
Also, the USDT-Omni distribution trend reversed near the peak of the market-wide price bubble in Jan. 2018 and has started becoming more concentrated.
How concentrated is crypto wealth? As of February 2020, large addresses storing over 1/1000th of the total money supply on a given network hold about:
95% of XLM
85% of XRP
46% of LTC
40% of ETH
29% of BCH
24% of BSV
11% of BTC
H/T @Coinometrics https://t.co/2fLR5I1T6A
— Jameson Lopp (@lopp) February 18, 2020
Bitcoin Forks & Silver to Bitcoin’s Gold, Litecoin
When it comes to Bitcoin forks, unlike BTC, Bitcoin Cash supply held by large addresses is getting more concentrated over time. In Aug. 2017 when the BCH was forked, 14% of BCH supply was held by large addresses which now hold 29%.
Bitcoin SV however, remains relatively flat, except for a significant dip in Feb. 2019 and a sudden increase in June 2019.
The silver to bitcoin’s gold, Litecoin has seen several large dips in the amount held by large addresses throughout 2013 before the spike in Dec. that year. The same happened in 2017 before the Jan. 2018 price peak.
However, about 46% of LTC supply is still held by large addresses compared to just 11% in large Bitcoin accounts.
XRP and XML – The Most Concentrated
Now, the most concentrated crypto assets. Account-based chains Ripple and Stellar both have official foundations who hold a large percentage of supply. In case of XRP, its 85% of the supply is held by large addresses while 95% of XLM.
Steller's largely because Stellar Development Foundation holds over half of the XLM supply. As per SDF’s mandate, it currently holds 29.4 billion of XLM. Though SDF burned 50% of its total supply, it still appears on-chain as such counted as part of supply distribution.
However, supply distribution is not a perfect representation of wealth distribution because one individual often creates multiple addresses.